In 2019 PwC estimated that as much as $900 billion dead capital is locked up in Nigeria’s residential and agricultural real estate market.
According to the consulting firm, approximately 95% of household dwellings in Nigeria have no title or a contestable title.
More than anything else, Nigeria’s complex land title and documentation process is a major contributor to this problem.
Because of this, it is essential for the government and the real estate industry to actively seek means to unlock the dead capital in the industry.
One way to achieve this is by incorporating blockchain technology into the process and birth about a more secure and transparent system.
Blockchain technology is a decentralized digital ledger system that records transactions in blocks which are secure, transparent and immutable. As the volume of real estate increases daily, there is a pressing need for these transactions to be securely documented to prevent errors, data manipulation and fraud.
In certain countries, blockchain technology has been successfully implemented in the real estate sector. For instance, in 2017, the Indian government partnered with a Swedish start-up company named ‘ChromaWay’ to address the rising incidents of property fraud in the country. Just last year New Town KolKata Development Authority, partnered with Airchains to adopt India’s first NFT-based land mutation. This groundbreaking initiative saw the adoption of 50,000 NFT’s covering 27,000ha of land and representing approximately 1m property records across the country.
According to the report released by Emurgo Africa 2023, Kenya, Nigeria and South Africa received a total of $88.5m (70%) of blockchain funding in Africa. The 2023 global crypto adoption index report released by Chainalysis ranked Nigeria as the second country for the adoption of cryptocurrency in the world. Despite this significant growth of blockchain technology in Nigeria, its integration into the real estate market remains limited. In the following paragraphs, we have a case for why blockchain technology should be ingrained in Nigeria’s real estate ecosystem.
The real estate market in Nigeria is fraught with some challenges. Chief among them is fraud, opaqueness issues and formalization. Africa’s commercial real estate space is a $15 trillion industry but grossly underdeveloped Addressing these challenges would require novel solutions. One major solution is the adoption of blockchain technology.
The Federal Government, recognizing the challenges in the real estate market and the country at large, approved a National BlockChain policy on May 3, 2023. The policy’s potential benefits were improved transparency and accountability, increased efficiency, supply chain management, identity verification and smart contracts.
One of the focus areas for this policy’s implementation is targeted at the adoption of blockchain technology in land registration and record system. Another response to this was a partnership between Distress Property Market LTD and Wallstreet Exchange to tackle the challenges in the Nigerian property market by leveraging the power of blockchain technology. This partnership aims to streamline transactions, increase access to investment and empower individuals through innovative financial solutions.
But how will blockchain revolutionize the market? In the following paragraphs, we have highlighted some of the features of blockchain technology and how Nigeria can adopt it in fixing its dead capital problems.
