The rise of Forex in Nigeria is undeniable. In 2019, the country was the runner-up in terms of the trading volume. Now, it is poised to outperform South Africa. The global pandemic has also given impetus to the industry, and it is growing fast. Here is a look at the figures available today.
Facts and Figures
According to last year’s estimates, the daily turnover of the Forex market has surpassed 6 trillion US dollars, the largest chunk of the volume coming from the BRICS countries (261+ billion US dollars). In 2019, South Africa was the leader, with 20+ billion in daily transactions. Nigeria came second with 314 million USD.
Out of 1.3 million traders on the African continent, roughly 200,000 reside in Nigeria, and 190,000 in South Africa. In 2019, the average trader from South Africa deposited $742.04. For a Nigerian trader, the figure stood at $514.42.
Appeal for Foreign Brokers
By late 2019, Nigeria had already seen rapid growth of Forex, which was connected to relative economic and political stability. Investors were also interested, as Nigeria received US$3.3 billion in foreign direct investment.
The economy looked well, and the national currency was stable. More and more retail traders were looking to benefit from strong Naira. Before long, the currency was very popular on the continent, so Forex brokers could not miss this opportunity.
International companies, including highly respectable brands, started tailoring their services to local needs. Now, Nigerians can open live accounts in the Nigerian naira and save on conversion fees. Traders from Nigeria and South Africa are also particularly valuable for brokers as they make sizable investments.
Unlike South Africa, Nigeria has no legal framework that would regulate Forex so scams are a big issue, as victims are easily lured in. Cybercriminals advertise Forex as a path to instant riches and sell fake trading robots. Hence, aspiring traders need to be extra cautious.
More and more foreign brokerages recognize the potential of the region and brands like ForexTime are licensed by reputable regulators overseas. These include the FCA in the United Kingdom, the FCSA in South Africa, and the CySEC in Cyprus. This ensures compliance with industry norms like protection of clients’ deposits.
In addition to this, trusted companies provide education like a free MT5 download which allows demo trading, so users can apply theory to practice. This is an important benefit that should not be missed out on. While Nigeria is still catching up with other countries in terms of regulations, there are still legitamate opportunities you can explore.
Before and After the Pandemic
In early 2020, the position of the Naira looked unstable, and many pundits expected it to collapse when the pandemic hit. They were right, but only to an extent as the lockdown measures spurred the development of the FX industry.
Of course, the economy has shrunk, and unemployment has shot up, but this is exactly what stimulates interest in online trading. As a result, more and more Nigerians are learning to trade currencies, stocks, and other instruments via platforms and apps. Regardless of any crises, the currency market is still vibrant, and it is open for everyone.
In addition to this, these neophytes are unlikely to give up trading. Even after the virus is gone, they will keep on working on the global markets, which means that Nigeria is going to welcome even more foreign brokerage brands in the future.
To contribute to this growth, modern technological advances make Forex more accessible than ever. A trading platform may be installed on computers and mobile devices. Web-based systems are opened directly via any browser. These platforms are packed with price charts, technical indicators, news, and other tools that make a trader’s life easier, and through global brokers, Nigerians can buy U.S. stocks, speculate on prices for gold and silver, explore derivatives, and have access to many other lucrative opportunities.
Conclusion: Trading Forex in Nigeria
Even before 2020, Nigeria had a booming online trading sector. Now, its growth has been accelerated by the lockdown. Last year, the country was the runner-up in terms of Forex volume, and given the pace of development, it may become the leader on the continent quite soon.