Why Nigeria Is Leading The Way With Cryptocurrency In Africa

March 26, 2021

Cryptocurrency has exploded after the past year or two. It was once something that was viewed as a rich man’s activity, but more and more regular people have realised the money making potential of crypto’s.

Crypto’s are definitely something you need to consider for the future, and one nation that is seemingly leading the way in crypto investment is, surprisingly, Nigeria. They have burst onto the scene as a group of people heavily invested in the crypto world. 

Why Nigeria

Nigeria has recently come out of its second recession in five years, and recessions are almost always responsible for forcing people to find alternative ways to save and make money, to ensure they are better off than they were in the recession, or to protect themselves if there is another. 

One of the biggest problems that Nigerians face is the fact that the Central Bank of Nigeria devalued the naira by 24% last year, with fears that a further 10% devaluing could happen this year. 

Tie this together with the fact that their currency is getting weaker, while goods and services are obviously getting more expensive, you have a situation where people need investments and wealth that is not in their own currency. 

Many Nigerians have begun recovering from the recession, but while their naira wealth is increasing, their dollar wealth isn’t, due to the devaluing. This is why millions of Nigerians have moved into crypto, with about a third of all Nigerians in the crypto game. 

There has been a massive ad campaign in Nigeria promoting crypto’s, mainly Bitcoin, but Nigerians have jumped on the bandwagon in full force, and have spread their money across multiple coins, and have taken the leap very seriously, not just blindly investing either. 

Why Cryptocurrency

Most people invest in crypto for 2 reasons, to make money, and to hedge against the banks. The first reason is self-explanatory, but the second reason is why there has been a massive crypto boom in Nigeria. 

The naira is currently very volatile, and the dollar is obviously a lot more stable, therefore many Nigerians are taking their naira and transferring into crypto’s and at quite a high rate, ensuring their money is protected. 

While there is a large group of Nigerians who have become fully fledged investors and traders, most Nigerians just want to store their money somewhere where their own economy and banks can’t devalue it. 

There has been a major stumbling block though. In 2017, the Nigerian central bank banned banks from dealing with crypto transactions. This ban went largely unenforced though, that was until earlier this year. 

On the 7th of February, the Central Bank came out with a blanket ban on crypto trading, citing the need to protect Nigeria against terrorism and illegal activities. This led to some fairly shady and very immoral activities from the bank.

All bank accounts that were associated with trading in crypto’s were frozen, with the account owners unable to withdraw their funds. In many cases, this was done without warning, with only those who specifically asked the bank if this was going to happen, given less than 24 hours to withdraw all their funds. 

While there are workarounds for this, with many Nigerians just reverting to using foreign bank accounts and peer-to-peer trading, exactly what they were doing before Nigeria had any recognised exchanges, many still believe the Central Bank is being too heavy handed. 

Crypto isn’t going anywhere though in Nigeria, with most investors believing it is the best way to invest their money, as well as the method they trust the most, even over the more established method of investing in stocks. 

Many financial experts in Nigeria and across the globe have raised concerns over the blanket ban, as they agree that the trading will happen anyway, and obviously regulating it properly is better than a pointless outright ban. 

The other issue with an outright ban on crypto, is the fact that there will be very large, missed opportunity. Nigeria is the third largest trader, by volume, in the world. Nigeria would be silly to miss out on this. 

Crypto Future in Nigeria

As mentioned already, the outright ban of crypto’s hasn’t slowed down the trade in the slightest, and Nigerians are only getting more and more invested as the weeks and months go by. 

In the end, crypto’s have absolutely soared in Nigeria, the combination of the potential to make a lot of money in the long run, as well as being able to protect that wealth from an economy that has proven to be very volatile, has drawn people to it. 

Many also believe that the once incredibly strong Nigerian economy is weakening, and that citizens need an investment alternative that doesn’t rely on it. The growth in Nigeria has also spurred on growth in other parts of Africa as well. 

Ghana, Rwanda, and Sierra Leone are all a lot more relaxed with their crypto policies, and if Nigerian investors move their business to these countries, crypto growth will follow. However, right now, Nigeria are the leaders, and even ban on the thing that many have seen as something that has saved their future, hasn’t slowed them down in the slightest. 

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