Osinbajo counsels central banks on adoption of blockchain technology

Vice President Yemi Osinbajo says it has become urgent for central banks around the world to adopt blockchain technology.

Osinbajo made this submission in his keynote address at the third edition of Nigeria Digital Economy Summit (NDES) on Monday in Abuja.

The theme of the summit is, “Web 3.0, Blockchain and DeFi: Impact of Africa’s Digital Economy.”

Osinbajo cautioned that blockchain technology—which allows digital information and transactional records to be securely stored and distributed–might disrupt central banking globally if it was not absorbed into the system.

He said it had become necessary for Nigeria to further broaden the scope of banking licences in order to accommodate more players in the financial mediation value chain.

“From a policy perspective here in Nigeria, we may need to again expand the range of banking licenses available to enable more players in the financial mediation value chain.

“Even central banks all over the world will have to rethink their roles, since block chain will challenge the centralisation of monetary authority with its clear imperfections.

“ Who knows? We might actually be in the last days of the central banking system as we know it.

“It is either the central banking systems all over the world will adopt block chain technology, or they will be taken over by blockchain technology.

“We are certainly, in my own view, in the last of central banking system; which means the space is open for all sorts of innovation in the central banking space.’’

He said that from a policy perspective in Nigeria, there might be another expansion of the range of banking licenses available to enable more players in the financial mediation value chain.

According to Osinbajo, clear rules must be set to support crypto markets and trading in other digital assets.

He said it was evident that the same old banking licences that were in use were no longer tenable.

“In the past, there was only one type of banking licence that costs N25 billion; but in the past few years, and these are excellent policy changes that took place with a lot of pressure from young men and women in the tech and entertainment space.

“The CBN has modified and there are different types of banking licences which is why we have fintechs, the unicorns because they are using different cadres of CBN licence that do not require N25 billion share capital.

“So, for example, Kuda and several others have a different type of licence—Fluterwave, Paystack although they are in some form of banking or the other.

“With the new iteration, with web 3, we have to rethink that and create other types of licences that are much cheaper so that more participants can come into that space.’’

According to him, one of the things that need to be done is to change the regulatory atmosphere.

He said that in terms of regulation, what ought to be done was to look more at taxes.

“Even that tax space is another big opportunity for digital technology and those who are going to be involved in digital technology,’’ he said.

Osinbajo said that the annual summit was a testimony to the joint commitment of the government and the private sector to the rapid and value-driven development of Nigeria.

He commended the Foresight Group and the numerous local and foreign partners for putting together the summit and driving conversations on how best to shift the country and its systems into the next phase of digital evolution.

Earlier, in his opening remarks, Mr Lanre Osibona, Founder and Chief Executive Officer, Foresight Group, said that digital transformation was a formidable force for change in Nigeria.

Osibona, who is the summit convener, said such transformation was helping to support economic growth; democratic dividends and expanding civil society engagements that would empower the people and engender prosperity.

He called for concerted efforts in driving digital transformation in Nigeria.

“Collectively, we must begin to address strategic action that will support Africa’s tech transformation as well as Nigeria’s tech ecosystem and digital economy.

“Innovation to change sectors including banking and finance, health, education, agriculture, hospitality and urban and industrial development are critical.

“The effect of COVID-19 pandemic definitely acted as an accelerant for the emerging technology; the pandemic had almost certainly led to a remarkable adoption of tech innovations.

“Blockchain technology for agriculture is gaining momentum particularly now for traceability, access, market and precision monitoring of critical issues identified in the food value-chain of the agricultural sector from production to final production,’’ he said.

He said that talent and talent retention were pivotal in creating tech jobs for young Nigerians.

Foresight Group is a collaboration of three private companies; it is the curator of NDES.