Real World Asset (RWA) Tokenization can drastically improve businesses in Nigeria, experts in the digital currency space have said.
They disclosed this at a roundtable discussion hosted by Fluent Economic Bridge Africa (FEBA) where stakeholders in blockchain, stablecoin, and cryptocurrency met to discuss the need for tokenization In Nigeria.
Read also: Why Tokenization Initiatives Hold the Key to Africa’s Economic Sovereignty
“Real Asset Tokenization has the potential to improve Nigerian businesses. By creating avenues for credibility, transparency, and inclusion, businesses can grow, and develop easily,” FEBA said.
Tokenization is a process where real-world assets, like properties, artworks, real estate, and anything are transformed into digital tokens on a blockchain network. These tokens are like digital representations of the actual assets, but they come with powers out of the ordinary.
Tokenization, known to be the future of finance, can help businesses reduce costs. Traditional investments often involve hefty fees for intermediaries. With digital tokens, the need for these intermediaries decreases.
The firm noted that the pertinence of tokenization to Africa’s markets cannot be underemphasised.
“If African nations can position themselves as early adopters in the global tokenization revolution, there is no telling how bright the future of their people would be,” it added.
According to the firm, businesses in Nigeria have an economic advantage in tokenization because of the devaluation of the naira.
“I think the devaluation of the naira makes it a perfect time for Nigerian businesses to embrace tokenization. Nigerian businesses can be better when they are no longer pegged against one asset, the US dollar.
“The real value of these businesses will be seen when Nigerian assets and minerals are tokenised. That is, more worth is now placed on the Naira as it becomes investable globally,” John Kamara, founder of Fluent Africa told BusinessDay.
Bradley All good, Co-founder of Fluent Africa continued, “When businesses tokenise assets they own, they can extract value from those assets even if they can’t sell them. The extracted value can then be used as capital for the business.
Read also: What Ubuntu gold tokenization means for Nigeria
“Tokenising business assets make them investable on global exchanges, allowing small businesses to raise capital from international investors more easily and at a lower cost than obtaining loans from local banks. It also addresses issues like capital flights and brings more investment back into the Nigerian economy.”
The global market value of tokenised assets is $116 billion as of 2023 with stablecoins making up the majority. Experts predict the tokenised asset market could reach $10 trillion by 2030.
In Africa, over 100 million Blockchain-based transactions took place in 2021, according to the World Bank. Venture capital funding also reached $306 million, which indicates investors’ confidence in the sector.
