Nigeria: A Sleeping Giant in Crypto Space?
When you think about which country cryptocurrency would thrive the most, you would mention tech-savvy countries like Japan and Korea or Economic giants like USA and obviously countries like Nigeria wouldn’t come into your mind. Nigeria has recently gained major traction in its Crypto Space despite the recent ban enforced by the banks in the country. So how great has the crypto adoption been in Nigeria? What is its potential going forward in the digital era?
Nigeria Crypto Adoption
To say that Nigeria is the king of Africa is an understatement, they sure do not have the large landmass like Algeria but they sure do have the biggest population and economy in the continent. Nigeria is also the 27th largest economy in the world but despite its resources, it stands to reason why Nigeria should be higher in the rankings.
Nigeria despite its low Covid cases compared to other nations had also seen its GDP slumped from an average yearly of 7% to 1.5% in 2021. This is obviously due to its overdependence on Oil which covers 9% of its GDP with its buyers like India got into a lockdown. This also means that diminished oil sales mean less money that can be used for innovations and imports.
Nigeria has also been looking to steer away its dependence on Crude Oil by expanding towards other sectors such as Agriculture, Information and Communications Technology and Creative Industries. Nigeria has also been transitioning its economy towards the digital era setting themselves up to one of the continent’s most vibrant tech hubs.
This boost on the ICT Industry was the result of the pandemic with companies desperately seeking remote working solutions and people turning to E — Commerce. As a result of this, Nigeria’s ICT Sector grew more than 8% during the pandemic 2020 and a large part of this increase came from fintech space. Nigeria also has attracted the most fintech funding in Africa at over $134 Million despite the hurdles that this sector still faces such as patchy electric supply, fragmented fiber optic network and a shortage of trained software engineers.
What makes Nigeria appealing to the fintech space is its large population who are still unbanked and present a huge opportunity for digital payments. Nigeria also has the largest youth population in the world with an estimated 70% of the population below the age of 30 and with the increase of smartphone penetration, this makes fintech a thriving sector in the country.
“We’re seeing more and more unicorn companies, companies valued at more than $1 Billion popping up in Nigeria’s tech innovation ecosystem, so that’s only going to grow and grow.” — Tokunbo Afikuyomi, Stears Business Journalist
This is also the reason why Cryptocurrency is so popular in Nigeria with a crypto adoption rate of 35%, one of the highest in the world. Part of this popularity was obviously because of the limited access to monetary service in the country which resulted in the use of cryptocurrency as a more efficient way to make day-to-day purchases. More significantly, people are trying to diversify their portfolio to cryptocurrency is to protect their wealth from the high inflation in the country which recently reaches 17.7% due to the War tensions.
However, amidst the rise of cryptocurrency activity in Nigeria, the Central Bank of Nigeria decided to impose a ban on Banks from serving any customers who have or appear to have dealings in cryptocurrencies. This ban was based on the allegations that cryptocurrency was used to fund illicit activities but instead it proved ineffective in tackling the issues as cryptocurrency transactions continue to grow in the market.
There is also the introduction of eNaira, a Central Bank Digital Currency (CBDC) that was issued in October 2021 as an attempt to encourage financial inclusion within the country. Unfortunately, the limited use of the CBDC and lack of popularity amongst Nigerians present it to be a challenge for mass adoption in the country.
There was an outcry amongst Nigerians for the CBN to overturn the Ban on Cryptocurrency and their voices were heard, as the country announced its attempt to regulate the cryptocurrency space in May 2022. Virtual Asset Service Providers or VASPs have to apply a license to a government on which a mandatory KYC/ AML regulation must be implemented within the platform before onboarding a user. This is good news for the Nigerian Crypto Space and should serve as a boost for its potential in the future.
What is Nigeria’s potential in the Crypto Space?
Cryptocurrency in Nigeria is in a growth trajectory despite all the stumbles like the Pandemic and the recent ban by the CBN. Unlike developed countries such as the USA where Cryptocurrency is viewed more like a commodity or investment, cryptocurrency in Nigeria is solving a problem and that is the lack of access to financial services. Add to that an increasing inflation and a depreciation of value in the national currency, you can see why Cryptocurrency is important for Nigerians as a means of exchange.
This is also not calculating that it is difficult for Nigerians to receive access to global financial services which should be integral to improving the standard of living within the country. Remittance should also be a factor as it forms a very important source of non–interest income to the country which amounted to close to $45 Billion in 2021 and making the process easier through cryptocurrency will be able to drive revenue that a developing nation solely needs.
There is some point in how the decentralized nature could be taken advantage of by bad actors but removing the link between Banks and exchangers isn’t going to solve it. This recent ban only just shifted the liquidity from known sources like the exchangers to unknown sources where the transactions cannot be tracked. Hopefully, the new regulations introduced in 2022 should be able to tackle the issue, as the KYC/AML regulations would help so that only the right people are on board the network.
Putting all this into consideration and with Nigeria being amongst the top 10 highest countries in terms of crypto adoption, the possibility is endless for the country to lead on the global stage. This also should be the opportunity for Nigeria to deviate from its dependence on Oil and carry its youth–dominated population to supremacy in the DeFI Space. All things said, we will have to wait and see the growth from Nigeria in the times to come.
We in Nagaya Technologies Pte. Ltd are excited about the developments in the cryptocurrency space that are going on in a lot of countries. We believe that innovations should be properly balanced with the right regulations in order for the cryptocurrency sector to flourish. This is why we decided to create the world’s first hybrid cryptocurrency called Nagaya that will provide a lot of value to our holders with the proper transparency and regulations. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial