Cryptocurrencies: Why Nigeria is a global leader in Bitcoin trade

 

More cryptocurrency trading goes on in Nigeria than almost anywhere else in the world, reflecting a loss of faith in more traditional forms of investment, as Ijeoma Ndukwe reports.

Tola Fadugbagbe recalls moving to Lagos from his small south-western town 10 years ago with dreams of brighter prospects.

Instead, the 34-year-old ended up in a series of odd jobs earning the minimum wage to survive - a typical story for many young Nigerians who are just trying to get by.

It was not until 2016 that online adverts for Bitcoin piqued his interest and he began his cryptocurrency journey.

"I started intensive research," Mr Fadugbagbe told the BBC.

"I was spending hours every day watching videos on YouTube and reading articles about Bitcoin. I didn't have much money so I started with $100 to $200."

At the time that we spoke, Mr Fadugbagbe, who now trades full time and teaches budding investors, said he had cryptocurrency worth more than $200,000 (£140,000) in his possession.

"I'll soon be moving into my own house, which I'm building. I have a farm - a very big one - courtesy of cryptocurrency," he laughs gleefully, unencumbered by concerns that he could be inflating an investment bubble that will one day burst.

"No Nigerian comes to cryptocurrency and wants to look back. It's a big opportunity."

Success stories like Mr Fadugbagbe's have attracted millions of Nigerians to digital currencies such as Bitcoin.

A 2020 survey by data platform Statista revealed that 32% of Nigerians are users of cryptocurrencies - the highest proportion of any country in the world.

Estimates show that of the top 10 countries for trading volumes, Nigeria ranked third place after the US and Russia in 2020, generating more than $400m worth of transactions.

Although Nigeria has eased out of its second recession in less than five years, the challenging economic climate remains, making alternative sources of income and alternative currencies attractive.

The Central Bank of Nigeria devalued the currency, the naira, by 24% last year. There are fears of a further fall in value by as much as 10% this year.

Meanwhile prices continue to rise, with food inflation climbing to its highest point since July 2008.

"I'd made naira but lost US dollars. That's when I realised we're hustling backwards"... Micheal Ugwu

When Michael Ugwu, the founder of a media company in Lagos, sold land he owned in 2018, he realized he needed to explore new investment opportunities.

Although his naira earnings had gone up, he was worse of in US dollar terms because of the devaluation.

"I'd made naira but lost US dollars. That's when I realized we're hustling backwards. It was then that I started to look into Bitcoin."

The move to invest in digital currencies has paid off.

"On some of my currencies I've made 50 times what I invested. On Bitcoin it's easily grown 10 times in the last year," he says.

The former banker sees cryptocurrency as an evolution of finance, describing it as "finance 2.0".

Despite the currency's volatility, Mr Ugwu sees it as a valuable tool to "hedge" or reduce the risk of living in what he describes as a high-risk environment.