Why Nigeria Is Becoming Africa’s Fastest Growing Forex Trading Nation?

With more than 200 million people, Nigeria is the most populous black nation on earth. Recently, Forex trading activities in the country have been on the rise. The Nigeria Forex industry executes up to $1.25 million trades daily, and there are many players in the market.

The question is, Why? Why is Nigeria becoming Africa’s fastest growing forex trading nation? Well, there are many factors responsible, and I’ll be discussing them in this article.

• Lack of regulation

The Nigerian forex market is unregulated. There are no rules and regulations to follow, and brokers operate independently. In other words, any Forex broker can spring up at any time without the Nigerian government restrictions.

In other parts of the world and even some countries in Africa where regulation exists, brokers that cannot keep up with the law exit. Rather than going out of business, they re-establish in regions that lack regulation, such as Nigeria.

Similarly, brokers in countries with so many restrictions on Forex will find it challenging to operate conveniently. Again, they’ll escape to do business in un-regulated regions like Nigeria.

With an increasing number of brokers year after year, the Nigerian forex trading industry continues to expand. Lack of regulation puts traders at risk, especially new ones because they won’t differentiate the legit forex brokers in Nigeria from the scam ones.

• Unemployment

As a country, Nigeria has an 8.10% unemployment rate as of 2019, with a youth unemployment rate of 13.96%. For a country of more than 200 million people and about 100 million youths, that’s a high percentage. In another perspective, data from Statista shows the global average unemployment rate in 2019 to be 5.4%.

With such a high unemployment rate, many Nigerians are forced to venture into other viable means of making income. Furthermore, Nigeria’s minimum wage is about $77, so most employed people don’t earn enough. They are forced to venture into other viable means of making income.

When it comes to making money online, Forex trading is one of the most renowned so, it’s easy for Nigerians to pick an interest. Currently, there are more than two million forex traders in Nigeria.

• Profitability

A question most forex newbies ask is “how profitable is Forex trading?”. This is because the concept of trading Forex is sold to them as a means of making money. All forex traders trade intending to make profits.

Most brokers offer leverage that lets traders open large trading positions with a minimal amount of money. Furthermore, the market is very volatile, and currency rates change almost every second. With the right speculation, a day trader has many chances to make wins.

So, forex trading is very profitable to the average new forex trader, who has seen the big dogs in the market.

While that can be argued, it’s no doubt that one can get rich by trading Forex. The market is very risky, but traders manage the risk by acquiring all the necessary skills and investing wisely.

• Internet and IT penetration

Forex trading has existed in Nigeria since the 1970s. However, it was as popular and renowned as today because top financial institutions like banks mainly carried out forex trading activities. Nowadays, you can trade forex from anywhere you are in Nigeria. All you need is a browsing device and internet connection.

According to Datareportal, there are about 85.49 million internet users in Nigeria as of January 2020, with a 42% internet penetration. This simply means that almost half of the Nigerian population makes use of the internet.

Internet and IT penetration have contributed to the Nigerian forex industry’s growth not by making it possible to trade from anywhere alone but also by fostering forex education. Prospective forex traders can learn to trade online by watching videos, reading guides, etc.

• 24/7 Market

The Forex market closes on Friday evening and opens on Sunday evening. So for business days, it’s a 24/7 hour market. Being open 24/7 is one of the advantages the Forex market has over stocks and why it is the world’s largest financial market with a $5 trillion average trading volume.

With this, forex traders have the flexibility to trade at any time, whether it is day or night. Supposing the forex market closes daily like the stocks market; not many Nigerians will have the chance to trade.

Bottom Line

Forex trading in Nigeria is becoming increasingly popular, and many factors are responsible for this. As a fast growing market, this should notify you, as a prospective forex trader, that there are many players in the market. Beware of fraudulent brokers and only invest what you can afford to lose.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes