What Nigeria’s financial sector stands to gain by leveraging blockchain technology — Victor Tubotamuno
You probably know that Nigeria’s financial sector is one of the most regulated sectors in the country. Financial regulation is needed to set rules and standards for adherence by financial institutions and to monitor their compliance to these rules for the stability of the market and the protection of consumers.
In a bid to transform Nigeria’s financial sector into a catalyst for growth in order to achieve the vision of making Nigeria one of the twenty largest economies by 2020, key regulators of the Nigerian financial system developed a strategy called the Financial System Strategy (FSS) 2020.
The objective of this strategy is to “strengthen and deepen the domestic financial markets, enhance the integration of domestic financial markets with the external financial markets and support the real sector.”
Earlier this year, the FSS2020 proposed the use of blockchain technology to transform Nigeria’s financial markets. Simply put, blockchain is a cheap and secure means of sending information from one point to another. The process is fully automated, the information when sent cannot be modified, and it costs nothing to send the information.
How blockchain works
A sender initiates a transaction process by creating a block
This block is verified by millions of computers connected by a peer-to-peer network across the internet. The verified block is added to a chain that is stored across the internet. The chain creates a unique record with a unique history. Falsifying a single record is virtually impossible as it would require the falsification of the entire chain
Blockchain guarantees confidentiality, integrity, and availability which are the three components of information security.
The information that is stored on a blockchain exists as a shared — and continually updated — database. Although information about transactions are publicly recorded in the database, the user information is cryptographically stored and cannot be accessed by unauthorized parties.
Also, the information can not be corrupted because there is no centralized version for a hacker to get to, and the information is accessible when needed.
The Director of FSS2020, M.D Suleyman commented that there is a need for all stakeholders to key into blockchain technology and he couldn’t be more right. The financial services sector stands to benefit greatly in the areas of asset management as it would increase efficiency and accuracy, in insurance as it would improve claims processing, and in payments as it would enable cross-border payments.
Perhaps the most attractive feature of blockchain technology is that it is free. This quality of the technology makes it accessible to both small and large organizations and rich and poor economies. Africa must leverage blockchain to solve her problems.
This is why “House Of Code” an annual hackathon organized by Spurbuddy, seeks to source for solutions to Africa’s problems through innovation, using technologies such as Blockchain, Artificial Intelligence, and VR/AR/MR. The mission is to champion a culture of innovation and disruption in African companies.
House Of Code bring together innovators from across the globe including software developers, graphic designers, and user experience specialists for a 72-hr hackathon.
They will be building solutions to problems that have been identified by industry players from across different sectors including health, finance, transport, insurance, government, agriculture, and education.
This event was scheduled to hold in June, 2020 but was postponed indefinitely due to Covid-19. A new date would be announced once things ease up.