Nigeria has elected a new government. And though petitions are expected in court to challenge the outcome of the presidential vote, the county’s crypto community is upbeat that president-elect Bola Tinubu’s administration will advance the adoption of Web3 technologies.

Tinubu, who was the flagbearer of the political party under whose rule Nigeria became Africa’s top Web3 destination, is expected to create a conducive operating environment for the growth of the industry. It was during former president Muhammadu Buhari’s rule that Nigeria launched Africa’s first digital currency – the eNaira- and started laying the foundation of crypto regulation in Africa’s biggest economy. It is also during his reign that Nigerians pioneered the trade of NFTs in Africa.

Oparinde Babatunde, the director of special projects at Yellow Card, exudes hope that the new government will continue integrating Web3 innovations into the country’s growth and development strategies.

He notes that since the outcome of the presidential race, there has been heightened excitement about cryptos among Nigerians, largely due to the ongoing cash crisis.

Decentralized Finance Can Add $29 Billion to Nigeria’s GDP

(Oparinde Babatunde, director of special projects at Yellow Card / Photo by Nodo News)

“The country’s adoption of bitcoin is being fueled by the election and the Naira shortage problem. There are cash deficits and high inflation in the nation, which may be encouraging people to use cryptocurrency as a substitute for cash,” Babatunde tells Nodo News. “The adoption of cryptocurrencies in Nigeria is currently being boosted by crypto exchange sites.”

In October 2021, Nigeria released a Central Bank Digital Currency (CBDC), the eNaira, to promote electronic payments and compete with the country’s adoption of private cryptos, according to Babatunde. During his speech at the launch of the eNaira in 2021, Buhari intimated that the adoption of the eNaira and blockchain technology “can increase Nigeria’s GDP by $29 billion over the next 10 years.”

Babatunde acknowledges that both on the official and black markets, the value of the naira in relation to the US dollar has been gradually declining.

“For instance, the dollar-to-naira exchange rate fell to its lowest level since November 2022, and according to a forecast by a U.S. bank, the value of the naira will reach its lowest point after the 2023 presidential election,” he said. “As a result, it is possible that the value of the naira will keep falling even after the election.”

Babatunde added that more first time crypto users have been reaching out to him asking how they can change their money from Naira to USDT.

Time to Properly Regulate Web3

(Ugochukwu Aronu, founder and CEO of Xend Finance / Photo by Nodo News)

But the new Nigerian government must now move fast to put measures in place to regulate the Web3 landscape and protect it from bad actors who abuse the freedom of decentralized finance.

Prospective users also need to be educated on the benefits of this technology, which goes a long way in motivating their adoption.

Last May, the government through Nigeria’s capital markets regulatory body issued new laws governing the issuance, exchange, and custody of digital assets in the country. This is expected to continue under Tinubu, as protection of users becomes key in creating trust in an industry that has long been unregulated.

In Nigeria, the technology is now, perhaps more that previously before, a more invaluable asset amidst an economic turmoil that the west African country faces after the just concluded presidential elections.

What if the results transmission portal that the opposition says was compromised was run on a public blockchain network? Wouldn’t there be more accountability? “Yes, there would be more transparency. This is very correct,” Ugochukwu Aronu, co-founder and CEO of Lagos-based Xend Finance tells Nodo News.

But the new government now has an already hard task of revitalizing the economic wellbeing of Africa’s largest economy, and experts opine that Web3 could play a key role in achieving this.

Nigeria is currently bedeviled by issues such as a rising inflation, currency devaluation, a huge population that has no access to formal banking and financial systems, and money transfer issues.

Such issues are compounded by the recent gray listing of the country by the Financial Action Task Force’s (FATF) due to opaque financial systems that allow money laundering.

Can Web3 Help Tinubu Get Nigeria Out of Economic Crisis?

(People waiting at Zenith Bank's ATM in Lagos, Nigeria / Photo by Nodo News) — (People waiting at Zenith Bank’s ATM in Lagos, Nigeria / Photo by Nodo News)

While it may not, by all means, be the silver bullet required to fully lift Nigeria out of the economic doldrums that it now is in, Web3 will play a key role in achieving this objective, given its continued acceptance and adoption in the country, across the continent, and beyond.

In 2022 for instance, VOA revealed that data it had collated from peer-to-peer crypto platforms in Nigeria showed that Nigerians traded more than $5 million worth of bitcoins.

This was a more than 250% growth within the period under review, amid a currency crunch that had been adversely impacting on the Naira.

In October 2020, CoinDesk published an article highlighting the various strategies that Nigeria had been putting in place for blockchain adoption in public administration and payments on a national scale.

Nigeria’s National Blockchain Adoption Strategy draft revealed that the facilitation of the adoption of blockchain technology in the country was part of the then-president Buhari’s plan to enhance the country’s economic growth as the country with the highest population in Africa transitions into a digital economy. Tinubu is expected to advance it.