Mr. Emeka Okoye, the chief architect at Cymantiks Nigeria Limited is a software engineer and he speaks with BUKOLA IDOWU and KEHINDE SALLAH on issues surrounding cryptocurrency regulation in Nigeria as well as the growing impact of fintechs in the financial sector. Excerpts
The debate on the legitimacy of cryptocurrencies has continued to grow, with high level investors and analysts calling it a spam. What is your view?
First, we should look at blockchain which is the technology driving cryptocurrency. People are rewarded with tokens but the problem now is that people are speculating on tokens forgetting that there is also the underlining technology which we can build on. Also, many people think cryptocurrency will take over national currency, it is not going to happen.
Simply because we have a way of shifting value from one entity to another without the involvement of national government or a third party, then everyone thinks everything will shift to cryptocurrency. No, it is not going to happen. In fact, there are a lot of things depicting that it will never happen. For me, I see it as a complimentary currency to existing national currency. The speculation of cryptocurrency is a big distraction. There is so much you can make out of the underlying technology.
Also, cryptocurrency is showing us that national currencies have not helped in unlocking the movement of money to where there might be need for it and that is why people are investing in cryptocurrency. It tells you that people are willing to move funds wherever they want without restrictions. National currencies have restriction, they are regulated. There will be opportunity for regulated currency and there will be opportunities for unregulated currency. So, cryptocurrency is not going to kill national currency, it is not going to happen.
We have seen countries place restrictions on the use and trading of cryptocurrencies and recently the CBN and NDIC alongside with legislators have warned against trading or use of cryptocurrencies. Is this the right path for Nigeria?
For me, I don’t think they are making the right decision. I have already said that to some of the officials of the Central Bank of Nigeria (CBN) as well and I am imploring the CBN to look again unto cryptocurrency. J.P Morgan after saying that it was a fraudulent scheme now said they see value and substance in cryptocurrency and it is not going to go anywhere. Second thing which actually had effect on the cryptocurrency market was the U.S. Senate hearing on cryptocurrency and they were not looking at banning or making it illegal.
People will need to look at it from that point. I was looking at it with some people so, they are looking at that seriously. United Kingdom (UK) is looking at it seriously. So, for the Nigerian government to think of banning, while I can understand where they are coming from, the truth of the matter is that we cannot continue with this kind of attitude towards innovation. Innovation needs smart regulatory culture which is an attitude of allowing innovation to move forward and let regulation follow because at the end of the day it is about the consumer not about the players.
That is what smart regulation is, but we know we don’t have that culture here in Nigeria. My advice to CBN and NDIC and other regulators is that they should start adopting smart regulatory tactic. If they ban cryptocurrency they are outlawing a technology tool and when you outlaw a tech tool, outlaws will use the tech tool and when the outlaws use them, people have to face the consequences. So, it is not a position I support because I see where we can take this.
However, I would say the speculation of cryptocurrency is a big distraction and it is turning the whole internet to be an internet of money rather than an internet of value. This speculation has nothing to do with the value we can derive from it.
Presently what is the value of Nigerian investments in Bitcoin?
Right now, we do I think on weekly basis, we do $4.7 million and I am expecting more. By my count we should have about 12 to 13 crypto exchanges in Nigeria. If you really want to see its implication in Nigeria, think about MMM. MMM was a pointer that things are not alright and this is where CBN and NDIC really need to deal.
How is MMM a pointer in the regulation of cryptocurrencies?
MMM was a pointer that things are not alright, we can’t keep regulating things. It is not going to solve the problem if it goes against the people’s desire, it should be about the people. When we talk of innovative product and service, we cannot use the same laws we used in the old economy for the new economy. The power has gone to the consumer. So, it is really weird that some people will try to come in-between the consumer and his desires and dreams.
More than 2.4 million Nigerians went into MMM, with hundreds of billions of naira. This tells you something, consumers are not happy with things around, they are willing to venture into new things. We have issues of moving wealth in this country that is why poverty is very high. We have a poverty population of over 100 million. Money needs to move so that more wealth is in more hands. These tools give an opportunity for some people to see what they can make out of themselves.
Another point is the sport betting that we have around, the Nigerians betting are huge. The CBN and other regulators need to think very well before banning cryptocurrency, because they are doing no one any good. First of all, do they understand how the internet works? I build a crypto exchange that is not domiciled in Nigeria and they can’t regulate it. Secondly, do they understand that I also have foreign card that they cannot regulate? So, what exactly are they trying to stop? Recently, the IMF chief mentioned that governments need to take a second look, so why is the CBN not trying to follow suit.
Are customers losing faith in the financial industry?
It is not so much about the financial system, this has to do with them seeking wealth. Nigeria has a good financial system although it can be better. Banks are not giving enough credit to people at the bottom of the pyramid. The credit is going to the crème de la crème of the society. Secondly, we have startups who are doing well and the payment system has improved. So, it has nothing to do with the financial system, what is happening here is wealth, we don’t have jobs, so many unemployed youths.
A lot of people are earning below poverty level. What do you want them to do? Jobs are going down every week, some of the Mr. Price shops are closing, and most of the foreigners are closing shops because wealth doesn’t seem to spread but it is concentrated in few hands. That is why crime is high, ‘Yahoo-Yahoo’ is everywhere. So, we need to move money so people can do other things then the economy becomes productive. We are so dependent on oil, oil is a distraction. Every oil economy in the world is moving away and Nigeria is still going to invest in oil.
As fintechs take up more space in the financial space, do you see fintechs take over from traditional banks?
It will never happen, it has never happened anywhere in the world. These are just hypes. Fintech has its niche in the market. Take for instance, you have beautiful fintech companies like Paylater, who are issuing out loans to small people. The way fintech will succeed is if they latch onto the banks, and help banks to do some small things that are too expensive or too costly. So, it is not going to happen. It hasn’t happened anywhere in the world. In fact, a lot of fintechs have been brought over by banks.
How do you think the economy is going to play out in 2018?
The most important thing is that we are not addressing us becoming a productive economy. I don’t think we have even started that discussion. If Nigerian government wants to really sow a seed for better government, they need to start thinking about a digital economy, and they need to start thinking less about oil because, it has no place in our future.
We are a country of 180 million people, so, that means we have human resource to build an army of digital professionals who cannot only solve Nigeria’s problem but can solve external countries’ issues and problems.
I don’t expect so much to happen from this budget because there are things that we need to deal with. We need to deal with corruption and over-blotted government. The government is too costly with overheads at 70 per cent, we don’t have enough to do much. My expectations are really very low and this is a government that is not strong when it comes to technology, they have not even started thinking in that level.