As an analyst with extensive experience in global economic trends and a deep-rooted passion for understanding the socio-economic dynamics of various nations, I find myself deeply moved by the resilience and ingenuity of the Nigerian youth in the face of adversity.
Cryptocurrency trading is rapidly becoming a popular method for generating earnings worldwide, and for Nigerians, it serves not only as a source of passive income but also an increasingly important tool to escape the widespread poverty afflicting their country.
Over the last few months, technology-minded young Nigerians have faced considerable difficulties. Rising electricity costs, escalating fuel prices, growing joblessness, and unfriendly policies have contributed to this hardship, even forcing companies like Huggies and GSK to leave the nation.
Why are Nigerians protesting?
In simpler terms, Nigeria is grappling with an inflation rate of 42%, primarily due to rising food costs and a persistent weakening of its national currency, the Naira (₦).
As an analyst, I find myself grappling with the harsh reality that Nigeria is currently enduring its most severe economic downturn in recent memory. This hardship is palpable and has sparked widespread frustration among its citizens. The cost of a fundamental dietary staple like rice has seen a staggering over-doubling in the past year alone, while the price of petrol, a crucial commodity, has skyrocketed more than threefold within just nine months. This economic turmoil is undeniably taking its toll on the wellbeing and livelihoods of Nigerians.
Current Economic Challenges in Nigeria
As a Nigerian crypto investor, I’ve noticed that our economy has been hit by economic tremors originating beyond our shores. However, it’s essential to acknowledge that we also face domestic challenges, some of which are indirectly linked to the policy changes instituted by President Bola Tinubu upon his inauguration in May.
Currently, inflation stands at approximately 40% – the highest it’s been in nearly three decades. Additionally, food prices have risen an additional 35%. However, despite these significant price increases, the minimum wage set by the government, a figure all employers are required to adhere to, has remained steady at 33,000 naira per month since 2019. This equates to just $19 (£15) in today’s exchange rates.
One contributing factor to the ongoing inflation is a debt issue that President Tinubu has inherited from his predecessor, Mohammadu Buhari. The former government took out short-term loans from the national central bank to cover approximately $19 billion in expenses.
Free Fall of Naira
As an analyst, I can share that I’ve observed a shift in approach by President Tinubu regarding the naira’s exchange rate. Previously, it was pegged to the US dollar, but now, he has chosen to let market forces of supply and demand determine its value instead. This move is significant because the previous strategy was quite costly for our central bank financially.
Consequently, getting rid of the peg led to a significant drop in the value of the naira, surpassing two-thirds of its original worth and briefly hitting a record peak.
Transition to Crypto Trading in Nigeria
During the COVID-19 period, when people started working from home and found new chances for Nigerians, many aspired to secure high-paying jobs or learn trading. Their goal was that the money they earned, if exchanged into Naira, would make up for it. At the time of writing, one U.S. dollar is approximately ₦1590 in Nigerian currency.
As a crypto investor, I’d like to share an interesting comparison: A typical Nigerian youth working for the federal or state government might earn between ₦100,000 and ₦150,000 per month. However, this can be significantly lower if one is unemployed. For instance, an entry-level data analyst makes around ₦26,609, while a newbie crypto trader potentially earns about USD 2000 monthly – which translates to more than the average salary of a government or state employee when converted to Nigerian naira. Similarly, newbie forex traders can earn up to $300-400, also surpassing the minimum wage in the country. This highlights the potential earning power of alternative income streams like crypto trading and forex trading.
Why is Crypto Trading on the rise in Nigeria ?
It’s worth noting that Nigeria is among countries boasting a significant number of people involved with cryptocurrencies. According to recent studies, roughly 35% of Nigerians aged 18-60 are actively participating in cryptocurrency trades or investments, including Bitcoin, as of the year 2023. This figure has been growing at a rate of 9% annually, resulting in an impressive $56.7 billion worth of transactions in 2023 alone. As a result, Nigeria now ranks among nations with some of the most vibrant cryptocurrency trading activities globally.
As a crypto investor, I’ve noticed some intriguing news: Nigeria reportedly has over 13 million cryptocurrency holders, making it the African country with the most crypto enthusiasts. Kenya comes in second with approximately 4.4 million. But why is this number growing so rapidly? What impact will this have on Nigerian society and economy?
Financial Inclusion
Beyond dealing with inflation, it’s crucial to focus on empowerment and financial inclusion for Nigerians, as they are predominantly underbanked and unbanked. A significant portion of Nigerian adults, approximately 70%, lack sufficient financial knowledge, according to KPMG. Instead of relying on traditional banks, many Nigerians utilize or own goods and services from non-bank financial institutions. This signifies that essential financial services like saving, borrowing, investing, and money transfer are out of reach for millions of Nigerians. On the other hand, cryptocurrencies offer a simple, swift, and cost-effective method for participating in the global digital economy without the need for regulation, identification, or intermediaries.
Freedom and Privacy
Historically, Nigeria has been marked by strife in its social and political landscape, violations of human rights, and widespread corruption. Many Nigerians have voiced their discontent with the government’s strategies and actions, particularly concerning the management of the economy, security matters, and the response to the COVID-19 crisis.
As an analyst, I’ve observed that the #EndSARS movement in October 2020 and the recent #TinubuMustGo protests in August 2024, both significant demonstrations against perceived injustices in Nigeria, have faced suppression and censorship by the government. However, the resilience of Nigerians is evident as they’ve rallied behind the protesters, voicing their disapproval despite attempts to control and monitor them.
Conclusion
As inflation increases, cryptocurrencies and foreign exchange are increasingly becoming popular choices among Nigerians as they navigate economic hardships within their country. These alternatives offer Nigerians opportunities for inclusion and financial autonomy, with potential for higher returns and expanded access to global markets. This trend suggests that Nigeria urgently requires economic changes and policies that can enhance its overall economic situation. However, it’s clear that crypto is becoming more prevalent, and we might see a growing number of users before the year ends.
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2024-08-14 13:26