Osinbajo: Why CBN needs to adopt blockchain technology

Vice-President Yemi Osinbajo says Nigeria may need to further broaden the scope of its banking licences in order to accommodate more players in the financial mediation value chain.

Osinbajo said this on Monday during his keynote address at the 3rd edition of the Nigeria digital economy summit (NDES) in Abuja.

Speaking on the theme ‘web 3.0, blockchain and DeFi: impact of Africa’s digital economy’, Osinbajo urged central banks around the world to adopt blockchain technology.

He said 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.

In 2021, the Central Bank of Nigeria (CBN) directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems.

“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,” Osinbajo said.

“Even central banks all over the world will have to rethink their roles since blockchain 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 blockchain technology, or they will be taken over by blockchain technology.

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

Osinbajo further said 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 cost N25 billion in the past few years. These are excellent policy changes that took place with a lot of pressure from young men and women in the tech and entertainment space,” he added.

“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. Flutterwave and Paystack are in some form of banking or the other.

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

Also speaking at the event, Lanre Osibona, founder and chief executive officer, Foresight Group, said digital transformation was a formidable force for change in Nigeria.

Osibona said concerted efforts are needed 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,” he said.

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

“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.”