Tinubu’s plan for Blockchain and eNaira is appealing despite lacking details

President-Elect Bola Tinubu mentioned in his manifesto that he has plans aimed at encouraging the use of blockchain technology and cryptocurrencies in Nigeria’s finance and banking sector.

The policy is intended to promote the prudent use of these technologies to improve identity management, revenue collection, and the use of crypto assets.

As part of the policy, the government will establish an advisory committee to review the existing regulatory environment governing blockchain technology and virtual asset services .

The committee will be tasked with suggesting changes to create a more efficient and business-friendly regulatory framework, where necessary. The government hopes that this will help to attract more investment in the sector and stimulate economic growth.

Additionally, the government plans to encourage the Central Bank of Nigeria (CBN) to expand the use of the country’s digital currency, the E-Naira. This move is part of a broader effort to promote financial inclusion and create a more accessible and efficient payment system in the country.

He also believes that the policy will help to position the country as a leader in the blockchain and cryptocurrency industry, creating new opportunities for businesses and entrepreneurs in the sector.

See excerpts

“We will reform government policy to encourage the prudent use of blockchain technology in finance and banking, identity management, revenue collection, and the use of crypto assets. As part of our reforms, we will establish an advisory committee to review the existing regulatory environment governing blockchain technology and virtual asset services and, where necessary, suggest changes create a more efficient and business-friendly regulatory framework. We will also encourage the CBN to expand the use of our digital currency, the Enaira.”

What this means

The policy of encouraging the adoption of blockchain technology and cryptocurrencies, as outlined in the excerpt, is related to the new Nigerian regulation on digital assets, which was introduced by the Nigerian Securities and Exchange Commission (SEC) in 2021.

The new regulation provides a framework for the regulation of digital assets, including cryptocurrencies and other digital tokens, in Nigeria. The regulation requires digital assets to be registered with the SEC and mandates that all digital asset offerings and investments must comply with SEC regulations.

The manifesto suggests a review of the existing SEC regulation on digital assets will be conducted with a view to making it more business-friendly. Several cryptocurrency enthusiasts criticized the regulation for lacking enough provisions to support the adoption of economically important use cases.

It is also noteworthy that the manifesto aligns with the central bank’s eNaira initiative which has not lived up to expectations. In fact, their plan is to expand the adoption of eNaira.

We need more specifics

One potential challenge is the lack of clarity about how the government plans to encourage the adoption of blockchain technology and cryptocurrencies.

The manifesto mentions the establishment of an advisory committee to review the regulatory environment and suggest changes, but it does not provide specific details on what these changes might entail or how they will be implemented.

Additionally, the excerpt does not address concerns about the risks associated with cryptocurrencies, such as volatility, lack of regulation, and potential for fraud.

Another challenge is the potential for the policy to exacerbate existing inequalities in access to financial services. While the policy could increase financial inclusion for some people, it may also exclude those who do not have access to the necessary technology or infrastructure.

Additionally, the policy could benefit larger corporations and investors at the expense of smaller businesses and individuals, who may not have the resources to invest in these technologies.

A third challenge is the lack of clarity around the government’s plan to expand the use of the E-Naira. The excerpt does not provide specific details on how the digital currency will be introduced, how it will be used, or what benefits it will offer over traditional currency. This lack of clarity could create uncertainty and hinder the adoption of the E-Naira.

While we await further details on its blockchain-related policy, the use of cryptocurrencies and blockchain technology is still a relatively new and untested area in many countries, and concerns about security, regulation, and fraud are likely to be an issue. Though Nigeria is considered a major adoption of cryptocurrency globally, government officials lack the understanding and use cases of blockchain technology in a modern economy.