A Stamp of Approval 👌

Crypto finally gets a stamp of approval in Nigeria and A look at Nigeria's Rice Economy

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Crypto finally gets a stamp of approval

Earlier this week, the Nigerian Securities Exchange Commission -- the commission that regulates investment and tradeable financial instruments business in Nigeria -- hinted that (The statement issued is not a regulation) Crypto-assets would be classified as legally tradeable financial instruments.

What are Crypto Assets

According to the SEC, “Crypto Asset” means a digital representation of value that can be digitally traded and functions as (1) a medium of exchange; and/or (2) a unit of account; and/or (3) a store of value, but does not have legal tender status in any jurisdiction. 

It’s been a long time coming

At first, there was a push back from the SEC, tagging crypto assets as being sorta illegal but with an increase in worldwide adoption (the total number of Bitcoin ATMs worldwide increased by 89% within the last year), it was only a matter of time.  

Why it matters

Increase in Value: Like any other currency, cryptocurrencies ( a type of crypto asset) gain their value based on the scale of community involvement. This new legal status conferred on it means that they’d be more use in Nigeria as it’s a better alternative for scarce Foreign exchange, and thus an increase in its value.

Consumer protection: While crypto assets may be legally recognised, it doesn’t mean there won’t be people trying to exploit others. Due diligence has to put in in place to separate the legit from the fake. The legalisation puts the SEC in a better position to monitor and protect the interests of consumers. 

Expect other African countries to respond with similar: With Nigeria being Africa’s largest economy and the first to make this move, this move offers a template for other African countries to follow.

Looking ahead: The SEC says all players in the crypto space are now subject to its regulatory guidelines and approval but it’s unclear what these guidelines would look like.

It’s time to look within

The Nigerian rice economy is projected to reach $6.3billion in 2025 but first, the country must look within and strive to be self-sufficient in local production.

Is this good news? Yes and No. The drastic measures to ensure local rice production and stop rice importation includes border closure and blockage of every means of access to foreign exchange. However, the country currently lacks the production capacity to meet national demand, although it’s working in it.

In the race to attain self-sufficiency, As per Africa Report, Singapore’s Olam has plans to produce 240,000 metric tons of rice in the upcoming farming season, while Aliko Dangote’s company invested $1bn in 2017 to increase the cultivation of rice to 150,000 hectares and set up 10 plants with the ambition of reaching an annual 1 million metric tons by 2022.

On the flip side:  It will have a boost in employment and in the long run, reduce dependence on imported rice where the country can, at least, afford to feed herself by herself. 

How people consume rice in Nigeria: When last did you eat rice? Rice consumption has quadrupled in the last 30 years. This is due to a few factors including increased population and individual needs. The country currently needs almost 7 million metric tonnes for yearly consumption. 

Importation: Nearly 90.07% of global production of rice is grown in Asia. Although Nigeria initially banned the importation of rice from Benin in 2004 and from all its neighbours in 2016, it brought it back after complaints.

Local production:  Only about 57% of the 6.7 million metric tonnes of rice consumed in Nigeria annually is locally produced, leading to a supply deficit of about 3 million metric tonnes. Currently, Nigeria’s overall seed production capacity is at 100,000 tons, satisfying less than eight per cent of the national demand. 

Bottlenecks: About 75% of milled rice production is dominated by small scale millers with basic equipment, hence hindering good quality; poor branding and packaging. This also encourages high-end consumers and smuggling of an estimated one million tons of rice sold to local millers and retailers due to restrictive trade policies. 

The way forward: In this case, the government has the final say. It’s a tough call for the government as West African rice is currently unable to compete with Asian rice which is imported at an unbeatable price. Time will tell if this drive was the right move.

It’s getting better

Source: Beautiful News

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– Ellen Johnson Sirleaf (former president of Liberia)