Africa’s biggest economy went through economic tantrums in 2022 and may see a further slowdown this year like many other countries on the continent.

However, in its Web3 space, developers are expected to be much busier, as more crypto adoption is underway. Nigeria’s new government is now planning to deploy blockchain technologies to align its financial infrastructure to future expectations.

This year may eventually be called a big blockchain year for the West African nation with all signs indicating the creation of a more accommodative environment for Web3 to thrive.

Here are key events in the past five months that are helping to shape Nigeria’s economic backbone.

January 2023 – Slow Start of the Year With Cash Crisis

Nigeria kicked off this year with a bleak economic prospect. The International Monetary Fund late last year forecasted the country’s economic growth at 3.0% this year, down from 3.2% projection for 2022.
The new Naira note redesign accelerated a cash crisis as people rushed to replace their old notes with new ones. The money change in a heavily cash-based economy induced agony for traders as they scrambled to get new banknotes. The Supreme Court eventually scrapped the Feb. 11 deadline because banks were unable to disburse enough of the new Naira, as a result, the deadline was postponed until Dec. 31.
The Naira suffered a huge loss against the USD, continuing to slide. Financial experts expect a further devaluation and could suffer a 20% devaluation in 2023. The Central Bank of Nigeria devalued the currency in January 2022.

February 2023 – New Regime and Failing eNaira

Bola Tinubu was elected as the new president of Nigeria. He is under great pressure to tackle a pile of issues: Raise agricultural production, deploy more technologies and improve industrial output, and stabilize the economy. His election was challenged by five separate petitions.
A report by Bloomberg showed that there has been little uptake of digital currency eNaira. The CBN partnered with New York-based blockchain company R3 to relaunch the eNaira. Another report by the United Nations Conference on Trade and Development (UNCTAD), stated that the slow uptake of the eNaira was attributed to a lack of offline functionality due to low Internet penetration.

March 2023 – Abuja’s Blockchain Push and MetaMask’s Bigger Play

The cash crunch however contributed to a brief uptake of the eNaira, which shot up 63% to $47.7 million. The CBN Governor Godwin Emefiele said that Nigerians opened around 13 million e-wallets, a 12-fold increase in the last five months.
Nigerian President-elect Bola Tinubu released his manifesto to consider more use of blockchain and cryptocurrencies in the financial sector. In his note, the Nigerian Security Exchange Commission (SEC) would review the regulations on digital assets to make them more business-friendly.
MetaMask, one of the world’s most popular crypto wallets and developed by ConsenSys, and MoonPay expanded their offering in Nigeria, to allow users to buy crypto via instant bank transfers within the MetaMask mobile and Portfolio Dapp. Nigeria is among MetaMask’s top markets globally, ranking third in mobile active users.

April 2023 – Sticky Inflation

Nigeria’s inflation accelerated to 22.04%, according to data from the National Bureau of Statistics. The central bank was forced of course to adjust its main lending rate by 50 basis points to 18%.
In a move to grow the fintech sector, the SEC opened a regulatory incubation program for fintech firms operating (or planning to operate in the Nigerian Capital Market. The SEC said that the incubation program will qualify fintech solutions that would build solutions for the business sector.

May 2023 – Acceptance after Denial: New Blockchain Policy

The SEC is studying asset-backed token offerings on licensed digital exchanges. A report by Bloomberg states that the tokens would be backed by assets including equity, debt, and property, and would not include crypto. The asset-backed token is also known as a “security token.”
The federal government approved the National Blockchain Policy, giving a boost to the use of the technology in the financial industry. According to Isa Pantami, the Minister of Communications and Digital Economy, blockchain with all its components and types has been institutionalized.

-Edited by Shigeru Sato, Faustine Ngila