By Josef Kefas Sheehama
The current age is under the industrial revolution called the 4th Industrial revolution which is fed by the development of digital technologies. With this revolution, cryptocurrencies have become a major component in the future of global trade.
The Bank of Namibia (BON) is on track to finish its cryptocurrency research. Currently, the Bank of Namibia does not recognize or support cryptocurrency ownership or trading. With the growing interest in cryptocurrency globally; the wider acceptance and adoption by institutions and private investors; and the inherent risks associated with digital amounts of money because they are largely unregulated, regulators have reached a point whereby a proactive approach must be taken. This is to either foster the development of this sector to fulfil its potential for financial inclusion or, allow its growth to continue to raise concerns about financial stability and emerging vulnerabilities. We see the ongoing COVID 19 has accelerated the adoption of nascent technologies as we move, in a manner where the government doesn’t necessarily have all the power, toward a cashless, streamlined, and transparent financial system.
The returns that come with cryptocurrency cut across various factors that could contribute to the growth and development of a country. As of today, cryptocurrency is already accepted as a mode of payment in several countries around the world. The possibility of Bitcoin being treated as a globally accepted currency might be an arms-length away. What might also work in favour of this happening is the fact that Bitcoin is not tied to any particular country’s banking system or economy. With the value of most cryptocurrencies experiencing an upswing. As a result of the extensive benefits of cryptocurrency and Namibia’s reluctance to embrace the future, our country is at risk of being shut out of the future economy. If Namibia does not embrace cryptocurrency as a viable method of payment, a foreseeable scenario might emerge in which a whole sector of the economy switches to cryptocurrency in a deliberate attempt to keep Namibia out of the economy. As Namibia finds itself at a crossroads of prohibition and regulation in its cryptocurrency rendezvous, globally the trend towards permissive regulation recognizes the freedom of choice given to people to use a medium of exchange other than fiat money backed by the central bank.
Furthermore, reindustrialization is an economic, social and political shift towards consolidating national resources for the primary goal of re-establishing industries that were once flourishing. Namibia needs to realize that a reinvigorated national economy lies at the heart of sustainability, growth and economic desirability. For Namibia to succeed in entering Industry 4.0, maintaining competitiveness, and taking advantage of an industrial revolution in its infancy, some forms of reindustrialization are required. It is important that Namibia embraces the many opportunities provided by this emerging tech, utilizing it to the fullest to drive economic growth and prosperity. We certainly see opportunities as the Bank of Namibia and NAMFISA have already initiated the process of exploring blockchain-based solutions. It is estimated that Cryptocurrencies have a USD 2 trillion market cap and have quickly become a small percentage of world GDP, which is at USD 85 trillion. Namibia must embrace crypto for innovation and efficiency and establish guard rails for consumer protection to get the best out of this decentralized technology.
Namibia has yet to enact laws governing cryptocurrencies, meaning that, the legality of crypto remains unclear. Namibia’s stance is based on the fact that cryptocurrency is not minted by a central authority, conflicting with Namibia’s Bank of Namibia Act, which grants the Bank the sole power to issue notes and coins denominated in the Namibian dollar. As the banks decrease in size, their existential threat to the economy will fall since smaller entities pursuing their financial self-interest aren’t as consequential as larger entities that do so. Despite unique of cryptocurrencies, their underlying technology, and associated markets can pose risks to monetary and financial systems such as fraud, manipulation and financial crime amongst other things.
Moreover, with evolving global trends in the world’s financial sector, Namibia is really lagging behind. The need for the Namibian government to review the financial services sector and completely revolutionize institutions and soft structures cannot be overemphasized. If Namibia wants to be part of the technology jet set, the time to do this is now. As a result of the widespread benefits of cryptocurrencies and the reluctance of Namibia to embrace the future, our country risks being excluded from the future economy. If Namibia does not embrace cryptocurrency as a viable payment method, a foreseeable scenario could emerge in which an entire sector of the economy switches to cryptocurrency in a deliberate attempt to keep Namibia out of the economy. The lack of an existing legal classification of cryptocurrency should not be the spur to ban its use. The government should take this opportunity to allow individuals to exploit powerful new technology with appropriate regulatory standards. It should accelerate the move in the direction towards enabling trusted digital platforms creating a Blockchain framework for the development of applications based on this technology. The world is moving ahead, it’s time to collaborate and accelerate this journey towards education, research, government and industry adoption.
In conclusion, the need for Namibia to advance its digital transformation road map by leveraging developing trends and emerging technologies such as Blockchain which will significantly contribute towards developing a new economy, integral to securing a stable future for the nation.
Therefore, I believe that cryptocurrency in Namibia has come to stay and its advantages clearly outweigh the disadvantages. Consequently, I call on both the Bank of Namibia and NAMFISA to make an informed decision on how to provide regulations for this product so that it can gradually be integrated into our financial ecosystem.
