A recent gathering of local blockchain gurus points toward a fascinating prospect: could blockchain technology have saved Nigeria from the crippling effects of its naira scarcity? Using Nigeria’s recent experience of a naira flow shortage as a case study, stakeholders at the Blockchain Technology Association of Nigeria’s Digital Assets Summit 2023 argued vehemently in favor of using decentralized finance (DeFi).
In their view, the government’s decision to mint new naira notes, and Nigeria’s subsequent efforts to drive up Central Bank Digital Currency (CBDC) adoption, precipitated the naira flow shortage that was experienced. They contend that these decisions could have been executed through the DeFi system, thereby forging a path that includes Nigerians in decision-making and prepares them more effectively for transitions. Sahara ICP Hub West Africa’s Co-Founder, Christopher Eniayemo, advanced the thought that integrating a blockchain system would propel the advancement of DeFi, granting citizens power over their funds and economy.
However, there is an intriguing juxtaposition to this claim. Nigeria’s President –Bola Tinubu, in his campaign manifesto outlined a vision to enable the use of blockchain technology and cryptocurrencies in the nation’s financial sector. If implemented, the manifesto could usher in an era favorable to digital assets, marked by more business-friendly regulations from the Nigerian Security Exchange Commission, thus providing a framework for regulating digital assets.
Despite these apparent strides, Nigeria’s push for a “cashless Nigeria” policy has led to a significant reduction in the amount of cash that individuals and businesses can withdraw. This move seems to be a tactical one aimed at increasing adoption of CBDC – eNaira, which was rolled out in December 2023.
While it’s tempting to view these developments as positive steps towards a more decentralized financial landscape, it’s crucial to bear in mind that each financial system comes with its unique set of strengths and weaknesses. In this context, it would be worthwhile to remember that while blockchain technology promises transparency and decentralization, there has been legitimate concern over its scalability and the potential carbon footprint. Ultimately, it is crucial that both the benefits and drawbacks of these advances be thoroughly understood and considered in the shaping of policy and regulation.
Source: Cointelegraph
