Globally, blockchain technology is an emerging recordkeeping transformative development with a vast potential to revolutionize various industries and drive economic growth. It is sometimes referred to as distributed ledger technology (DLT) which makes the history of any digital asset unalterable and transparent through the use of a decentralised network allowing authorised owners to record information that cannot be modified except if it is authorised by the owners on the network. Without a doubt, Blockchain technology holds massive potential.
To harness this potential, the National Information Technology Development Agency (NITDA) developed the National Blockchain Adoption Strategy (the “Strategy”) in 2020, and it was approved by the Federal Government of Nigeria (the “Government”) on the 3rd of May 2023. The strategy is a comprehensive and forward-thinking plan that seeks to leverage the transformative power of blockchain technology to drive innovation and primarily identify and utilise the opportunities to strengthen the country’s security in cyberspace and stimulate economic growth.
Objectives of the National Blockchain Adoption Strategy
- Fostering Innovation and Research:
The Strategy recognizes that investment in research is crucial to increasing awareness and deepening the knowledge of blockchain technology, discovering its potential use in various industries, and creating new products and services in the digital economy. Thus, it encourages partnerships with academia and experimentation with emerging blockchain technologies such as smart contracts, decentralised applications, and interoperability solutions. The emphasis on innovation will lead to finding more practical and innovative uses for blockchain technology for individuals, businesses, and the government.
- Establishing Blockchain Sandboxes for Testing and Piloting:
The Government plans to establish blockchain sandboxes (an isolated testing environment) to facilitate experimentation and mitigate regulatory risks. These sandboxes will provide companies with controlled environments to test and develop blockchain solutions without the fear of regulatory violations. By encouraging the development of innovative blockchain solutions, the sandboxes will attract entrepreneurs and foster a thriving ecosystem of blockchain technology in Nigeria.
- Public-Private Partnerships:
The Strategy will foster public-private partnerships, bringing together the strengths of both sectors by leveraging their respective reach, expertise, and resources. This collaboration will lead to knowledge sharing, resource pooling, and collaborative problem-solving, facilitating the effective adoption of blockchain technology in Nigeria and becoming a good model for other countries.
- Supportive Legal and Regulatory Frameworks:
A vital aspect of the Strategy is the creation of supportive legal and regulatory frameworks that encourage innovation in the blockchain industry. The Government aims to establish clear and comprehensive regulations that provide certainty and clarity for companies developing blockchain solutions. These frameworks will not only attract domestic and foreign investment but also ensure consumer protection, address security concerns, and maintain the stability of the financial ecosystem.
- Creation of Blockchain Business Incentive Programs:
In line with its focus on entrepreneurship, the Strategy includes incentives and support programs to encourage and nurture entrepreneurs in the blockchain ecosystem. These incentives include tax breaks, grants, and incubator programs to create an enabling environment for startups and foster a culture of innovation.
- Promotion of Digital (Blockchain) Education and Awareness:
Promoting education and awareness about blockchain technology is crucial to fostering adoption and understanding. The Strategy emphasizes the need to educate the public and various stakeholders about blockchain technology’s potential use cases and benefits. By building a knowledgeable and engaged community, the Strategy aims to drive further innovation and adoption of blockchain solutions.
- Adoption and Integration:
The Strategy outlines key areas for blockchain adoption in the public and private sectors. Government agencies will be encouraged to adopt blockchain technology in operations such as record-keeping, voting systems, and supply chain management, enhancing efficiency, transparency, and security. Similarly, the Strategy promotes the adoption of blockchain technology by private companies, particularly in finance, healthcare, education, and logistics, leading to more efficient business processes and new market opportunities.
The National Information Technology Development Agency (NITDA) will be the main stakeholder responsible for coordinating the policy initiatives under the supervision of the Federal Ministry of Communication and Digital Economy (FMoCDE).
Other key stakeholders for the Strategy include but are not limited to the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Securities and Exchange Commission (SEC), Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Federal Inland Revenue Service (FIRS), Fintech Association of Nigeria, Nigeria Immigration Service (NIS), Nigeria Inter-Bank Settlement System (NIBSS).
Blockchain technology can revolutionise multiple sectors beyond fintech, including product/delivery tracking, identity verification, management, healthcare, and transportation. The Strategy is a comprehensive and ambitious roadmap that will position Nigeria as an active player in the blockchain ecosystem if well adhered to. If appropriately implemented, the Strategy has the potential to improve public services, promote economic growth and job creation, and boost confidence in digital platforms. Thus, making Nigeria well-prepared to shape the future of the global blockchain industry and reap the benefits of this transformative technology. This is an exciting time for the ecosystem.
Written by Halimah Adebanjo with contribution from the Legal Team at Flutterwave