Nigeria Stock Exchange Limited is to launch a blockchain-powered exchange platform in 2023 to attract young investors and facilitate more transactions. 

As a leading integrated market infrastructure in Africa servicing the continent’s largest economy, the Nigerian Stock Exchange enables companies looking to take advantage of the financial markets to access the capital needed to expand their business. 

As interest in distributed ledger technology grows, the move follows an introduction of new guidelines to regulate trade in digital assets at a time when regulators and businesses are opening up to the prospects of blockchain. 

According to Temi Popoola, the CEO of the Nigeria Exchange Limited, blockchain technology will be used to settle capital market transactions. In an interview, Temi said, 

“Blockchain technology can facilitate different parts of the capital market, whether around the creation of products or facilitation of the Exchange to trade financial assets.”

The concept has come up even in the aftermath of a crypto-market crash highlighted by the Terra blockchain’s failure in May. Since its all-time high in November, Bitcoin has also lost more than half of its value.

In the first three months of the year, Nigerians accounted for a quarter of the transactions on the crypto marketplace, Paxful, trading about $185 million in the period. 

While young Nigerians account for the largest volume of cryptocurrency transactions outside the US, they have largely ignored the local exchange services. 

The Nigerian exchange will partner with a technology firm and get the approval of regulators before the launch in 2023. 

According to Popoola, “For a lot of young and upcoming Nigerians, this is the kind of technology they adopt and we want to see how we can deploy it to grow our market. Digitizing transactions will help attract young buyers looking for diversified products as well as fast and easy access to the market.”

Last year, the exchange had its first complete electronic share offering issued by MTN Group Ltd.’s Nigeria unit. This offering was 1.2 times oversubscribed with 85% of the investors under 40 years.

However, a tech policy analyst at Stears in Lagos, Gbemisola Alonge, believes that besides blockchain, the listed companies should be able to deliver returns to attract the target investors. 

Alonge is quoted saying, “It’s almost impossible to think of blockchain without including cryptocurrency, so if the adoption is not in agreement with the Central Bank’s position, there may be scepticism from investors. ” 

Last year, the Central Bank cited a threat to the financial system and prohibited commercial lenders from transacting or operating in cryptocurrencies. At the time, Nigeria’s SEC said this was to protect investors and make the market more transparent.

Nigeria led the way in Africa with the introduction of the eNaira last year to boost financial inclusion and blockchain technology has since continued to spread across the continent.