Nigeria is one of the countries with the largest economy in Africa. With a population of over 200 million and an estimated GDP of 477 billion, this country is often referred to as the Giant of Africa because of its great economic potential. Also, it has proven to be a place with a unique opportunity for cryptocurrency adoption.
Studies have shown that Nigeria has the highest percentage (32%) of crypto users in the world. Additionally, between July 2022 and June 2023, the country recorded a 9% increase in cryptocurrency transactions, which amounted to $56.7 billion. This figure shows that Nigeria is one of the largest crypto markets in the world.
In light of these facts, the big question is, “What are the factors affecting the adoption of cryptocurrencies in Nigeria?” In this article, we’ll be highlighting the answers to this question in detail. Make sure you follow through till the end to find out!
KEY TAKEAWAYS:
- Studies have shown that Nigeria has the highest percentage of crypto users in the world.
- The use of crypto has thrived despite the fact that the Nigerian government is trying to control the use of cryptocurrencies.
- Major factors responsible for the adoption of cryptocurrencies in Nigeria include economic and social factors, technological infrastructure, and market dynamics.
- At this pace, Nigeria is on track to be a world leader in the cryptocurrency world.
Factors Impacting Cryptocurrencies’ Adoption In Nigeria
The Regulatory Environment
The Central Bank of Nigeria (CBN) has had a not-so-friendly relationship with the use of cryptocurrencies in the country, evident in the periodic crackdown that has happened. For example, in 2021, the CBN instructed financial institutions in the country to close down the accounts of people who were engaging in cryptocurrency transactions. It also reiterated that, according to its 2017 circular, cryptocurrencies are not legal tender in Nigeria.
Despite these restrictions, the Nigerian government has taken some steps that seem like it is not outrightly against the use of cryptocurrencies. Instead, it wants to engage in the technology in a controlled manner. For instance, Nigeria’s Securities and Exchange Commission (SEC) has recognized the potential of crypto in the financial market and has put in some guidelines to regulate the use of digital assets. Additionally, the central bank launched its digital currency, eNaira, back in 2022. In reality, though, the adoption of cryptocurrency is not really driven by the regulatory environment; the subsequent factors are largely responsible for the crypto boom in Nigeria.
Economic Factors
Nigeria is struggling with high inflation rates and the devaluation of the Naira. These economic issues have driven citizens to look for alternative solutions, and cryptocurrencies have proven to be a good solution. As Naira keeps losing value, citizens are diversifying their investments away from traditional assets to cryptocurrencies, which are less susceptible to economic instability. Moreover, cryptocurrencies are a way for the unbanked population of the country to access financial services without going through the traditional banking system. They can make cheaper and faster cross-border payments without restrictions.
Technological Infrastructure
Studies have shown that Nigeria has the highest rate of smartphone connections and internet penetration rate in Africa. This technological infrastructure allows Nigerians to easily access digital wallets and trading platforms. With the development of user-friendly crypto applications, the average Nigerian can engage with digital currencies. The groundwork of the widespread use of smartphones and accessible crypto platforms helps with the rapid adoption of cryptocurrencies in Nigeria.
Cultural and Social Factors
Nigerians have a strong entrepreneurial spirit, and the potential of the profit they can earn from investing in cryptocurrencies resonates with many. In a country where financial literacy is getting popular among the youth, the decentralized nature of cryptocurrencies is attractive. Social media and peer influences are also significant drivers in the adoption of this innovation.
The rise of active crypto communities on X (formerly Twitter) provides a network of people who share information and encourage each other to invest in digital currencies. This sense of community, alongside the desire for financial independence, has made Nigeria a fertile ground for the use of cryptocurrencies.
Market Dynamics
The promise of substantial profit as a result of the volatile crypto market has attracted investments from seasoned investors and newbies. This is obvious in the large number of Nigerians who participate in Initial Coin Offerings (ICOs) and other crypto-related investment opportunities. Additionally, the rise of crypto exchanges that are tailored to Nigerians has made it easier for them to get involved in crypto trading. These platforms also provide customer support and educational resources to help Nigerians learn more about the crypto market.
Freedom and Privacy
Nigerians have experienced issues like corruption and human rights violations and often look for ways to support these causes with autonomy and privacy. Because it is built on blockchain technology, cryptocurrencies have proven to be a powerful way to bypass government control and surveillance. They can transfer value easily without the fear of being harassed because their identity is exposed.
Final Words
A combination of factors, including economic, technological, and cultural factors, influences the adoption of cryptocurrencies in Nigeria. As the country continues to find its way through the fintech world, it is obvious that the use of cryptocurrencies is here to stay. If Nigeria keeps up this pace and addresses the challenges that come along the way, it will ultimately position itself as a leader in the global cryptocurrency market.
