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Nigeria’s Central Bank Warns Against Cryptocurrency Investments, Again

Last Updated March 4, 2021 5:06 PM
Iyke Aru
Last Updated March 4, 2021 5:06 PM

Nigeria as a nation is popular for its peculiarity on how to interpret events, developments and innovations, especially when it has to do with technological disruptions. Often times, this popularity happens for the very wrong reasons, but in the long run, the dust usually settles and ideas take off with the correct solutions that they have to offer.

The Dark Years of Cyber Fraud

Between the final years of the 20th century and the very early years of the new millennium, the internet found its way unto the shores of the most populous black nation in the world. Despite the uncountable benefits that the new technology brings like we see and experience today, it was an effective tool in the hands of bad players who carried out different forms of scams and internet fraud. As a matter of fact, the stigma left by this development is yet to be erased completely as most online transaction websites still do not allow transactions passing through the Nigerian cyberspace.

Such developments as mentioned above may not be peculiar to Nigeria or Africa, however, the absence or rather slow rate of advancing the positives that come with new innovations makes it easy for bad players to overshadow genuine developments. Therefore a trend of sinking before attempting to climb out and thrive becomes repetitive.

Insufficient Human Capital Investment

This slow rate of positive advancement can be largely attributed to the lack of adequate investment in the young people in the areas of education and health infrastructure by the nation’s leaders, both past and present. This is a deficiency that was clearly noted by the Co-Chairman of the Bill and Melinda Gates Foundation , Bill Gates during his recent visit to the country.

Gates further defended his criticism of the nation’s approach by saying:

“As a partner in Nigeria, I am saying the current plan is inadequate. Nigeria has all these young people and the current quality and quantity of investment in these young generations; in health and education just isn’t good enough. So, I was very direct. “If they can get health and education right, they will be an engine of growth not just for themselves but for all of Africa.”

Clearly, this lack of proper human capital development leaves a vacuum that is usually filled by desperate actions by the youths who employ their wits in any way they deem appropriate for the sake of survival.

Desperation is not exempted as one of the major forces behind the initial general opinion that was created with the influx of all manner of ponzi schemes within the past 18 months. These schemes camouflaged themselves under the umbrella of Bitcoin and cryptocurrencies, parading different forms of investment plans that have led to citizens losing their wealth to con artists and scammers. Apparently, it all boils down to the lack of proper knowledge and education, coupled with the ‘get-rich-quick’ mentality that is prevalent within the country.

An Institutional Warning

As a result, regulatory institutions seem to be currently responding by seeking ways of protecting the citizens from misguided investments. This is evident in the recent statement that was made by the Manager in charge of Research Department at the Nigeria Deposit Insurance Corporation (NDIC) , Mr. Adikwu Igoche.

Igoche clarified that cryptocurrencies were not deposits or financial instruments authorized by the Central Bank of Nigeria, CBN. Therefore, such instruments “are not insured by the NDIC” and if anyone loses his money trading in the business, the person does so at his own risk.

“These forms of currencies are not backed by any physical commodity, such as gold or other precious stones. “They do not belong to the category of currencies or coins issued by the CBN or the central bank of any other country,” Igoche said.

Proper Education Matters

According to him, the NDIC will not relent in sensitizing Nigerians to financial, operational, legal and security risks they face by patronizing ponzi schemes and digital currencies.

Apparently, for the umpteenth time, someone from the authorities lumps digital currencies and ponzi schemes together. This is a scenario that does not usually go down well with digital currency enthusiasts and blockchain experts both within and outside the country. This raises the question whether the agencies will continue in its traditional reactive approach of damage control or tow that path of Bill Gate’s advice by investing in human capital, especially in areas of health and education. By doing so, youths within the nation may become discouraged from such desperate measures that they are becoming used to while equipping themselves to differentiate between genuine technology and fraudulent practices.

Featured image from Shutterstock.