Economy
Nigerians Defy Central Bank, Flock to Bitcoin
By: Gerelyn Terzo of Sharemoney
Bitcoin, the leading cryptocurrency, has seen its value balloon by more than 100% year-to-date, soaring to an all-time high of more than USD 60,000.
Nigerians, many of whom are battling poverty, would be hard-pressed to miss out on those gains. This is especially true considering that the unemployment rate in the most populous African nation was 33.3% as of last quarter, with more than 23 million Nigerians out of work.
Enter bitcoin, which has been a safe-haven investment as well as a faster and cheaper payment method for the growing segment of the population that is catching on.
In fact, Nigeria last year rose to the top of the heap for bitcoin trading at $400 million in volume, surpassing transactional volume in nearly every other jurisdiction — with the exception of the United States and Russia — as traditional asset classes lose their appeal in comparison and the local currency, the naira, remains under pressure.
Nearly one-third of Nigerians who participated in a Statista poll said that they used or owned cryptocurrencies, more than any other country represented in the survey.
Source: Statista
Nigeria also stands out in all of Africa, as the top peer-to-peer bitcoin trading nation on the continent based on bitcoin trading volume.
Nigeria’s P2P BTC trading volume surpassed USD 99 million in the first quarter of 2021. Kenya is a distant second at $34.8 million followed by Ghana and South Africa at $27.4 million and $25.8 million, respectively.
Source: Business Insider/Useful Tulips
The robust bitcoin trading activity in Nigeria has earned the country the title of Africa’s Bitcoin Nation. A 27-year-old Nigerian office worker who was spotlighted by the AFP, Chigoziri Okeke, described how he first invested in cryptocurrencies five years ago with the intention of just making a payment.
When his crypto wallet’s value increased by 10% in a few short days, however, he was hooked and started directing a percentage of his salary toward the market. Today, this investor’s crypto portfolio is worth USD 50,000, comprising various digital assets.
In addition, Google searches of bitcoin in Nigeria surpass that of any other jurisdiction, according to Nairametrics.com. Bitcoin appeals especially to the West African nation’s millennial generation, who are looking to the flagship cryptocurrency as a store-of-value asset as well as a way to circumvent the hoops they must jump through to open a traditional investment account.
With the bitcoin price most recently hovering at USD 60,000, Nigerians have reason to be excited. At this price, one bitcoin could reportedly buy someone a three-bedroom apartment in Lagos’ Ajah neighbourhood.
Unstable Fiat Currency
A big part of bitcoin’s popularity is due to Nigeria’s unstable naira. The International Monetary Fund (IMF) has drawn a line in the sand, stating that Nigeria’s fiat currency is “overvalued” by more than 18%. The IMF wants Nigeria to devalue its fiat currency, but the African nation’s government has said no way.
Nigerian President Muhammadu Buhari blames “global outflows” triggered by COVID-19 for the unstable naira and believes that devaluing it further after doing so twice in 2020 would only exacerbate the already sky-high inflation rate, which is currently in the double-digits at more than 17%. This would weaken Nigerians’ purchasing power even more. Nigeria’s central bank slashed the naira’s value by close to one-quarter last year.
Meanwhile, not only has bitcoin been generating returns hand over fist, but it has also been thrust into the global spotlight amid the SARS-related protests in Nigeria.
According to reports, Nigeria thwarted financial payments toward police brutality protests, which only led the supporters to donate bitcoin instead. Twitter and Square CEO Jack Dorsey backed this movement, which only brought more attention to the country and cryptocurrencies.
Source: CoinGecko/TradingView
Mixed Signals
Nigeria’s central bank has been highly critical of bitcoin, warning as recently as February that “cryptocurrencies are largely speculative, anonymous and untraceable.”
Nonetheless, the Central Bank of Nigeria can’t stop the population from accessing the flagship cryptocurrency, thanks to the peer-to-peer nature of bitcoin, which was inherently designed to circumvent third-party service providers like banks.
Bitcoin creator Satoshi Nakamoto, whose real identity remains a mystery, defined the first cryptocurrency in the whitepaper, which was published in 2008, saying:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”
The Central Bank of Nigeria has since backtracked from its remarks slightly, maintaining that it has not placed a blanket ban on cryptocurrency trading. It is a tangled web, however. The central bank instead said that it is doubling down on a 2017 law that bans institutions supporting cryptocurrency transactions.
Even though institutions might be banned from supporting cryptocurrency trading, individuals are still free to trade them. The central bank is sending mixed signals, to say the least, as local banks were instructed by the central bank to refrain from doing business with customers who transact in cryptocurrencies.
“The CBN did not place restrictions from use of…cryptocurrencies and we are not discouraging people from trading in it. What we have just done was to prohibit transactions on cryptocurrencies in the banking sector,” stated Adamu Lamtek, according to Decrypt, citing Today NG.
Since the restrictions were imposed on Nigeria’s crypto trading industry, rather than disappearing, the industry has flexed its muscle for its nimble nature. In a few short months, they have been quick to build P2P exchanges that circumvent the crypto ban on financial institutions.
The restrictions have funnelled more activity to over-the-counter (OTC) venues while a makeshift P2P market is similarly expanding. Danny Oyekan, the founder of global social payments application Coins App, is cited by Decrypt as saying,
“So basically, the ban only forced the fiat channels underground.”
Source: Twitter
In Nigeria, cryptocurrencies are regulated by the country’s own Securities and Exchange Commission, which last year stated that it would classify cryptocurrencies as securities unless they are proven otherwise by the asset’s issuer or sponsor. In February, Nigeria’s SEC said that crypto regulation was going to be placed on the back-burner amid the central bank’s crypto crackdown.
Despite the uncertainty, Nigerians are showing no signs of relenting in their pursuit to own bitcoin and are increasingly relying on P2P trading platforms to do just that.
By Adedapo Adesanya
A 0.91 per cent growth was recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, May 22, after the share prices of four securities ended in green.
According to data, FrieslandCampina Wamco Plc went up by N15.61 to N179.67 per share from N164.06 per share, Newrest Asl Plc grew by N6.11 to N67.26 per unit from N61.15 per unit, Food Concepts Plc appreciated by 17 Kobo to N2.75 per share from N2.58 per share, and Nitrox Industrial Gases Plc added 6 Kobo to sell at N25.50 per unit compared with the previous day’s N25.44 per unit.
At the close of business, the market capitalisation chalked up N23.22 billion to settle at N2.561 trillion versus Thursday’s N2.538 trillion, and the NASD Unlisted Security Index (NSI) increased by 38.81 points to 4,281.28 points from 4,242.47 points.
During the session, the price of Central Securities and Clearing System (CSCS) Plc was down by N3.13 to N71.07 per share from N74.20 per share.
The activity chart showed that the volume of securities transacted by the market participants decreased yesterday by 81.6 per cent to 590,339 units from the 3.2 million units recorded on Thursday, as the number of deals shrank by 28.6 per cent to 30 deals from the 42 deals recorded a day earlier, while the value of securities increased by 0.5 per cent to N95.3 million from the preceding session’s N94.8 million.
Great Nigeria Insurance (GNI) Plc closed the day as the most active stock by value on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 61.2 million units traded for N4.1 billion.
The most active stock by volume on a year-to-date basis was GNI Plc, with the sale of 3.4 billion units for N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units exchanged for N415.7 million.
By Dipo Olowookere
The Nigerian Exchange witnessed a decline in transactions on Friday despite closing higher by 0.22 per cent on the back of sustained bargain-hunting.
During the last trading session of the week, investors transacted 711.9 million equities valued at N29.1 billion in 62,386 deals compared with the 1.1 billion equities worth N31.0 billion traded in 62,448 deals in the previous day, indicating a decline in the trading volume, value, and number of deals by 35.28 per cent, 6.13 per cent, and 0.10 per cent, respectively.
Fidelity Bank closed the day as the most active stock with the sale of 198.1 million units for N4.6 billion, Access Holdings traded 69.7 million units worth N1.8 billion, Mutual Benefits exchanged 42.7 million units valued at N197.4 million, Japaul transacted 33.9 million units worth N134.4 million, and Zenith Bank sold 24.4 million units valued at N3.2 billion.
Yesterday, the industrial goods index rose by 0.53 per cent, the consumer goods sector jumped 0.28 per cent, the banking industry improved by 0.25 per cent, and the energy counter soared by 0.18 per cent, while the insurance space shed 0.18 per cent.
At the close of business, the All-Share Index (ASI) gained 536.98 points to finish at 249,712.37 points compared with the previous day’s 249,175.39 points, and the market capitalisation grew by N344 billion to N160.077 trillion from N159.733 trillion.
Aluminium Extrusion and DAAR Communications expanded by 10.00 per cent each to sell for N9.90 and N2.09, respectively, RT Briscoe surged by 9.93 per cent to N14.06, Learn Africa increased by 9.79 per cent to N12.90, and Red Star Express advanced by 9.56 per cent to N34.95.
On the flip side, Trans-Nationwide Express depreciated by 9.92 per cent to N5.72, Livestock Feeds dipped by 9.64 per cent to N8.90, The Initiates crashed by 8.65 per cent to N33.80, Ellah Lakes drowned by 8.64 per cent to N10.05, and Neimeth lost 6.36 per cent to trade at N10.30.
By Adedapo Adesanya
The Naira weakened against the United States Dollar by N3.15 or 0.23 per cent to N1,375.46/$1 from N1,372.31/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, May 22.
It was also a similar situation for the domestic currency against the Pound Sterling in the official market yesterday, as it lost N9.46 to sell for N1,849.72/£1 compared with the preceding session’s N1,840.26/£1, and against the Euro, it depreciated by N6.26 to close at N1,597.04/€1, in contrast to Thursday’s exchange rate of N1,590.78/€1.
At the GTBank FX desk, the Nigerian Naira tumbled against the Dollar during the session by N2 to trade at N1,381/$1 versus the previous day’s N1,379/$1, and at the parallel market, it remained unchanged at N1,390/$1.
Analysts at Cowry Asset Management Limited, in their weekly financial outlook, have projected the Naira will remain under soft pressure in near term due to continuous FX demand.
“Looking ahead, the Naira may remain under mild pressure in the near term due to persistent FX demand, though rising external reserves could help cushion volatility,” they noted.
Meanwhile, the Central Bank of Nigeria (CBN) this week reiterated that it would continue with its current policy direction to sustain the fight against inflation and stabilise the exchange rate.
This comes as the FX market has changed significantly under the ongoing reforms introduced by the apex bank, with increased market liquidity reducing the need for heavy intervention by the CBN. Its intervention currently accounts for only about 1.2 to 1.3 per cent of total market turnover in 2025, a development he said reflects the growing strength of the market.
Turnover has risen sharply from about $100 million in 2023 to roughly $550 million presently, with transactions occasionally climbing to as high as $1 billion in a single day.
A look at the cryptocurrency market showed that it was down on Friday as Mr Kevin Warsh was sworn in by President Donald Trump as the chairman of the US Federal Reserve, replacing Mr Jerome Powell, who will continue as a governor in the US central bank.
The appointment was made in the hope that he would lead the central bank to cut interest rates, but the Iran war has sent oil prices soaring and re-ignited what had been cooling inflation.
Ethereum (ETH) depreciated by 5.5 per cent to $2,010.90, Dogecoin (DOGE) lost 5.2 per cent to trade at $0.1001, Cardano (ADA) fell by 5.0 per cent to $0.2389, Solana (SOL) slipped by 4.9 per cent to $82.69, and Bitcoin (BTC) slid by 3.3 per cent to $74,950.02.
Further, Ripple (XRP) went down by 2.9 per cent to $1.32, Binance Coin (BNB) declined by 2.6 per cent to $641.61, and TRON (TRX) shrank by 1.2 per cent to $0.3606, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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