The Implications of a National Blockchain Policy for Nigeria

At the sunset of former president Muhammadu Buhari’s administration, the Federal Ministry of Communications and Digital Economy announced the approval of a national blockchain policy. The document, announced on May 3rd, 2023 was received by blockchain innovators, enthusiasts and stakeholders as a move in the right direction for the country.

The policy document hopes to “facilitate the development of the Nigerian digital economy and enable citizens to have more confidence in digital platforms” and has an implementation and steering committee composed of blockchain experts, professionals and bodies. 

Read also: Nigerium: Inside NITDA’s plan to build Nigeria’s indigenous blockchain network 

In the past year, the National Information Technology Development Agency (NITDA) has been at the forefront of implementing the proposition in the document. What should you know about the national blockchain policy document and why should it matter? 

This article will provide some details:

A history of the national blockchain policy document 

According to the national blockchain adoption strategy draft, the national blockchain policy was created because of the need to diversify Nigeria’s economy. Importantly, there is a need for the economy to go from its heavy reliance on the oil and gas sector and “leapfrog into an economy driven by digital technologies.”

In line with that, the Federal Ministry of Communications and Digital Economy (FMoCDE) was charged with creating a digital economy policy strategy for Nigeria. Following that, the FMoCDE charged the National Information Technology Development Agency (NITDA) with the responsibility of creating a framework for information technology practices in Nigeria.

Subsequently, NITDA developed the blockchain adoption strategy as part of the mission towards a digitally viable economy.

In summary, the national blockchain policy is a regulatory framework that is designed to guide the adoption of blockchain technology in Nigeria. In other words, the national blockchain policy lays the groundwork for blockchain adoption – a sort of go-ahead for stakeholders to come together and create a legal framework for blockchain use in the country.

The goal of the policy is to create a blockchain-powered economy that supports secure transactions, data sharing, and value exchange between people, businesses, and government.

Some initiatives outlined in the policy’s strategy framework include the promotion of blockchain business incentives programmes and the establishment of a national blockchain sandbox for proof of concepts and pilot implementation. These ambitions by the government convey a friendly regulatory framework for blockchain startups in the country.

The policy document highlights some use cases of blockchain that can help the country. These include tracking and tracing drugs in the pharmaceutical supply chain, verification of university certificates, identity data management, digital content publication and sales, and peer-to-peer transactions.

Industry stakeholders participation in the national blockchain policy process

The Nigerian blockchain private sector is in charge of implementation of the policy which focuses on 3 core areas – adoption, capacity development and innovation.

Members of the steering committee who are scattered in the earlier mentioned groups include notable blockchain stakeholders like the President of Stakeholders in Blockchain Association of Nigeria – Obinna Iwuno, Founder of Blockchain Nigeria User Group – Chimezie Chuta and some other players.  

Each group, ie adoption and others, are working on projects and initiatives to achieve goals in their focus area that will have a national impact.

Earlier this week, members of the steering committee had a meeting with the Director-General of NITDA where presentations of the project were reportedly made and a way forward was agreed.

But, the document shows that the government is still crypto-averse

Although the national blockchain policy document reveals that the Nigerian government seeks to develop a regulatory framework for other use cases of the blockchain, surprisingly the document displays its apathy for cryptocurrencies.

A part of the document reads:

“Blockchain technology undoubtedly holds great potential for the development of Nigeria’s digital economy. A lot of the focus has been on cryptocurrencies, especially bitcoin. However, there is a lot more that blockchain can do for the economy and this strategy document aims to redirect the focus to other areas.”

What this means is that – for the Nigerian government, approving a national blockchain policy does not amount to accepting cryptocurrency – although data and trends show that digital currencies remain the most prominent use case of the blockchain in the country.

Related post: Another crypto exchange, OKX shutdown services in Nigeria

Moves from the Nigerian authorities in recent months have helped put their position in a clearer light. Recall that the Nigerian authorities, in a bid to crack down on what it called ‘financial market manipulation and naira sabotage’, have been in a prolonged legal battle with the largest crypto exchange in the world, Binance which led to the detainment of two of the exchange’s executives.

In February, Nadeem Anjarwalla, a British Kenyan, a regional manager for Africa was detained alongside Tigran Gambaryan, a United States citizen and Binance’s head of financial crime compliance were charged to court by Nigeria’s tax agency, the Federal Inland Revenue Service (FIRS) on the charges of tax evasion.

The Nigerian authorities filed criminal charges against the two Binance executives, Tigran Gambaryan, before a Magistrate Court in Abuja. A few weeks later, 38-year-old Nadeem reportedly escaped from custody under bizarre circumstances.

Reports said there were efforts by the Nigerian authorities to repatriate Najeem to the country, in partnership with the Kenyan authorities. But, nothing significant has been heard about that.

Although Richard Teng, Binance CEO had earlier claimed he was working closely with the Nigerian government to resolve the situation, he later announced that the Nigerian authorities were demanding a hefty bribe from its detained executives to make the money laundering trial initiated against them go away.

An umbrella body of blockchain organizations in Nigeria, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), recently reacted to the lingering impasse.

The inter-community working group expressed worry that the legal tussle with the global crypto exchange platform has gone on for too long and has the potential to cause damage to the nascent Nigerian blockchain industry.