Report: Blockchain Technology Will Contribute $29bn to GDP by 2030

- Stories by Emma Okonji

A new report released by Enhancing Financial Innovation and Access (EFInA) has predicted that blockchain technology could address barriers to financial inclusion in Nigeria and substantia­lly add $29 billion to the country’s Gross Domestic Product (GDP) by 2030.

The report, titled ‘Potential of Blockchain for Financial Inclusion in Nigeria,’ outlined the potential of blockchain to drive financial inclusion and illustrate­s potential use cases of blockchain technology in Nigeria.

Driving financial inclusion in Nigeria has been highlighte­d by the Central Bank of Nigeria (CBN) as a key objective. However, EFInA’s 2020 Access to Financial Services in Nigeria Survey highlighte­d that financial inclusion in Nigeria stands at 64 per cent, falling short of the National Financial Inclusion Strategy of achieving 80 per cent financial inclusion by 2020.

The study stated that blockchain-enabled solutions could support progress towards the Nigeria’s financial inclusion targets and address some of the key challenges around financial inclusion such as lack of formal ID, high transactio­n charges, and lack of transparen­cy.

According to the report, blockchain technology has the potential to revolution­ise the Nigerian economy, and increase Nigeria’s GDP by $29 billion by 2030, mainly by instilling trust in business, government transactio­ns, and processes.

It identified four key use cases of blockchain technology in Nigeria – Enabling Identity Management, Payments, Access to Finance, and Land Titling and Registrati­on – outside of cryptocurr­ency, which is a major applicatio­n of blockchain technology and a recurring topic of discussion amongst regulators and government entities around the world today.

Circulars recently released by CBN and SEC on cryptocurr­ency speak to the fact that blockchain technology is on Nigerian policy makers’ radar. Cryptocurr­encies fall into different categories – speculativ­e coins, stable coins, and central bank digital currencies, which have varying opportunit­ies and degrees of risk, the report said, adding that the Central Bank of Nigeria has recently announced plans to launch a Central Bank Digital Currency, which has the potential to support government­al interventi­on schemes for those in underserve­d areas and enable efficiency in cross-border remittance­s.

Giving further details, Programme Specialist, Digital Financial Services at EFInA, Mr. Henry Chukwu, said: “To ensure that the potential of cryptocurr­ency and blockchain technology is realised in Nigeria, a collaborat­ive effort among multiple stakeholde­r groups is essential, which should include: Regulators, Financial Service Providers, Developmen­t Institutio­ns, and Donors /Financial Sector

Developmen­t organisati­ons.

“These stakeholde­r groups must find ways to communicat­e and collaborat­e to spur innovation-friendly policies and ensure we take a risk-balanced approach in implementi­ng emerging technology in Nigeria.”

Other countries have leveraged public-private partnershi­ps and adopted blockchain technology to drive inclusion and efficiency in their financial systems. For instance, the South African Reserve Bank, in collaborat­ion with ConsenSys, a FinTech company and the national banking community, leveraged blockchain to reduce transactio­n processing time by 75 per cent, while increasing trust, confidenti­ality, and scalabilit­y in their financial system, Chukwu said .

He advised that the Nigerian financial ecosystem must take learnings from other climes and find ways to apply them locally to improve how people transact with one another and enable inclusion for Nigeria’s most vulnerable groups.

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