Nigeria, the continent’s leading economy and top oil exporter, has experienced a 9% annual increase in cryptocurrency transactions, totaling $56.7 billion, per a study by New York-based blockchain analytics company Chainalysis.
The study, which examined crypto trends in Sub-Saharan Africa from July 2022 to June 2023, indicated that Nigeria’s growth rate ranked third among the top 50 global economies that saw a rise in crypto activity.
The surge in Nigeria’s crypto market is attributed to a faltering currency and rising inflation, which have diminished the value of the naira and made life more expensive for countless Nigerians.
People across various age groups in Nigeria are increasingly adopting cryptocurrencies like bitcoin and stablecoins as a means to safeguard their savings, hedge against currency devaluation, and explore alternative financial services.
Cryptocurrencies are also being utilized in Nigeria for international payments, remittances, online shopping, and social media tipping.
Despite regulatory obstacles and market fluctuations, Nigeria’s crypto economy continues to expand. In 2021, the Central Bank of Nigeria (CBN) prohibited banks and financial institutions from engaging in cryptocurrency transactions, citing concerns like money laundering and fraud. Nevertheless, Nigerians have turned to peer-to-peer platforms to continue their crypto activities.
According to Chainalysis’ Global Crypto Adoption Index, Nigeria ranks second out of 154 countries regarding grassroots crypto adoption. Nigeria also dominates the region in raw transaction volume, making up over 40% of Sub-Saharan Africa’s total crypto transactions, which amount to $141.6 billion. Despite having one of the world’s smallest crypto markets, Sub-Saharan Africa is highly dynamic, marked by a high degree of innovation and experimentation.
Other nations in the region displaying notable crypto activity include Uganda, with a 245% annual growth in transaction volume reaching $1.6 billion; Kenya, with a 51% annual decline to $8.4 billion; and South Africa, with a 14% yearly decrease to $11.9 billion.
These countries share economic challenges similar to Nigeria, such as currency devaluation and inflation, which are pushing their populations toward cryptocurrencies as alternative financial solutions. Regulatory stances on crypto in these countries vary, ranging from supportive to restrictive.
The study concludes that Sub-Saharan Africa holds immense potential for crypto expansion, driven by its large, youthful population, high mobile adoption rates, entrepreneurial energy, and a pressing need for financial inclusion.
The report advises that regional governments and regulatory bodies adopt a balanced and cooperative approach to crypto regulation to encourage innovation and safeguard consumers.
Source: Business Insider
