The rate of crypto adoption in Nigeria keeps growing. Beyond being the second-highest country in the world in terms of the number of Bitcoin transactions, Nigeria currently has the highest per capita rate of crypto ownership in the world at 31.9 per cent. The country also has the largest portion of retail crypto traders carrying out transactions below $10,000. Young Nigerians have turned to crypto as a means of investment and even employment – considering the rising number of crypto-focused start-ups in the country.
Unlike other countries such as the US, however, Nigeria is still behind in terms of crypto payment usability. While some companies like Helicarrier (formerly BuyCoins) pay their staff in crypto, there are even fewer companies that accept crypto payments.
In a New Payment Index survey carried out by Mastercard, about six out of ten Nigerians are willing to use cryptocurrencies such as Bitcoin as payment. The index discovered that the adoption of digital payment channels has grown such that 96 per cent of Nigerian consumers will consider using at least one emerging payment method, such as crypto.
If so many Nigerians don’t mind using crypto as payment, why then are more companies not leaning towards accepting crypto payments? I spoke to some business owners operating in Nigeria and the reasons can be summed as the following:
Unlike the naira, cryptocurrency is subject to unpredictable changes in the market, aka volatility. For businesses, a 3 per cent drop in bitcoin’s value can be big enough to generate a massive loss, and that’s a risk business owners are not willing to take.
The policies by the government put in place to stifle crypto transactions in the country are affecting payment usability. There are severe sanctions for breaking the laws around crypto usage in the country and businesses are trying to avoid that. Last week, it came to light that the Central Bank of Nigeria(CBN) imposed a fine of N800 million ($1.9 million) on three banks for allegedly facilitating crypto transactions. Three days later, it fined three more banks N514 million, bringing the total amount to N1.3 billion($3.13 million) for six banks.
The government is unrelenting in its attack on crypto, and this directly affects the usability of digital currencies in the country. The CBN has ignored pushback against this crypto ban and has advised Nigerians to adopt its CBDC, the eNaira.
In a piece detailing the lack of regulatory framework for crypto usability, writer, Bitenge Ndemo, Kenya’s brilliant technologist, wrote, “Blockchain technologies are the future, and any effort to ban them—or even excessively intervene in their operations—would meet the same fate as other state attempts to circumscribe behaviour. Moreover, restricting cryptocurrencies at the moment, when they are facilitating innovations and brimming with potential, would undermine financing of critical sectors like MSMEs, affordable housing, and remittance payments right when Africa needs these options most.”
Considering the challenges, it’s clear Nigerian businesses do not have the backing to promote crypto usability. Maybe in the future, crypto will sufficiently replace the fiat currency, but all it can do for now is complement it in secret, away from the prying eyes of the CBN.