How Blockchain Technology Can Boost Nigeria's Economy

Nigeria is not only the largest economy and the most populous black nation in Africa but has had a great economic prospect. However, it has been grappling with challenges such as corruption, unsustainability of supply chain management and low financial liberalization. Research carried out by the World Bank shows that about 55 per cent of Nigeria’s population lacks access to financial services, hence exclusion from economic activities. While in the other hand, logistics and supply chain challenges are quite costly to Nigerian businesses ranging from millions per annum eradicating the growth of essential sectors such as agriculture, manufacturing, and e-commerce among others.

Enter blockchain technology a distributed and shared database, which is slated to deliver huge changes in terms of greater transparency, safety, and reporting in a range of business sectors. Knowing that blockchain applications modeled with supply chain traceability, and payment systems secured through the use of cryptocurrency like bitcoins and Ethereum can help redefine the economy of Nigeria. The market research for blockchain has estimated the global venture at $7.18 billion in 2022 and it will reach $163 billion by 2029 as per business insights from the Fortune Firm. Nigeria, among the first countries to embrace cryptocurrencies as a way forward by its citizens to circumvent the traditional banking systems, is perfectly placed to harness such a product to fuel change in its economy.

This article focuses on what blockchain technology can do to solve one of the major problems of any economy and subsequently open up new opportunities for Nigeria’s economy.

 

1. Enhancing Supply Chain Transparency and Efficiency

Several industries support Nigeria’s economy, including agriculture, oil and gas and manufacturing industries, all of which deal with many problems linked to supply chain management. Blockchain technology presents an opportunity through Supply Chain Transparency to enable all actors involved in the Supply chain to be able to view a tamper-proof record of all the transactions that transpired in the chain.

 

Improved Traceability

In fields such as farming, blockchain can provide accountability by providing a record of activities that is accessible to regular buyers as well as legal entities. For instance, agric entrepreneurs in Nigeria such as cocoa farmers could use blockchain to ensure compliance with international standards of provenance of cocoa products for enhanced exports.

In this section, the discussion focuses on improving efficiency and increasing effectiveness while decreasing costs in order to achieve a superior outcome.

 

Boosting Efficiency and Reducing Costs

Logistics networks are one area that seems particularly constrained in Nigeria, as is obvious for the following reasons: Smart contracts in the shape of blockchain can easily raise and open new outlets of income by automating many of its processes such as inventory, payment of bills, custom clearances etc. Blockchain application in the optimization of supply chain management can remarkably reduce the costs of Nigerian firms, which in turn enable them to channel their resources towards investment.

 

2. Strengthening Financial Technology and Inclusion

Fintechs have been a vital force of change in Nigeria, Africa’s most active fintech market. However, a large number of the citizens of Nigeria cannot gain access to formal institutions of the banking sector. There are many creative financial opportunities that the blockchain can provide to fill this gap.

 

Bitcoin: Missing a Financial System

Currently, more than 33.4 million Nigerians own cryptocurrency as the data of the Statista for the year 2022 shows and so Bitcoin and Ethereum have become the perfect analogues for traditional banking. Blockchain decentralizes transactional activities by helping different parties engage in financial transactions easily without recourse to any third-party service provider.

 

Decentralized Finance (DeFi)

Decentralized finance platforms built on blockchain help Nigerians get credit, save, and invest without involving banks and other financial organizations. It could encourage the growth of many small businesses especially in the rural regions and promote the development of operation scalability.

 

3. Revolutionizing Trade and E-Commerce

Still, Nigeria has an e-commerce market of $12 billion and the market is growing at a fast rate where blockchain applications could be most useful. It can used to solve problems such as fraud, delayed payment, and trust, which are aspects that give people a hard time when conducting business online.

 

Secure Payments

Blockchain leads to safe payments from fraud and also time conscious from chances of fraud which is eradicated by the use of blockchain. It is especially advantageous for Nigerian e-business companies who want to gain customers’ trust and expand their services.

 

Smart Contracts for Logistics

Smart contracts can be used to enhance the logistics industry because they possess the ability to automate such factors as delivery confirmations as well as the release of payments. For instance, logistics efficiency can be increased by blockchain supply chain solutions as well as timely delivery of products improves the satisfaction levels of customers.

 

4. Strengthening Governance and Reducing Corruption

The world estimate showed that corruption is still a major factor that hinders the growth of Nigeria’s economy. Through decentralization and transparency, Blockchain has the potential to minimize fraud in the public sector and accountability in the private sector.

 

Clear Acquisition Systems           

Blockchain technology can be used in Government procurement to make sure that the monies spent on procurement are used correctly. As a result, it minimizes chicanery chances and increases public confidence given that it keeps records of transactions that cannot be altered.

 

Election Integrity

Besides the cardinal economic benefits of blockchain, the technology can transform the way Nigerians participate in the democratic processes to secure and transparent voting. This should in director help minimize election fraud, thus promoting a stability that is requisite for investment and innovation.

 

5. Empowering Innovation and Investment

Now, as the world develops the blockchain market, Nigeria should become the country for the development of new startups and blockchain industry research.

 

Tech Hubs and Talent Development

Hubs like the Yaba tech hub in Nigeria will therefore benefit from applying blockchain technology. Such partnerships with these companies, training programs and collaborations can help Nigerian developers develop an enabling environment with the right skills for developing impactful solutions.

 

Attracting Foreign Investment

Perhaps the formation of clear rules for the use of blockchain and cryptocurrency can attract foreign investors. For this reason, Nigeria seems to already be positioning itself to embrace blockchain technology through partnerships and funding, increasing sectors such as fintech, SCM, and digital transformation across the nation.

 

Conclusion

The paper establishes that by embracing blockchain technology, Nigeria can finally surmount some longstanding economic problems and embrace prosperity frameworks. Blockchain has a multiplicative effect on the Nigerian economy as it seeks to enhance the degree of transparency in supply chains, streamline the flow of funds through financial inclusion, and accelerate the economic revolution through e-commerce and port visionary governance.

These are true but to optimize these advantages, the Nigerian government needs to up its stakes in infrastructure, education, and harmonization of laws. Civil and business society on their part need to work towards providing support in the appropriate environment for blockchain systems and solutions to thrive.

Leveraging blockchain will complement Nigeria’s drive toward a digital economy, nurturing growth in innovation and economic status as well as offering job opportunities for citizens and attracting investments for sustainable growth. Nigeria is ready for the blockchain revolution that has commenced globally.