Blockchain Potentials for eCommerce in Nigeria
By providing benefits like transparency, traceability, lower transaction costs, and better transaction monitoring, blockchain can greatly aid eCommerce in Nigeria. Come read our blog to find out more!
Blockchain has evolved into a powerful technology as an electronic ledger system that creates a cryptographically secure and immutable record of any transactions of value. With features including distributed ledger, consensus, cryptography, and smart contracts, blockchain can immensely help eCommerce in Nigeria.
Incorporating a decentralized payment system is a huge step forward in the ever-advancing technology of eCommerce and internet-enabled trade. Nigeria is seeing unprecedented growth in online marketplace purchases, and blockchain can improve this space significantly.
Financial Inclusion Is Key to Driving eCommerce Growth
Nigeria's Central Bank has identified the importance of financial inclusion, highlighting it as a critical aim.
Recent research by Enhancing Financial Innovation and Access (EFInA) shows that blockchain can help address barriers to financial inclusion in Nigeria and substantially boost the economy by as much as $29 billion. This implies that by increasing financial inclusion through blockchain, we will experience growth in the eCommerce sector.
However, EFInA's 2020 Access to Financial Services in Nigeria Survey found that financial inclusion in Nigeria stands at 64%, significantly below the National Financial Inclusion’s goal of achieving 80% financial inclusion by 2020.
Blockchain solutions will go a long way in helping Nigeria achieve greater financial inclusion by addressing key challenges, such as a lack of proper ID, high transaction charges, and lack of transparency. This will, in turn, contribute to eCommerce growth.
Blockchain Potentials in Nigeria
Payments and financial instruments are still a big part of the blockchain's application. According to the International Trade Administration, consumer spending in the eCommerce industry in Nigeria is predicted to rise to $75 billion in the coming years. Blockchain solutions such as cryptocurrency (exceptionally stable coins and central bank digital currencies) can significantly benefit eCommerce in the country.
However, greater trust and confidence will need to be established in this area to attract more merchants and consumers to make use of it. The unbanked and underserved, especially in rural areas, also presents an excellent opportunity for financial service providers riding on the back of blockchain.
Aside from facilitating payments, blockchain can also contribute to the Nigerian economy by enabling efficiency and transparency in supply chain financing. Key areas in which blockchain can be deployed to improve financial inclusion are identity management, payments, access to finance, and land titling and registration. Others include securitization, contract and dispute resolutions, and customer engagements.
Blockchain technology truly has the potential to revolutionize Nigeria's economy. Its key advantages, including transparency and traceability, reduced transaction costs, effective transaction monitoring and compliance, and dynamic pricing, among others, offer tremendous promise for the country's eCommerce.
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