Crypto trading is taking over the world as a means to earn income, but in the case of Nigerians, it is not just to make passive income but, lately, a means of getting out of rampant poverty that’s currently plaguing the land.
The past couple of months has been challenging for tech-savvy youths of Nigeria due to increased electricity tariffs, hikes in fuel prices, increasing unemployment, and unfavourable policies that have driven companies such as Huggies and GSK out of the country.
Why are Nigerians protesting?
Nigeria is facing 42% inflation, driven by food prices and the continued depreciation of the Naira (₦) currency.
Nigeria is experiencing its worst economic crisis in a generation, which is causing a lot of suffering and resentment. While the price of rice, a staple meal, has more than doubled in the last year, the cost of a litre of petrol has increased by more than three times in just nine months.
Current Economic Challenges in Nigeria
Like many other countries, Nigeria has recently seen economic shocks from outside its borders. Still, it also has domestic problems that are partially related to the changes President Bola Tinubu instituted when he took office in May.
The average rate of price increases, or annual inflation, is currently about 40%, the highest level in almost thirty years. Food prices have increased by a further 35%. Nonetheless, since 2019, the government-set minimum wage, which all employers must follow, has remained at 33,000 naira per month, only $19 (£15) in today’s currency.
One factor further driving the inflation is a problem inherited by the current President, Tinubu, from his predecessor, Mohammadu Buhari. The previous administration had requested short-term borrowing from the nation’s central bank to fund $19 billion in expenditures.
Free Fall of Naira
In addition, President Tinubu reversed the practice of setting the naira’s value in relation to the US dollar instead of letting supply and demand dictate market prices. The level was being maintained at great financial expense to the central bank.
However, eliminating the peg has caused the value of the naira to fall by more than two-thirds, momentarily reaching an all-time high.
Transition to Crypto Trading in Nigeria
When the COVID-19 era led to a “work from home” shift and created opportunities for Nigerians, many sought out high-paying jobs and learned to trade, hoping that this earned currency, when converted to Naira, would compensate. As of the time of writing, the U.S. dollar to Nigerian naira is $1 to ₦1590.
Typically, a youth in Nigeria earns between ₦100,000 and₦ 150,000 if working for a federal government or state establishment, and this could be lower if the individual does not have a job. An entry-level data analyst earns about ₦26,609, a newbie crypto trader earns USD 2000 monthly, and newbie forex traders earn UPTO $300-400 due to technicalities. When converted to Nigerian naira, it is more than the government, state and minimum wage paid to individuals in the country.
Why is Crypto Trading on the rise in Nigeria ?
Nigeria is one of the countries with a high proportion of cryptocurrency users and owners. According to research, around 35% of Nigerians between 18 and 60 were actively trading or investing in cryptocurrencies like Bitcoin as of 2023. Nigeria saw a 9% yearly increase in cryptocurrency transactions in 2023, amounting to $56.7 billion. Due to this, Nigeria now has one of the biggest cryptocurrency trading markets worldwide.
According to news, Nigeria has over 13 million cryptocurrency holders, more than any other African country, with Kenya having 4.4 million. However, what are the causes of this fantastic expansion? What effects will this have on Nigeria’s society and economy?
Financial Inclusion
Apart from inflation, there is a necessity for empowerment and financial inclusion. Nigerians are largely underbanked and unbanked. Less than 30% of adults in Nigeria have inadequate financial aptitude, according to KMPG. Nigerians own or utilize goods and services from official non-bank financial institutions. This implies that the advantages of the contemporary financial system, such as saving, borrowing, investing, and money remittance, are unavailable to millions of Nigerians. Conversely, cryptocurrencies provide a quick, easy, and inexpensive means to participate in the global digital economy without requiring regulation, identity, or middlemen.
Freedom and Privacy
Nigeria’s past has been marred by social and political turmoil, human rights abuses, and corruption. Many Nigerians have expressed dissatisfaction with the government’s policies and actions, particularly regarding the handling of the country’s economy, security, and COVID-19 pandemic response.
For instance, the #EndSARS campaign, a wave of protests against police brutality that took place in October 2020 in Nigeria, as well as the just concluded #Tinubumustgo protest in August 2024 was suppressed and censored by the government. Nigerians have supported the protestors, expressed their disapproval, and eluded government control and monitoring by using cryptocurrencies. Additionally, cryptocurrencies provide a certain level of privacy and anonymity that can shield Nigerians from fraud, identity theft, and harassment.
Conclusion
With inflation rising, crypto and forex remain a go-to for Nigerians as coping mechanisms for hardship in the country. These alternatives offer Nigerians inclusion and economic freedom, promising higher earnings and increased global market access. This trend, however, underscores Nigeria’s desperate need for economic reforms and policies that will improve the country’s economic predicament. However, crypto is here to stay, and there might be an increase in the number of users before the end of the year.
Also Read: Top 5 Crypto ‘Play-to-Earn’ Games That Are Winning over Nigeria
