There is growing anticipation that blockchain technology will have a profound impact on various sectors of the Nigerian economy, especially the financial sector.
Driving financial inclusion in Nigeria has been highlighted by financial regulators, including the Central Bank of Nigeria, as a key objective. Blockchain-enabled solutions can support progress toward financial inclusion targets. Blockchain technology shows potential to address some of the key challenges around financial inclusion such as lack of formal ID, high transaction charges, and lack of transparency. However, misconceptions and skepticism around the topic of Blockchain persist.
So, in 2021, EFInA conducted a study to enlighten the Nigerian financial ecosystem on the potential of blockchain to drive financial inclusion and expand on the use cases of blockchain technology in Nigeria outside of cryptocurrency.
EFInA’s blockchain research covers:
Overview of Distributed Ledger Technology (DLT) and Blockchain Technology
- Explain the basics of distributed ledger technology and blockchain technology.
- Expand on the difference between blockchain technology and cryptocurrency.
The Potential and Impact of Blockchain in Nigeria
- Outline the potential impact of Blockchain on financial inclusion and development goals in Nigeria.
- Identify key use cases in which blockchain can be deployed to improve financial inclusion.
- Share case studies on the global application of blockchain technology.
Recommendations in Driving Financial Inclusion Using Blockchain
- Outline the key stakeholders in the financial ecosystem and initiatives that are required to drive the adoption of blockchain adoption in Nigeria.
Possible Risks of Blockchain Technology and Cryptocurrency Adoption
- Understand the risks and mitigants around blockchain technology and cryptocurrency.
Notable insights from the blockchain report are as follows:
Blockchain is not the same as cryptocurrency, cryptocurrency is just one application of blockchain technology.
Blockchain can be leveraged to address some of the leading barriers to financial inclusion in Nigeria:
- High transaction cost – by eliminating the need for intermediaries.
- Trust issues with the financial system – by leveraging cryptographic keys.
- Offline transaction capability – by storing a copy of the ledger offline in a tamper-resistant device during downtime periods.
There are 4 key uses of blockchain technology to improve financial inclusion:
- Identity Management
- Access to Finance
- Land Titling and registration
Blockchain has the potential to boost Nigeria’s GDP by $29 billion by 2030, through 5 key areas:
- Source Verification
- Payments and Financial Instruments
- Contracts and Dispute Resolution
- Customer Engagements