With a population of over 185 million citizens according to World Bank statistics, Nigeria is certainly Africa’s most populous country and one of the largest economies on the continent. The country is blessed with many important and valuable natural resources which provide means of foreign exchange and revenue for its teeming population. It’s most important resource is Crude oil – otherwise known as ‘Black Gold’, the chief revenue-generating resource accounting for up to 80 per cent of the country’s economy.
The Oil and Gas industry in Nigeria has suffered many years of economic wastage due to loopholes in the accountability system. The sector could benefit immensely from the new innovative and efficient store of value that is Cryptocurrency.
The Blockchain System
The Blockchain is a decentralized system of records that can seamlessly store and transfer transaction information via a peer-to-peer system that is autonomous of any central authority.
Data on the system is constantly encoded and time-stamped and onto a continuous link of ‘blocks’ known as the ‘Blockchain’. It is a very secure system, as all the pieces are interlinked and at whatever point changes are made, the whole chain gets updated with the latest information.
Plugging Financial Leaks
The main challenge with the oil and gas sector in Nigeria is financial and resource wastage and lack of transparency in remittances. Cryptocurrency adoption can help solve the latter by utilizing the secure Blockchain to bring down transaction costs and ensure transparency by saving a logical copy of all transaction records. In this way the industry can avoid the need for costly and time-consuming audits and settlement.
According to a report by Nigeria’s oldest indigenous accounting firm, Deloitte, ‘Blockchain could also lead to increasing database and trading efficiency, improving transparency and compliance, addressing cyber threats and even improving the supply chain, through more seamless contract management’. Experts from the firm were quoted in the report, saying the challenges development is posing to orthodox models across the world, required proactive measures to mitigate the impact of the trend, especially in Nigerian kind.’
Challenges to Implementation
Cryptocurrency adoption still has a long way to go in Nigeria at the moment. The Central Bank of Nigeria does not yet regard it as a valid medium for citizens to carry out transactions, although this technology is making waves in other parts of the world. It would be seen that the main impediment to adoption of digital currencies in Nigeria is the lack of a legal framework recognizing it as a valid store of value.
The report further went on to say that for the system to work on a scale as big as the Nigerian Oil and Gas sector there must be commensurate institutional technological investment and cooperation by top level government.