As one of the largest economies and the most populous country in Africa, Nigeria stands to become a blockchain powerhouse in the region.
Nigeria Blockchain Alliance (NBA)
Founded in 2015 by the Cryptographic Development Initiative in Nigeria, the Nigeria Blockchain Alliance (NBA) is a strategic initiative to promote National Development in the era of distributed ledger technology and cryptocurrency by facilitating awareness, education, policy advocacy, industry dialogue and collaboration among relevant stakeholders in order to collectively unlock hidden potentials, create job opportunities, open new business horizon and enable economic transformation while discouraging crime in the blockchain/cryptocurrency ecosystem in Nigeria.
Fintech Roadmap Committee
In November 2018, the Capital Market Committee (CMC) inaugurated a Market Wide Fintech Committee to come up with a Fintech Roadmap for the Nigerian Capital Market. The aim is transition the Nigerian capital market towards a more technology-driven approach similar to other economies.
Central Bank of Nigeria (CBN)
While the Central Bank of Nigeria (CBN) stressed in February 2018 that virtual currencies are not legal tender, it has continued monitoring the space. In August 2018, the CBN published a notice inviting stakeholders to a meeting where they discussed “Virtual currencies as a medium of exchange in Nigeria”. The meeting was joined by industry leaders in the virtual currency industry such as exchanges, wallet providers, miners, software developers and individual investors. The CBN Committee on “The Study of Virtual Currency as an Emerging Medium of Exchange” participated as panelists and observers.
We would like to thank Chuta Chimezie of the Blockchain Nigeria User Group (BNUG) for his help and the help of the group in the production of this research.
Interview with Reginald Karawusa, Acting Executive Commissioner, Legal and Enforcement SEC Nigeria
Has Nigeria introduced any specific regulations or initiatives to deal with blockchain/DLT?
We are not aware of any specific regulations or initiatives that have been introduced regarding blockchain/DLT in Nigeria. However, concerted efforts have been made to understudy the technology by some government organisations, including the Nigerian Customs Service. The SEC Nigeria has also been approached with a view to exploring blockchain use cases for the securities market.
Could you expand on what you think the right level of regulation should be? Have you seen this reflected in the institutions’ actual approach to regulation? Do you believe the Nigerian regulatory framework is ready for blockchain technology, or do you need to amend existing regulations or make specific ones?
Each agency will regulate the relevant aspects under its supervision. Regulation should strive at protecting users without harming innovation. There will be a need for amendments of existing regulations to address the changes Blockchain/DLT will introduce.
Is there one particular Nigerian minister appointed to lead on this issue? Would that be a good idea?
There is no particular minister leading on this. If one is appointed, it will aid in fast-tracking the promulgation of relevant regulation.
What do you consider to be key factors in successfully implementing widespread blockchain/DLT adoption?
First is domestic adoption among market participants and the regulators. The second key factor would be the buy-in of the industry and the Nigerian government, which will facilitate the widespread implementation of Blockchain/DLT in Nigeria.
Which specific use cases/applications are being implemented by you and more widely, in Nigeria’s public sector? What benefits have been so far, if any?
We are looking into the regulation of Initial Coin Offerings and Cryptocurrency exchanges. We are yet to assess the possible benefits.
Do you see any major political challenges preventing wider adoption?
None, except some laws that may need to be reviewed and also the need for more synergies among regulatory agencies.
Do you see any ethical concerns around the use of blockchain?
There is need to avoid Ponzi schemes developing as well as concern over cyber threats. There are also concerns surrounding AML/CFT, which will be a major challenge for regulators.
What is the plan in the short to medium term (next 5 years)? How do you see the space evolving in the next 5 years? How would you like the space to evolve?
We see Blockchain taking root in Nigeria in the next 5 years. The SEC Nigeria is currently considering the use of a Regulatory Sandbox framework for the treatment of innovations, such as Blockchain/DLT. Currently, we are speaking with some potential applicants who are eager to get the SEC Nigeria’s registration/license in order to commence operations. Blockchain/DLT use cases are thus likely to grow in the coming year.
The SEC Nigeria is enthusiastic and welcomes innovation within a proper regulatory framework, which it is already working towards.
The SEC Nigeria would like to see positive developments and growth in the Blockchain/DLT space in the next 5 years.
What lessons or transferable experiences can you share to help other countries follow your lead?
We are still researching the positive benefits of Blockchain/DLT. We encourage other regulators to do the same for possible adoption, depending on their areas of best utilisation.
There is a need for inter-agency and for inter-jurisdictional collaboration as well as the need to develop the regulator’s capabilities.