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Blockchain and Cryptocurrencies: The Keys to Reforming Inefficiencies in Nigeria?

 5 min read / 

Nigeria, though still a developing country, is very much a resource-rich one – and that means a lot of potential for prosperity for the nation as a whole. Through the extraction and exportation of its vast oil reserves, Nigeria could raise huge sums of money to grow and develop infrastructure to reduce poverty and improve citizens’ quality of life. However, undermining all these possibilities are inefficiencies and corruption in the public sector; problems which have persisted for the last forty years. But could modern technologies such as Blockchain and cryptocurrency provide a solution?

Corruption and Inefficiency

Corruption and inefficiency are worryingly common in African countries at varying levels of development, and Nigeria is one of the worst affected. Its main industry, oil, has been particularly crippled by inefficiency problems; non-enforcement of contract terms in 1993 led to losses of $60bn, while between 2009 and 2011 a further $11bn was lost through theft. Nigerian ports are also impacted upon by inefficiencies and corruption and consequently suffer losses of nearly $3bn annually, as well as having the generation of 10,000 jobs each year stifled. Poor infrastructure, inconsistent policy and an unclear administrative system have been listed causes of the issues.

Yet, the problems are not limited only to commerce and businesses. The public sector in Nigeria is riddled with corruption, and this extends to the citizens that government officials are meant to serve. A report by anti-corruption organisation Transparency International ranked Nigeria lowly 136th in its annual Corruption Perception Index; it has also been found that on average a Nigerian will pay a bribe once every two months according to Nigeria’s 2016 National Corruption Report, with the police and prosecutors being the most frequent recipients. Clearly, Nigeria is consistently sabotaging its own potential through administrative problems and personal greed. However, a combination of Blockchain technology and cryptocurrency could help end this cycle.

As explained in the previous article on Blockchain, the concept can be described as a decentralised peer-to-peer digital ledger in which financial records, compiled into a block, are added to a digital chain in a permanent and unchangeable way. By being decentralised, there are both security and speed improvements; security is increased by the removal of any ‘master copy’ of the ledger, while the absence of a middle-man drastically decreases the time a transaction takes to be completed. The other technology mentioned – cryptocurrencies – are digital currencies that harness the Blockchain technology in an online marketplace. But what does this have to do with preventing corruption and inefficiency? Well, in fact, there are uses of these two concepts that are very relevant here.

Smart Contracts

Firstly, smart contracts could be used to provide citizens with access to their legal entitlements. Blockgeeks state how smart contracts help ‘exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman’. In the more remote areas of Nigeria, this could prove revolutionary. It could give farmers legal rights for their land, in doing so providing them with a valuable and tradeable asset; an NGO called Bitland is already providing this service in Ghana with great success – there’s no reason why Nigeria could not engage in the same process, improving current inefficiencies in the legal sector as well as reducing inequalities.

Additionally, if citizens were to have access to their own legal profile in which their rights, assets and licences are all easily available, it could go far in reducing the prevalence of the everyday bribery that appears to go on so often. If an individual needed to obtain a new copy of a driving license, for example, they could do so using Blockchain, without the need to go through a public sector that is almost above the law and can charge illegally.

Democracy

Furthermore, Blockchain technology could be used to ensure true democracy occurs. A lot of African countries remain in quasi-dictatorial states, in which a dictator operates essentially under the illusion of untampered democratic process. A Blockchain can provide a transparent, unchangeable ledger of digital votes that would ensure corruption could not occur, and therefore democracy would be protected.

While Nigeria does operate democratically, it is evident that corruption is present throughout the state infrastructure, and therefore the country would benefit from having a system that could ensure democracy exists without exploitation. This open-ledger technology, in combination with cryptocurrency, can prevent corruption outside of voting too. By providing a traceable record of every single financial transaction and through the absence of a middle-man, it could create tangible progress in the prevention of foreign aid being misappropriated, something that has been seen to occur in Nigeria.

Conclusion

However, for all the potential improvements that Blockchain and cryptocurrencies can provide, major obstacles still remain. There will be significant data privacy and governance considerations surrounding the transparency of these ledgers; ledgers that will be containing what is currently regarded as confidential and private information. As well as this, there has to be a willingness of the existing government to use the new technology – it obviously cannot be forced upon them.

Given that the government largely is the target of the reform that Blockchain and cryptocurrencies would enable, it appears unlikely that such technology will be welcomed with open arms. Instead, it seems that there somehow needs to be an overhaul of the attitudes within the Nigerian public sector, so that it is more willing to find solutions to the crippling problems that have persisted for so long. 

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1 Comment

1 Comment

    WP_Comment Object ( [comment_ID] => 123108 [comment_post_ID] => 126223 [comment_author] => Pono Marin [comment_author_email] => [email protected] [comment_author_url] => http://wellwallet.com [comment_author_IP] => 162.158.118.74 [comment_date] => 2017-12-21 16:35:46 [comment_date_gmt] => 2017-12-21 16:35:46 [comment_content] => I think about this a lot. Especially with the high demand of cobalt and lithium and other raw materials that some countries in Africa are so rich with. There is no reason for the people to have to live in poverty. I watch altcoins and cheer for the ones whose focus is to empower the unbanked. As more and more citizens get behind blockchain, this good be a game changer. [comment_karma] => 0 [comment_approved] => 1 [comment_agent] => Mozilla/5.0 (Macintosh; Intel Mac OS X 10_12_6) AppleWebKit/537.36 (KHTML, like Gecko) Chrome/63.0.3239.84 Safari/537.36 [comment_type] => [comment_parent] => 0 [user_id] => 0 [children:protected] => [populated_children:protected] => [post_fields:protected] => Array ( [0] => post_author [1] => post_date [2] => post_date_gmt [3] => post_content [4] => post_title [5] => post_excerpt [6] => post_status [7] => comment_status [8] => ping_status [9] => post_name [10] => to_ping [11] => pinged [12] => post_modified [13] => post_modified_gmt [14] => post_content_filtered [15] => post_parent [16] => guid [17] => menu_order [18] => post_type [19] => post_mime_type [20] => comment_count ) )
  1. Pono Marin

    December 21, 2017 at 4:35 PM

    I think about this a lot. Especially with the high demand of cobalt and lithium and other raw materials that some countries in Africa are so rich with. There is no reason for the people to have to live in poverty. I watch altcoins and cheer for the ones whose focus is to empower the unbanked. As more and more citizens get behind blockchain, this good be a game changer.

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