Nigeria’s National Information Technology Development Agency NITDA,  has showcased Nigeria’s Innovative IT Policy Formulation Approach at the just concluded London Blockchain Conference.

NITDA led the Nigerian delegation at the conference, held from 31st May to 2nd June 2023 at the Queen Elizabeth II International Conference Centre, Westminster, London, United Kingdom.

Director General, NITDA, Kashifu Inuwa who was represented by Dr. Usman Gambo Abdullahi, Director, of Information Technology Infrastructure Solutions, participated in a panel discussion on “Blockchain Innovation Program: Changing Lives Through BSV Education”.

He used the opportunity to inform the global Blockchain community of Nigeria’s innovative approaches toward ensuring nationwide adoption of the technology.

Inuwa recalled that the National Blockchain Policy for Nigeria, approved by the Federal Executive Council on Wednesday 3rd May 2023 was unveiled by Professor Isa Pantami, the former Honourable Minister of Communications and Digital Economy, on Tuesday 16th May 2023.

Inuwa explained that the Policy was developed to help Nigeria’s transition into the digital economy by using Blockchain technology in boosting innovation, improving public services, creating job opportunities, reducing corruption and driving economic growth.

He also recalled that the National Digital Economy Policy and Strategy for a Digital Nigeria (NDEPS) was launched and unveiled by Muhammadu Buhari, the former President, in 2019. “The Policy, anchored on 8 pillars, has Digital Society and Emerging Technologies as one of the pillars. NITDA, being the Policy’s key implementing Agency, crafted the Agency’s Strategic Roadmap and Action Plan, anchored on seven strategic pillars, namely Developmental Regulation, Digital Literacy and Skills, Digital Entrepreneurship, Indigenous Content Development and Promotion, Digital Transformation, Cybersecurity and Emerging Technologies.

“The implementation of the National Blockchain Policy for Nigeria focused on three areas – talent development, innovation, and adoption – is aimed at helping Nigeria achieve, among others, improved transparency and accountability, increased efficiency, enhanced security, financial inclusion and job creation. The NITDA Boss emphasised that this will also help in boosting innovation, improving government services, driving economic growth, enhancing public trust in governance and promoting citizen engagement.

Mr Inuwa noted that there is global high demand for employable skills adding that with a population of over 200 Million, Nigeria accounts for about 50% of West Africa’s population.

He further explained that Nigeria has a significant brain capital and a strong comparative advantage to leverage Blockchain technology to supply highly skilled labour to the global market.

“It is in this regard that the Agency commissioned the National Talent Gap Assessment that resulted in the development of the National Digital Skills Strategy. He highlighted some of the strategies employed by NITDA to ensure Nigeria becomes a leading talent hub for Blockchain innovation and development.

“The NITDA Blockchain Scholarship Scheme with Domineum Blockchain Technology Solutions  is part of the Agency’s grand plan of adding 500,000 Blockchain professionals to the talent pool

“The first batch of the Scholarship programme recorded about 92,000 applications out of which 32,000 have successfully completed the programme and their certificates issued at the launching and unveiling of the Policy.

“It is exciting to note that Nigeria secured the commitment of BSV Blockchain Association through Stefan Mathews, co-Founder and Executive Chairman of the nChain Group, a global Blockchain technology and Intellectual Property holding company as well as Executive Committee member of Bitcoin Association, for subsequent batches of the programme.

“The National Blockchain Policy leverages the successes achieved as well as lessons learned from the implementation of the Strategy,” he stated.#nigeria #policy #blockchains

A lack of clarity over cryptocurrency’s status in Nigeria could make it challenging to collect newly-introduced taxes, experts told Decrypt.

The 2023 Finance Act, signed into law by Nigeria’s outgoing president Muhammadu Buhari, introduced sweeping changes to the nation’s revenue drive, including the introduction of a 10% capital gains tax on profits made in the disposal of digital assets from May 1, 2023. The country’s Security and Exchange Commission (SEC) clarified that digital assets encompass cryptocurrencies, security tokens, and non-security tokens.

It marks another step in the slow march to official recognition of cryptocurrency in Nigeria, which is ranked 11th on the 2022 Global Crypto Adoption Index by Chainalysis.

But experts say getting crypto traders to pay the tax may be difficult. “It is difficult to understand the stand of Nigeria on the issue of cryptocurrency,” said Timi Olagunju, a policy consultant who specializes in technology law.

Olagunju explained that since cryptocurrency transactions cannot be monitored like bank transactions, tax authorities will be at the mercy of crypto traders to self-report their profits on which tax could be levied.

A tax officer with the Lagos state government in southwest Nigeria, who spoke to Decrypt under condition of anonymity, said that the “opaque nature” of some crypto transactions and an aversion to self-reporting taxes in the country will cut deep into possible taxes the government will record from digital assets.

“The government has to hope that digital assets traders report their profits and pay taxes willingly,” the source told Decrypt. “But I’m not optimistic that will happen a lot.”

As of 2021, only 41 million Nigerians had registered to pay taxes, according to the Federal Inland Revenue Services, which collects taxes for the Nigerian government.

Crypto’s uncertain status

The issue is further complicated by the uncertain status of cryptocurrency in Nigeria. In 2021, the country’s central bank, the CBN, ordered banks in the country to immediately cancel their services for customers who buy, sell, or trade cryptocurrencies. It subsequently clarified that while individual citizens are free to trade crypto, Nigerian banks are prohibited from dealing in crypto-assets or—crucially—facilitating payments to and from crypto exchanges.

At the time, the CBN expressed concerns that the anonymity afforded by virtual currencies could foster fraud, terrorism financing—two of the biggest problems the country faces—and volatility.

The effect of the bank ban has been to force users to resort to OTC deals and an informal peer-to-peer market. “Basically, the ban only forced the fiat channels underground,” Danny Oyekan, CEO of investment firm Dan Holdings and social payments app Coins App, told Decrypt at the time.

The SEC reiterated its view on cryptocurrency earlier this month. “Nigerian investors are hereby warned that investing in crypto-assets is extremely risky and may result in total loss of their investment,” said the SEC in a June 2023 circular directed at a fraudulent company using the name of crypto exchange Binance.

With no formal recognition and the government hounding banks that facilitate the exchange of crypto transactions, the new tax may damp down interest in digital assets, said Emeka Ezike, the vice president of Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).

He insisted that taxation without a long-term plan will “dwarf” the potential contribution to the country’s struggling economy.

“But the opportunity here is that the federal government recognized the sector, and that gives it a running ground to negotiate with policymakers for a more friendly process to ensure the market thrives,” Ezike said.

A cloudy future

As Nigeria navigates the complex landscape of digital asset taxation and blockchain technology, the future remains uncertain, yet filled with potential.

In May 2023, Nigeria launched a national policy that will drive its adoption of blockchain technology. Notably, the policy recognizes the legitimacy of cryptocurrencies and cryptocurrency exchanges despite reservations expressed by the CBN and SEC.

The document explains that the National Blockchain Policy will provide a “framework for the use of cryptocurrencies, among others, which can help to mitigate risks such as money laundering and fraud. This can help to build trust in cryptocurrency and make it more accessible to businesses and individuals in Nigeria.”

It hints at the possibility of the Nigerian government establishing standards for the listing and trading of cryptocurrencies on regulated exchanges in the country.

The SEC itself is pivoting towards tokenisation and plans to develop a pilot programme for a permissioned liquidity pool comprising tokenized bonds and deposits.

Still, authorities remain tight-lipped about the status of cryptocurrency in the country. A spokesperson for the Federal Inland Revenue Service declined to comment when contacted.

The new tax policy has raised questions and concerns among stakeholders within the industry who are closely monitoring its impacts, challenges and opportunities.

While organizations like SiBAN acknowledge the significance of the tax policy, they recognise that it also signposts that the “government recognized the sector” which provides for an opportunity “to negotiate with policymakers for a more friendly process to ensure the market thrives.”#tax #nigeria #crypto2023