3rd Annual Nigeria Digital Economy Summit, NDES
REMARKS BY HIS EXCELLENCY, PROF. YEMI OSINBAJO, SAN, GCON, VICE PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA AT THE 3RD ANNUAL NIGERIA DIGITAL ECONOMY SUMMIT AT FRASER SUITES, ABUJA ON THE 10TH OF OCTOBER, 2022
Let me thank the Foresight Group and their partners for the kind invitation to be here. And I must say that it is an absolute pleasure to be here with you. First, because I am very interested in technology and the future of technology and what that holds for our continent. And also, because I know that the potential that we have is so incredible that with the right policies and the right approach, we can actually become the world leader in digital technology and all its various ramifications.
So, every gathering such as this is important because as I am sure for me and as I am sure for you, this is a listening, learning and thinking event. Introspection and thinking are what can get us as far as we want to go.
And we are at a pivotal season in human history – people don’t even notice, they don’t think that it is that important, but we are welcoming the third iteration of the Web (so-called Web 3.0 or Web 3).
Already, the changes that are and will be taking place are quite simply mind-boggling. Within three decades, we have seen some of the most astonishing transformations in the way we work, live, learn and do business, beginning with Web 1.0 or Web 1, between 1989 and 2005.
Web 1.0 was a wonder all by itself, although it didn’t have the capacity to sift through internet pages and most information was from directories, from various hard copy directories.
So, as a Law Professor in that Web 1 era, I couldn’t use the web for any useful research. I had to go twice a year to the Institute of Advanced Legal studies in London to do the extra research I needed and I came back on every trip with trunk loads of photocopies for my research.
So, I had to physically go to the libraries, and make the photocopies. Although we had libraries here, the library of the Institute of Advanced Legal studies in London is probably one of the best in the world for research. So, you can imagine going there twice every year at great cost, you can imagine (and my wife will always tease me that people go out of the country and come back with nice things for themselves and their wives but I come back with loads of photocopies).
But between 2005 and today, the Web 2.0 era, we have witnessed the coming into its own of the so-called social web, the revolution of the interactive internet; advanced web technologies which enabled the building of game-changing web platforms like YouTube, Wikipedia and social networks, such as Facebook, Twitter, Instagram, Yelp, MySpace etc, and also the distribution and sharing of data across various platforms and a plethora of user-generated content.
One thing we must note about the Web 2 era, for someone like me, a professor, I can now do research online, I could sift through internet pages (which we couldn’t do in Web 1), ask technical questions, I can actually interrogate specialized websites and visit libraries and data centres online. So, I don’t have to go abroad and bring my data, I can actually do all of my research just using my iPad, and I can have access to an incredible amount of information. This is something that was impossible then.
So, while my productivity level as a Law Professor was probably 10%, now it is a thousand times more. But of much greater moment is that this was also the explosion of e-commerce. e-banking and the grand age of social networks and all its implications.
And now, we are in the early days of Web 3.0. The defining components of Web 3 is what we are going to be talking about today – blockchain technology, smart contracts, decentralized finance (DeFis), tokens, both fungible and non-fungible(NFTs); and the whole range of the token economy.
Unlike Web 2.0 where data is mostly centrally stored, the big advantage in Web 3.0 is that data will be interconnected in a decentralised way and will also be machine-readable.
Decentralised protocols as you know, are at the heart of blockchain, cryptocurrency technology and the whole range of DeFis. So, these systems will be effectively integrated and interoperable and automated through smart contracts. That data would be machine readable is very significant, which is why Web 3 is sometimes described as the Semantic Web. This means that users and machines using AI and Machine Learning will be able to creatively interact with data.
Before this era, what we were talking about was human beings interacting with data, but now, machines with their own intelligence will be able to interact with data.
All these developments mean a whole lot. First is the increasing sovereignty of the user, the user will have more control over personal data. DeFi will mean cheaper and faster financial transactions, as the middle institutions will be retired. This is happening now.
So, this means more room for FinTechs, and not just for banking services but insurance and consumer finance. Even central banks all over the world, have to rethink their roles (and we have been saying this to our Central Bank in various ways that they have to start rethinking the role of the Central Bank). Blockchain will challenge the centralization of monetary authority with all its imperfections.
There is no question in my mind at all that the sovereignty of Central Bank, the way that Central Bank operates – centralized monetary authority is archaic now. It is either the central banking systems all over the world adopt blockchain technology, or they will be taken over by blockchain technology. We are certainly, in my own view, in the last days of the central banking system as we know it. This means the space is open for all sorts of innovations in central banking.
From a policy perspective here in Nigeria, we need to again expand the range of banking licenses available to enable more players in the financial mediation value chain. We must also set clear rules to enable crypto markets and trading in other digital assets.
So, for policy, it is evident that you cannot use the same old banking licenses that we used to have. Many would have noticed that in the past, there was only one type of banking license, the one that cost N25 billion. So, if you wanted to establish a bank, you need to have N25 billion. But in the past few years (excellent policy changes that took place), due to pressure from young men in the tech and entertainment space, the Central Bank has now modified banking licenses and there several types of banking licenses, which is why you have the FinTechs and the Unicorns that you have because they are within the different cadre of central bank licenses that do not require the N25 billion share capital.
So, for example, Kuda Bank and several other banks, obviously have different kinds of licenses. Even Flutterwave and Paystack, have different types of licenses, although they are in some form of banking or the other.
So, now with the new iteration of Web 3, we are going to have to rethink and create other types of licenses that are even cheaper, so that participants can come into that space. One of the things that we will have to do is to change the regulatory atmosphere because you cannot have a situation where you are insisting that people will need to bring a large sum to be able to obtain licenses. Already, there are people doing all sorts of work, and today, the way you are going to have to regulate is to look more at taxes. It is another big opportunity for digital technology and people involved in digital technology. How do you really tax some of the digital companies? There are a lot of ideas and arguments regarding that.
Now, identity in the Web 3 age is a key development. It means the user owns his or her own identity and personal data, unlike what we saw before now, when digital platforms you use, own your personal data like Facebook and market our data as they wish. But with Web 3, we will have more autonomy, and the notion of self-sovereign identity.
With Web 3, each person online will have a unique identifier stored on a blockchain. You can then choose which applications to interact with, by using a digital wallet. The wallet becomes your identity. The wallet then enables you to use various decentralized applications on the internet. This is going to further disrupt financial and other commercial transactions as we know it.
So, banks and other platforms you are doing business with can read the details of your accounts or see the digital assets you own. If you connect your wallet to a particular bank it can, on the basis of your assets that it can see, do a wide range of credit and other banking business as you request. Since banks can see my assets held in blockchain, I do not need to open accounts in the different banks from which I may require credit. This is because I have all my information in the blockchain, I have the web that identifies me.
So, things are changing very rapidly, certainly, it is not going to be business as usual, asset transfers will be simplified, and credit judgments and even debt restructuring can be done seamlessly. (I owe Bank A something, Bank B knows that I owe Bank A, but wants my business, everybody can see my information and they can give all sorts of instructions/arrangements because it is easy for everyone to verify the information). So here we find yet another major opening for new and more efficient digital finance systems and products.
I think Web 3 will also mean that the digitization of government services will come with more options; government agencies can then be smarter, faster and more efficient in delivering their services.
One important area of business is the digitization of government processes and services. Many times, you hear us talking about this ministry being online and that agency being online, but we are far from achieving actual digitization of government services because what that means is that we should be able to interact with government websites, processes and services using our mobile phones and it should be as straightforward, simple and intuitive as that. There should be no obstacles between us and the services. Passport applications, driver’s licenses and all of those other services, there must be an efficient and digital way of doing all those things. This is a whole new area of business that people can go into like the GEEP – the platform that was used to operate TraderMoni and MarketMoni, our revolutionary microcredit for informal traders built using a digital platform. Eyowo, a local completely Nigerian tech company built the platform. This is one aspect of government services.
The whole range of government services will provide excellent opportunities for innovation.
3-D, as everyone here will agree, is also a big part of Web 3. It is the fibre of Metaverse. In a few short years, Metaverse will enable me to sit and study virtually in the library of the Institute of Advanced Legal Studies in London, where I used to travel all the way from Nigeria, and spend weeks making photocopies for research back home. It is impossible today to completely imagine what Web 3 will mean for education, agriculture, medicine and industry.
Just take education, for instance, there is a lot of talk now about how we are going to do science and technology. As a government, we are thinking in terms of STEAM (Science, Technology, Engineering, Arts and Maths) which are very important building blocks for the digital economy and for the future of our country. But then, laboratories are in short supply, there is a lot of equipment that is also in short supply, but think of what the Metaverse would do.
Think of what virtual reality can do for laboratories, for the training of medical personnel and scientists and all of that. You may not need physical laboratories. So much can be done virtually. Tertiary education is not going to be the same. It is very unlikely that for a country this size, with the sheer number of people going to the university every year, we are going to be building brick-and-mortar universities to accommodate them. It is going to be impossible, it doesn’t even make sense. Already, we are arguing about paying lecturers, paying staff.
Online university is the new virtual university, which will be of various kinds and the depth that metaverse would give it is the new direction for education. We can listen to lectures from practically anywhere in the world.
A whole new world is unfolding before our very eyes. Unlike Web 1 and 2 where we were relatively disadvantaged. (In 1989 we didn’t have mobile phones so we could not take advantage of the reach and depth that mobile telecoms gave digital innovation and financial inclusion). We are better positioned to be significant players in Web 3. We have already shown that we have the talent, creativity and acumen to build and grow major tech companies. At the last count, we have 6 unicorns and many on the way.
But we must spend time and investments in the development of digital skills, we must think through these issues (we did that by changing the regimes of banking licenses). We had a sub-group of our Industrial and Competitiveness Council which was on technology. We were able to think through how to license FinTechs, that was how we have what we have today. It is not rocket science, thinking of how to make progress and change policy, thinking of how to make sure that policy is way ahead of development. These developments are taking place every day.
We must develop appropriate policies and regulations that promote rather than inhibit innovation and commerce. We must think of how to promote commerce, not how to regulate it to a point where it frustrates businesses.
We can be world leaders in the Web 3 revolution. Our only limit is our vision.
This annual summit is a testimony to the joint commitment of the government and the private sector to the rapid and value-driven development of Nigeria. I commend the Foresight Group and the numerous local and foreign partners who have sustained this partnership by putting together this Summit and driving conversations on how best to shift the country and its systems into the next phase of digital evolution.
The outcomes of past summits have contributed positively to an improved-policy environment and better governance in the areas of innovation and investment over the years. Amongst other things, the NDES has over the years, helped to foster better understanding between the public and private sectors on the realities and opportunities for Nigeria, and realities and opportunities for the future.
I think that we must work at this summit and do a few more in-between summits, a few more thinking through innovation sessions, we shouldn’t wait for one summit to the other, small groups can think through so many things.
Thank you very much for making the time to attend this summit and also because you are part of the future of our country in the digital space.
Thank you very much, God bless you.