With its decentralized and secured nature, Blockchain technology and other distributed ledger technologies (DLT) provide a wide range of opportunities and benefits in areas such as finance, education, governance, healthcare, and trade; through greater transparency, enhanced security and easier traceability. Though the adoption of Blockchain is on the rise in the African continent, the Nigerian government has, on many occasions, taken stands against trading with cryptocurrencies due to it being void of proper regulation and prone to financial crimes. Beyond cryptocurrencies, this article touches on the adoption of the other applications of Blockchain technology and the ways it could help improve Nigeria.
Blockchain technology and other distributed ledger technologies (DLTs) are not limited to bitcoin and other cryptocurrencies. DLTs consist of a series of networks of databases that allow users to create, distribute and store information in a secured and efficient manner. Simply put, blockchain is an open-source distributed database that reduces human interference in securing, verifying and maintaining data.
According to Paul Mitchell, the Fintech and Blockchain Lead for PricewaterhouseCoopers (PwC) South Africa:
The speed at which blockchain technology is being adopted is unprecedented. There is a growing recognition that this technology has profound implications in many areas, and we are watching it move from a start-up idea to an established technology in a fraction of the time it took for the internet to be accepted as a standard tool.
This technology has the potential to transform every sector and innovators in various fields are looking for ways to integrate blockchain into their infrastructure. This emerging technology holds pivotal potentials and offers transformational solutions to numerous problems facing Nigeria.
With the World Economic Forum recently asserting that blockchain solutions could add a staggering $1 trillion to the world economy within the next 10 years, Nigeria therefore needs to pay more attention to this emerging technology and utilize it in transforming and growing its economy.
2.0 WHAT BLOCKCHAIN TECHNOLOGY OFFERS NIGERIA
Blockchain technology has certainly come to stay. The sooner the Nigerian government utilizes what the technology offers, the better. It has the potential to shape and disrupt a number of sectors, including banking, real estate, governance and digital business overall, because of its greater transparency, increased efficiency, better security and improved traceability.
Corruption is the foremost problem facing the African continent. The African Union estimated that the continent loses 148 billion dollars – 25 percent of Africa’s average Gross Domestic Product (GDP) – every year, to corruption. Budget padding and budget mismanagement are the primary modes through which corruption is carried out in Nigeria. In the 2019 Open Budget Index (OBI), Nigeria had a transparency score of 21 (out of 100), ranking 97th out of 117 countries.
Blockchain technology can help address budget-related corruption. The technology can be applied in developing budget-tracking mechanisms. A blockchain-based application will save all transactions and expenditure and everyone in the network will be alerted at every update. This way, Nigerians can be able to track budgets and this would help eliminate corruption and embezzlement of funds as the transaction data, including transaction amount, time, account number(s), and receiver(s) will all be under public scrutiny.
Apart from budget-related corruption, public procurement (or government contracting) is the single largest marketplace for government spending and the greatest source of official corruption worldwide, according to the World Economic Forum. There are various factors that make this process a hotbed of corruption in both high-income and low-income countries. Vendor selection processes are complex and opaque, involving a high degree of human discretion. These vulnerabilities lead to massive financial waste, distorted market prices, reduced healthy competition and would most times result in substandard goods and ineffective services. Blockchain technology can help solve this problem by facilitating third-party oversight of transactions. This will enable greater objectivity and uniformity through automated smart contracts, thus enhancing the transparency and accountability of transactions and actors.
2.2 Election Process
Elections in Nigeria are always accompanied with concerns such as election security, voter registration integrity, poll accessibility, and voters’ turnout. Blockchain technology, with its decentralized, transparent, immutable, and encrypted qualities, could potentially help minimize election tampering and maximize poll accessibility. The likes of Sierra Leone and Russia have utilized Blockchain technology in conducting elections. Sierra Leone was the first country to do so.
A decentralized record of all votes cast in an election kept on Blockchain ledgers cannot be altered or changed without leaving traces of tampering. Votes would be cast using smartphones, and as thousands of votes pour in, they would be permanently recorded. This will save people the stress of going down to polling booths to vote. The main issue would be internet access as more than half of the Nigerian population still lack internet access.
The application of Blockchain technology to improve the Nigerian economy will require increased internet penetration in the country.
2.3 Land Registration
Land title registry is another area that Blockchain technology can be utilized. This would help instil and expand property rights and enhance transparency in the process.
Blockchain-based land registries can potentially provide a secured, decentralized, publicly verifiable, and immutable record system through which individuals could definitively prove their land rights. These qualities reduce the opportunity for self-interested manipulation of land rights and increase the resilience of land ownership more generally. This would help tackle problems around land ownership that lead to duplicate land titles and illegal sales, as well as low access to mortgages.
Experts have posited that the greatest application area of blockchain technology lies in trade, where solutions that reduce supply chain trade barriers can increase the global GDP by nearly 5% and global trade by 15%. Nigeria can adopt the technology and boost the ease of doing business.
Blockchain technology makes global payment faster and more secured; easing transactions with customers and clients in other countries and guaranteeing instant payments. Automating commercial processes with blockchain-based smart contracts can greatly enhance the speed of payments and reduce invoicing errors through instantaneous payment, once agreed conditions or terms are met. It also wipes out the susceptibility to money laundering, given its status as a secured system.
Digital security is a major problem that faces businesses. Blockchain technology makes tracking and managing digital identities secured and efficient, resulting in seamless authentication and reduced fraud. Be it banking, healthcare, national security, citizenship documentation or online retailing; identity authentication and authorization is a process intricately woven into commerce and culture worldwide. Blockchain technology offers solution to many digital identity issues as identity can be uniquely authenticated in an irrefutable, immutable, and secure manner.
Improving traceability and transparency of goods across the supply chain, from the point of origin to the last-supply destination, would be possible with blockchain technology. Several initiatives are monitoring goods provenance, from how they were made to how they are being managed. The data is stored permanently and shared across decentralized networks, enabling comprehensive track-and-trace beyond current capabilities. Users can verify if products are authentic or have met handling requirements. A good example is Walmart’s pilot on food tracking.
2.5 Financial services
Financial inclusion remains a big problem in Nigeria. Access to financial services such as banking is considered a key factor to reducing the poverty level in any economy. Unfortunately, a large percentage of the Nigerian population remains unbanked.
Blockchain technology can help change the narrative. Unlike traditional banks, Blockchain technology does not require a physical branch since it is operated on a distributed network. This would save users, bank and telecom charges, as is the case in mobile transactions. The idea is to create alternative financial structures to complement the existing system in order to liberate Nigerians from the inefficiencies of the existing financial system.
Nigeria has always ranked low on the World Bank’s ease of doing business index. This is a result of the lack of access to credit facilities by the micro, small, and medium enterprises (MSMEs). These entities contribute immensely to economic growth through job creation. Yet, they often experience constraints in accessing loans from banks and other financial institutions.
These financial institutions, including credit bureaus, are often faced with the lack of a database to access identity confirmation, availability of collateral and creditworthiness of these entities and as such, are usually reluctant to grant loans to them. To address this issue, the Nigerian government in 2017 signed the Collateral Registry Act and the Credit Reporting Act into law, to ease credit access for MSMEs. However, the impact of both laws is still yet to be felt as these entities still complain of lack of credit access.
An effective ledger system like blockchain technology can be used to successfully implement these laws. Different financial institutions could save information about the financial status of their clients, including data about current loans, collaterals, interest obligations, income levels or past repayment rates. To protect privacy, customers have to authorize accessibility to their data. Ultimately, banks can monitor customers’ financial situations and evaluate the risk and conditions of a loan more efficiently and small business owners can access more funds to expand their businesses.
2.6 Data collection
The lack of an effective centralized database in Nigeria has been a matter of national priority. Without accurate data, the government cannot properly solve basic problems and monitor development strategies and goals. Nigeria is a country with multiple databases. Data is collected and stored everywhere and there have been numerous articles on the various ways this issue can be solved.
Blockchain technology can help solve this problem by creating ledgers containing basic information and legal documents of every citizen, with a provision for virtual identity management. For example, with the application of blockchain technology, almost all public services in Estonia are digitized and accessed through secure digital identities that are provided to every citizen and resident. These e-identities will enable citizens to vote securely and have access to a variety of services and rights.
In the education sector, Blockchain technology can be used for record keeping. Degrees, certificates and diplomas; credentials in general would be made digital and within the learner’s control, without the need for an intermediary to verify them. This would definitely eliminate the delay in the processing of academic transcripts. Blockchain technology can also be used for the accreditation of educational institutions and their respective syllabuses.
Blockchain’s ability to improve record keeping also makes it a natural fit for solving intellectual property (IP) management problems. For example, by using blockchain to determine if an idea or invention is unique or to register IP assets, copyright and patents.
Blockchain is a dynamic and versatile technology and can be utilized in almost every sector. The technology is being improved upon, so there are still a multitude of possibilities that the technology offers.
The main challenge to the adoption of Blockchain technology is poor internet access in the country. The government needs to contribute to the development of Blockchain technology before trying to regulate its use. The government must provide the necessary infrastructure and funds to promote the dynamics of the Nigerian digital economy.
It goes without saying that blockchain technology alone cannot prevent crimes. This technology must be paired with thoughtful legal frameworks and structures. In the absence of consistent law enforcement, accurate informational inputs, adequate technological know-how, cooperative political elite, and societal goodwill; the implementation of blockchain technology might not reach its full potential.
Ayotunde Abiodun is a 300- level student of the faculty of law, University of Lagos. Ayotunde currently serves as the Online Editor of the University of Lagos Law Review. He believes that laws and policies move the human race forward, so he volunteers for borg., a think tank and policy analysis organisation. In his personal time, Ayotunde enjoys reading, debating and learning new things on YouTube.
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https://www.weforum.org/agenda/2018/09/blockchain-set-to-increase-global-trade-by-1-trillion/ (accessed 13 September 2020).
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 World Economic Forum, “Blockchain alone can’t prevent crime, but these 5 use cases can help tackle government corruption” available at https://www.weforum.org/agenda/2020/07/5-ways-blockchain-could-help-tackle-government-corruption/ (accessed 14 September 2020).
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 DHL, “Is Blockchain the new internet” available at https://www.dhl.com/ng-en/home/insights-and-innovation/insights/blockchain.html (accessed 14 September 2020).
 Supra, note 2.
 Supra, note 6.
 Techpoint Africa, “5 areas the Nigerian economy can benefit from Blockchain technology” available at https://techpoint.africa/2018/03/19/blockchain-nigerian-economy/ (accessed 15 September 2020).
 It is also known as the Secured Transactions in Movable Assets Act 2017.
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 Supra, note 9.
 Smarter with Gartner, “4 ways Blockchain Will Transform Higher Education” available at https://www.gartner.com/smarterwithgartner/4-ways-blockchain-will-transform-higher-education/ (accessed 15 September 2020).