In demonstrating the exact substitutional purposes of crypto when it comes to global finance, Africa’s largest country Nigeria - in terms of population and GDP - facilitated a record amount of crypto transactions over the past year. More specifically, the nation completed $56.7 billion worth of crypto transactions from July 2022 to June 2023, indicating a year-on-year growth of 9% (per Chainalysis).
Poignantly, such feat comes amid rabid inflation in the country, an ever-weakening Nigerian Naira (NGN), and of course, an ongoing crypto winter. Paradoxically, it also comes in wake of the Nigerian government implementing explicit anti-crypto regulations back in 2021.
With regards to the former point here, the nation’s bullishness for the likes of Bitcoin and other cryptos of the stablecoin variety pumped as the Naira experienced an almighty crash in the middle of June 2023. Here, one unit of NGN went from equalling $0.0021 to $0.0013 in the space of a week - and has since stayed that way.
On the inflation side of things, hikes were experienced as its President Bola Tinubu tightened fiscal policy measures by scrapping the country’s petrol subsidies (amongst other bold reforms such as lowering restrictions to unify its multiple exchange rates). In turn, this saw Nigeria’s August 2023 inflation levels increase to an 18-year high of 25.8% - which also signalled 8 consecutive months of rising rates.
Per the general sentiment across the nation, Nigeria’s economy - like many others - is also continuing to bear the brunt of COVID-19’s economic impacts.
In addition to contending with these costly macroeconomic policies, Nigerian crypto bulls were dealt a sucker punch back in 2021 when the government began prohibiting banks and financial institutions from engaging in or facilitating cryptocurrency transactions.
Thankfully, with Africa’s ‘youngest population’ hosting a plethora of tech-savvy entrepreneurs and anti-establishment pioneers, a myriad of alternative solutions came to surface - most prominently in the form of CEX-provided peer-to-peer trading services that bypass the restrictions imposed by the bans.
In fact, Nigeria’s crypto-comeback shouldn’t necessarily come as much surprise, as per a 2023 global survey by Consensys and YouGov, it was revealed that the country is the most ‘crypto-savvy’ region in the world (followed by its African cousin of South Africa).
As is evident from these findings, Nigeria is a productive example of how DeFi can serve as a relatively stable solution for economies drenched in inadequate macroeconomic policies that offer zero financial empowerment to their populations.
And although Nigeria doesn’t necessarily fit the category of a ‘developing country,’ these are typically the type of nations that will prosper most from the financial-democratising powers of crypto.
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This article is intended for educational purposes and is not financial advice.
