• Tuesday, July 16, 2024
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Blockchain adoption in the Nigerian maritime space

Blockchain adoption in the Nigerian maritime space

The Nigerian economy is touted to be the largest economy GDP-wise in Africa, and its maritime sector plays a very critical role in achieving this status given the fact that we are very oil export dependent. Despite her economic prowess, the maritime sector, which has about 0.3 trillion USD in economic potential, has been bedevilled by inefficiencies, delays, and corruption for the longest time, thereby retarding growth and development. Given this plethora of challenges, blockchain technology can improve business transparency, accountability, and process efficiency.

With the newly introduced ministry of marine and blue economy, the ministry is saddled with administrative bottlenecks, uncoordinated bookkeeping practices, opaqueness, systemic corruption, and stakeholder incompatibility, among other issues. These factors, in no small measure, contribute to delays in the supply chain, increased costs, income shortfalls, and compromised security within the supply chain. A simple example is a customs field officer having a dispute with a clearing agent about the year of a vehicle and whether the right duty is paid. If these details have been captured via a secured platform that can be digitally API-ed or EDI-ed into the local customs servers and replicated across other affected networks within the Nigerian economy, there will be no need for such disputes, which mostly opens up the system for sharp practices.

“To ensure these issues are adequately addressed, there is a need for a technology-backed new norm across the entire maritime ecosystem. This technology is known as blockchain technology.”

Another clear example is in the case of oil theft, where the absence of blockchain-derived digital information that can be matched with satellite imagery to deter oil thieves is nonexistent.

To ensure these issues are adequately addressed, there is a need for a technology-backed new norm across the entire maritime ecosystem. This technology is known as blockchain technology.

Blockchain technology is a revolutionary concept that has garnered immense attention in recent years due to its potential to transform various industries. At the core of the blockchain lies a decentralised, distributed ledger that records transactions across a network of computers. Unlike traditional centralised databases, where a single entity controls the data, blockchain operates on a peer-to-peer network, making it transparent, immutable, and secure.

The term “blockchain” simply refers to the way data is structured and stored. Transactions are grouped together in blocks, which are then linked in chronological order to form a chain. Each block contains a cryptographic hash of the preceding block, which creates a secure and tamper-proof system. This ensures that once a transaction is recorded on the blockchain, it cannot be altered or deleted without consensus from the network participants.

One of the key features of blockchain technology is decentralisation. Instead of relying on a central authority to validate transactions, blockchain networks use consensus mechanisms such as proof of work, proof of stake, or delegated proof of stake to achieve agreement among participants. This eliminates the need for intermediaries, reduces the risk of fraud, and increases trust in the system.

Blockchain technology has numerous applications across various industries, including finance, supply chain management, healthcare, real estate, and more. In finance, blockchain enables faster and cheaper cross-border payments, while in healthcare, blockchain can secure patient data and streamline record-keeping processes. In supply chain management and maritime transportation, which is our area of focus, it enhances end-to-end efficiency, transparency, and traceability.

From a broad perspective, this novel technology can help improve the maritime space by enhancing supply chain visibility, streamlining documentation processes, improving payment processes, enhancing transparency and accountability, securing cargo tracking and monitoring, enhancing compatibility and collaboration, and finally ensuring regulatory compliance and security, among other numerous benefits.

Blockchain technology presents a transformative opportunity to address the longstanding challenges related to inefficiencies, bottlenecks, and corruption. By enhancing transparency, accountability, and efficiency in logistics operations, blockchain can help unlock significant economic benefits, boost trade competitiveness, and foster sustainable growth. The world is moving in that direction, and Nigeria and indeed Africa cannot be left behind. We must ensure we develop the wherewithal to integrate with the international maritime community in adopting this novel technology in trade facilitation.

However, successful implementation requires signalling from the heads of the executive and legislative arms of government, collaboration among stakeholders, investment in infrastructure, and regulatory support to realise the full potential of blockchain in revolutionising maritime logistics in Nigeria. Once we get it right in Nigeria, the impact will reverberate in the sub-region and beyond.

Patrick Idemudia is a Port terminal expert with 18 years in the maritime industry. He has training and work experience in Nigeria, Benin, Kenya, Ghana, Bahrain, Oman, UAE, Malaysia, the UK and the United states. He is currently based in Houston, TX