Can Blockchain Fix Nigeria's Payment Challenges and Transform Its Financial Landscape?

In Nigeria, the frustration of failed transactions is a daily reality for millions. Whether withdrawing cash from an ATM or paying with a card, the odds of encountering errors are alarmingly high. Industry sources report that for every ten transactions, one fails. The situation is worse with POS machines, where one in every six transactions does not go through. This inefficiency hinders businesses and limits access to financial services, stifling economic growth.

A Nigeria-based fintech startup, Zone, is using blockchain technology to address the persistent issues of unreliable transactions, connectivity failures, and slow settlements. Co-founded by Obi Emetarom, Zone's blockchain-powered network allows banks and fintech companies to connect directly, bypassing the traditional intermediaries that often introduce delays and errors. This solution has attracted significant attention from both financial institutions and investors. Recently, Zone secured $8.5 million in a seed round to expand its network domestically and connect more banks and financial services companies.

A different kind of blockchain

The round was led by Flourish Ventures, a mission-driven global venture capital firm focused on fintech. Flourish has consistently championed innovations that unlock the economic potential of markets like Nigeria, where inefficiencies in the financial system can have far-reaching impacts. Zone's vision aligns with Flourish's mission to leverage technology for financial inclusion and economic empowerment.

Unlike the volatile, decentralised nature of cryptocurrency, Zone's blockchain is permissioned and fully regulated by the Central Bank of Nigeria. All participants in the network — whether banks or fintech companies — operate within a regulated environment, ensuring the safety and reliability of transactions.

This regulated blockchain offers a new paradigm in payments. By removing the need for a central intermediary, Zone creates a decentralised infrastructure where financial institutions can interact directly. This direct communication reduces the likelihood of system-wide failures, making transactions more reliable. Because all parties have access to the same real-time information, disputes are easier to resolve. In the case of a false chargeback, the blockchain enables instant reconciliation, giving everyone involved full visibility of the transaction data.

Processing and settlement in one system

Zone's blockchain also serves as both the transaction and settlement processing system. This means the delays and errors typically associated with settling payments are minimised. The system operates efficiently, processing transactions and settlements simultaneously, further enhancing the user experience for both banks and customers.

"In the next 10 to 20 years, we believe payments will become frictionless and powered by blockchain infrastructure." — Obi Emetarom, Co-Founder, Zone

Zone's approach is not just about improving existing systems but reimagining how payments could work in the future. The long-term vision is for payments to evolve into a decentralised structure, similar to how email functions today. Unlike email, payments require regulatory oversight. That is where Zone's hybrid model comes into play — blending the decentralisation of blockchain with the regulatory safeguards that ensure safety and compliance. Zone can build regulatory rules directly into the blockchain, enforcing compliance while giving participants more control over the system.

The broader implications

Zone's initial rollout focused on ATM withdrawals, but the company quickly expanded to include POS transactions. With four of Nigeria's top five banks already onboard, Zone's growth trajectory is clear. Flourish Ventures' support has been equally critical, helping to unlock the potential of Nigeria's economy and ensuring the country's financial system can keep pace with growing demands.

As Nigeria adopts innovations like Zone's blockchain network, the potential for transforming its financial landscape is immense. This technology not only addresses payment failures but could enhance sectors like healthcare, e-commerce, and government services through more efficient, reliable transactions. Zone's model could inspire similar advancements across Africa, enhancing financial inclusion and strengthening the continent's role in the global tech economy.