From the nation’s deposit insurer, the Nigerian Deposit Insurance Corporation (NDIC) came another strong warning at the weekend, for those allured by the high gains promised by promoters of digital currencies, saying that it is meddling with “uncertainty.”
Besides, the corporation said that while deposit value of the Naira and other major currencies can be ascertained, the value of the digital currency, including Bitcoin, which now are in about 500 versions cannot be ascertained, as well as what influences its value.
The Deputy Director, Research, Policy and International Relations Department, NDIC, Dr. K. S. Katata, admitted that over the last 50 years, technology innovation has been fundamental financial service industry transformation, with majority of them positively converging to drive the next phase of the services.
Explaining digital currency, at the just concluded yearly workshop for financial journalists in Kano State by NDIC, he said that it is a means of payment that only exists electronically and like traditional money (such as banknotes), they can be used to buy physical goods and services.
However, private digital currencies combine new payments systems with new currencies that are not issued by any central bank, popularly among them Bitcoin, including LiteCoin, Ethereum and Ripple. He said that public authorities and central banks around the world are closely monitoring developments in digital currencies and studying their implications for the financial system and the economy.
While some central banks have expressed interest in developing digital currencies, he warned that individual persons have never issued a currency and reiterated that trading in them is more of gambling, which would soon backfire.
Similarly, the Central Bank of Nigeria (CBN) has earlier warned that transactions in these currencies are largely untraceable and anonymous, making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism. Noting that they are trade only in unregistered exchanges across the world, the apex bank warned that patronisers may lose their money without any legal redress in the event the promoters close business or the scheme collapses.
Meanwhile, inadequate presence of financial institutions, among other things, has contributed to the high level of poverty, retarded growth opportunities and low progress in efforts to reduce the number of financially excluded persons in the North Eastern part of the country.
The Director of Development Finance Department, CBN, Dr. M.A. Olaitan, who was represented at the workshop by his deputy, Sani Mohammed, stated that the region has only 3.6 per cent of financial institutions spread, with just five per cent contribution to Gross Domestic Product, despite huge resource.
Olaitan, in his presentation titled: “Rebuilding Financial Infrastructure in the North East”, at the workshop, he lamented high poverty incidence and growing inequality, high unemployment rate, low literacy rate, insecurity, increasing desertification and aridity; parlous level of financial and social infrastructures; declining access to education, electricity, financial services and healthcare in the region.
While elucidating the Distribution of Deposit Money Bank (DMBs) branches in Nigeria, Olaitan said the geo-spatial mapping shows low banking density and penetration in the region. Citing report of the National Bureau Statistics in 2016, he noted that the region is well-known for agriculture, with over 80 per cent of the population engaged in farming and with about 1,794,400 hectares of land under crop cultivation.
He said that the North-East region presents enormous potentials for contributing to the Federal Government’s economic development and diversification agenda, but would require the presence of financial institutions to facilitate the funding.
“The region is endowed with natural resources such as clay, salt and potash, limestone and kaolin deposits, iron ore, uranium, quartz, magnetite, mica and granite” he added. He disclosed that Central Bank will continue to support initiatives aimed at rebuilding the financial infrastructure in the region to ensure access to financial services through low cost channels that can support the economic capacity of the region.
“This collaboration continue to be driven by perceived economic value-added, customer education, ease of usage and reliability, and coverage” he added. He said there are already strong economic and investment potentials, as strategic power projects are situated within the region, such as the Mambila hydro power project; the Bauchi State Yankari Independent Power Project; the Adamawa State Solar and Wind Energy Project; the Gombe State Balanga Hydro-power project; and the Yobe State Green Cowrie Solar Power Plant project.
“For these reasons, a robust plan, with clearly defined strategies, will be needed to drive the financial infrastructure rebuilding within the North-Eastern region and pave the way for long-term economic prosperity and financial inclusion” he explained.
He said the current vision to drive the North-East’s infrastructure redevelopment stems from two Federal Government’s initiatives- the Presidential Initiative for the North East (PINE) 2015 – 2020 and North-East Development Commission (Establishment) Act became effective October 25, 2017.