As central banks across Africa contend with the complexities of modernising their financial systems, the Central Bank of Nigeria (CBN) has emerged as a trailblazer, setting an example for how regulation and innovation can work in tandem to drive financial progress.
Unlike counterparts in countries that remain hesitant to embrace emerging technologies, the CBN has taken bold steps to integrate blockchain, CBDCs, and other fintech advancements, paving the way for a more efficient, diverse, and inclusive financial ecosystem in Nigeria.
Recently, CBN’s approval of a pioneering partnership between NIBSS and Zone—a first-of-its-kind initiative to conduct Payment Terminal Service Aggregator (PTSA) functions on a regulated blockchain—has garnered significant attention.
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This move not only strengthens Nigeria’s financial infrastructure but also sets a precedent for integrating blockchain within a regulated framework on a national scale, a feat yet to be achieved globally. “By marrying blockchain’s decentralised capabilities with the rigour of regulatory oversight, the CBN has positioned Nigeria as a global leader in financial innovation,” said Oluwadamilola Ademuson, e-Payments banking executive.
A vision for regulated innovation
The CBN has long recognized the value of proactive regulation, which enables rather than stifles innovation. This unique stance has allowed it to lead Africa’s digital financial transformation, focusing on effective regulation that promotes growth.
This vision has manifested in concrete ways. The introduction of NIBSS Instant Payment (NIP) in 2011 revolutionised financial transactions in Nigeria, enabling millions to experience real-time payments for the first time. By 2022, NIP transactions surged to 5.2 billion, a 613.1 percent increase from 729.2 million in 2018, highlighting its significant impact on the nation’s payment landscape.
Similarly, the introduction of local banking card schemes, such as Verve and AfriGo, has significantly reduced Nigeria’s reliance on foreign payment systems, enhancing accessibility and affordability across diverse socioeconomic groups. Verve, for instance, was the most used card in 2019 and 2020, accounting for 65 percent and 38 percent of e-commerce and POS transactions in Nigeria during those periods, respectively.
Additionally, the launch of AfriGo by the Central Bank of Nigeria in 2023 aims to further deepen cashless payments and transform the Nigerian payment system. The introduction of eNaira, Africa’s first official digital currency, showcased CBN’s ability to recognise and deploy cutting-edge technology that strengthens Nigeria’s financial infrastructure while promoting inclusivity.
By endorsing these innovations, the CBN demonstrates a unique understanding of the importance of technology as a tool to empower citizens, enhance security, and increase efficiency within Nigeria’s payment ecosystem. Yet, it is the recent endorsement of the partnership between the Nigeria Inter-Bank Settlement System (NIBSS) and Zone, Africa’s fastest-growing payment infrastructure company, that perhaps best exemplifies CBN’s commitment to regulated innovation.
A global first: CBN’s endorsement of NIBSS’ use of blockchain tech
In an unprecedented move, CBN recently approved a partnership between NIBSS and Zone, authorizing them to conduct Payment Terminal Service Aggregator (PTSA) functions on Zone’s regulated blockchain network. This marks one of the world’s first instances of regulator participation in a permissioned blockchain consortium, potentially redefining how financial regulations and decentralisation intersect on a global scale, positioning Nigeria as a leader in decentralized financial innovation.
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This partnership is groundbreaking in its scope. By leveraging Zone’s regulated blockchain—Africa’s first Layer-1 blockchain network for payments—the PTSA functions gain unmatched security, transparency, and efficiency. The CBN’s endorsement of this initiative signifies not only a bold step forward for Nigeria’s payment infrastructure but also a broader shift in how blockchain technology can coexist with traditional regulatory frameworks to create a more resilient financial ecosystem.
Through Zone’s blockchain-powered infrastructure, the NIBSS-Zone partnership enables direct interaction between NIBSS and financial institutions via a dedicated blockchain node within NIBSS. This setup allows NIBSS to embed PTSA functions within each node on the Zone Network, thereby streamlining compliance for PoS providers and eliminating unnecessary points of failure.
Additionally, the Blockchain node deployed within NIBSS enables real-time access to transaction records and continuous monitoring of PoS terminals nationwide. “The partnership between NIBSS and Zone is more than a milestone for us; it’s a testament to what’s possible when innovation and regulatory foresight come together.
By connecting Nigeria’s financial ecosystem to Zone’s decentralised network, we’re establishing a standard of reliability and transparency that will redefine payment processing, not just for Nigeria but as a model for Africa and beyond,” says Obi Emetarom, Co-founder and CEO of Zone.
The CBN’s forward-thinking approach in supporting this partnership highlights its understanding of blockchain’s potential to offer frictionless, secure, and compliant solutions—capabilities that can fundamentally transform the payments ecosystem. This endorsement demonstrates CBN’s commitment to staying ahead of global trends while protecting user interests through vigilant oversight.
An example for Africa’s Central Banks
As CBN pioneers these initiatives, its actions reverberate across Africa, providing a model for other central banks grappling with the challenges and opportunities presented by new technologies. While many regulatory bodies view innovations like blockchain and CBDCs with caution, the CBN’s approach has been refreshingly open.
In the past, many African countries relied on traditional financial frameworks, cautious of the risks associated with new, complex technologies. Yet, CBN’s endorsement of innovations like eNaira and blockchain-powered payment networks demonstrates that central banks can maintain effective oversight without impeding progress. Through its proactive stance, CBN is sending a clear message to its counterparts across the continent: regulation and innovation can—and should—go hand in hand.
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CBN’s achievements reflect an important paradigm shift. Its ability to quickly understand emerging technologies, assess potential risks, and enact thoughtful policies has positioned Nigeria as a leader in Africa’s digital financial space. By building a resilient yet forward-looking financial ecosystem, CBN has not only improved Nigeria’s financial infrastructure but also encouraged other African regulators to rethink their approach.
Dada is an investment analyst.
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