LAGOS, Oct 12 (Businesshala) – Nigerian art dealer Ibuka Joseph started using cryptocurrencies last year after trading was shut down due to COVID-19. Now he’s stuck even though the financial authorities disapprove.
“Crypto only allows me to transact freely and within minutes we are done with our transactions,” the 28-year-old told Businesshala from a friend’s studio in Lagos.
Nigeria’s Central Bank barred local banks from working with cryptocurrencies in February, warning of “severe regulatory sanctions” and freezing the accounts of firms it says are using them.
But Joseph’s appetite for crypto, like many in Nigeria, has grown.
For those like him, the clampdown highlights the benefits of using currencies outside the control of central banks, and Nigeria remains the largest market for cryptocurrency trading platforms such as Paxful.
Experts and users told Businesshala that Nigerians are turning to crypto for business, to protect their savings as the naira loses value, and to send payments abroad, as US dollars are often harder to obtain. .
In March, just after the central bank ban, the dollar volume of cryptocurrencies remitted from Nigeria increased to $132 million, up 17% from the previous month, said research firm Chainalysis. Transactions in June were 25% higher than in the same month last year.
Another artist who uses crypto to sell his works, Sly Megida, said that his buyers around the world readily accept the use of digital currencies and they have also protected their finances.
“Naira is stepping back and we are trying to maintain the value of the art,” he said, calling crypto a “currency where people don’t think I am paying too much or too little”.
The Paxful peer-to-peer platform that Joseph uses, Nigeria experienced a 57% increase in trading volume from June to June, while user numbers increased by 83%.
Exchange Yellowcard, which has adopted a peer-to-peer model in Nigeria since February, told Businesshala that usage “continues to absolutely skyrocket”.
Both Paxful, which has opened an office in Abuja to lobby the government to change its attitude towards crypto, and Yellowcard said Nigerians generally turn to crypto for business rather than speculation.
Chainalysis said in a report on African crypto last month that the central bank ban pushed most Nigerians out of traditional crypto exchanges, so many were moved to peer-to-peer systems.
This goes through platforms like Paxful or LocalBitcoins, which test both sides. But other users exchange crypto for Nigerian Naira or other currencies only with people they meet on WhatsApp or Telegram.
As a result, Chainalysis stated that Nigeria’s crypto usage is likely to be even higher than its figures suggest.
However risks remain. In August, the central bank froze the accounts of some crypto users for allegedly receiving funds from illegal forex dealers, leaving many companies using cryptocurrencies reluctant to talk about it.
However, Joseph is adamant.
“You can sell to people outside the country, and they can actually pay in different currencies, which you can always convert,” Joseph said.