Nigerians Stick With Cryptocurrencies Despite Central Bank Restrictions
The Central Bank of Nigeria, which has attempted to crack down on the country’s booming cryptocurrency trade. (Wikimedia Commons)
Nigerian cryptocurrency trading has remained strong in recent weeks, in defiance of a February 5 central bank order barring banks from processing crypto-related transactions. The move had closed accounts linked to cryptocurrency exchanges and threatened violators with “severe regulatory sanctions.” But traders adapted by using peer-to-peer markets, which allowed individuals to buy and sell digital currencies to each other online.
Since the central bank announced its decision, Bitcoin has only grown stronger against the Nigerian naira. As of March 2, one bitcoin traded for about 34,000 nairas, up from around 17,400 on the day of the ban.
The Central Bank of Nigeria (CBN) says it targeted cryptocurrency trading due to concerns over its volatility and unregulated use by non-state entities. In a press release clarifying its decision, the CBN wrote, “Cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.”
However, many Nigerians are undeterred by the CBN’s dire warnings. They consider investing in cryptocurrencies as one of few paths to prosperity in a stagnant economy. Nigeria’s unemployment rate has tripled since 2015, leaving around half of the country’s labor force either unemployed or underemployed. Bitcoin and other digital currencies offer opportunities for advancement outside of traditional economic structures.
Nigerians also view cryptocurrencies as a means to avoid government regulation and control. In October of last year, young Nigerians turned to Bitcoin en masse in order to skirt a financial crackdown on anti-police brutality protesters. Trading in cryptocurrencies became an effective way for the protest movement to fund its activities without government intrusion. Cryptocurrencies also insulate Nigerians from the unpredictability of the naira, which the central bank has manipulated extensively in recent years. The CBN devalued the currency by 24 percent last year, with some expecting the value to fall by as much as an additional 10 percent this year.
The cryptocurrency craze is not limited to Nigeria. Digital currencies have wide appeal across Africa for many of the same reasons that they have taken root in Nigeria. A deficit of traditional banking sources and a deep skepticism of government monetary policy choices have pushed Africans to embrace new currency innovations, with 54 percent of them in favor of a single global currency, and Africa now representing the continent with the greatest proportion of individual crypto users doing transactions below $10,000. Crypto’s rise in Africa seems unlikely to end anytime soon, no matter how hard governments try to suppress it.