Local Insights: Could Blockchain have averted Nigeria’s Naira shortage?

Local Insights: Could Blockchain have averted Nigeria's Naira shortage?

A group of local blockchain experts in Nigeria believes that blockchain technology has the potential to address economic challenges not only in Nigeria but also across Africa. They pointed to Nigeria’s currency flow shortage as a prime example of how blockchain could be a solution.

During the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN)’s Digital Assets Summit 2023 in Abuja, experts discussed Nigeria’s past decision to print new naira notes, the country’s fiat currency. This decision, along with efforts to boost the adoption of the central bank digital currency (CBDC), contributed to a shortage of naira in circulation.

Christopher Eniayemo, a co-founder of Sahara ICP Hub West Africa, suggested that the decision to print new naira notes could have been handled within a decentralized finance (DeFi) system. This approach would have allowed Nigerians to participate in the decision-making process and better prepare for the currency change.

Eniayemo emphasized that introducing blockchain technology to Nigeria and Africa at large could promote the development of DeFi, granting citizens greater control over their finances and the economy. Blockchain provides the technical foundation and principles that enable DeFi to operate in a decentralized, transparent, and secure manner, offering a wide range of financial services without relying on traditional financial intermediaries.

Interestingly, Nigeria’s current President, Bola Tinubu, has expressed support for blockchain technology and cryptocurrencies in the nation’s banking and finance sector. His manifesto proposes a review of the existing regulations of the Nigerian Securities and Exchange Commission concerning digital assets, aiming to make them more business-friendly. This new regulatory framework aims to govern digital assets like cryptocurrencies and other digital tokens in Nigeria.

It’s worth noting that in 2022, Nigeria implemented restrictions on the amount of cash that individuals and businesses could withdraw from banks and ATMs as part of an effort to promote a “cashless-Nigeria” policy and increase the utilization of its CBDC, the eNaira.

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