Nigeria orders telecom companies to shut cryptocurrency trading platforms

The directive by the Nigerian government to shut cryptocurrency trading platforms affects websites such as those operated by Binance, Coinbase and Kraken. The move comes as regulators across the globe continue to rein in the exuberance of the crypto sector, following a 2022 crash in prices which led to a slew of bankruptcies, scandals and billions in investor losses.

Subscribe to us on YouTube: http://ow.ly/Zvqj30aIsgY

Follow us on:

Facebook: https://www.facebook.com/cgtnafrica/
Twitter: https://twitter.com/cgtnafrica
Instagram: https://www.instagram.com/cgtn_africa/

Well let’s delve further into this recent decision by Nigeria’s government we are joined by basil ABIA he is a policy analyst and co-founder at panafrican Data Insights company verv Africa Mr ABIA always great to have you on the show with us now of course uh what Nigeria’s government seems to be

Saying is that crypto exchanges in the country are basically contributing significantly to the Nair’s volatility uh its devaluation right now in the market walk us through what what the reasons are behind the government’s latest move is it clear well I think um first of thank you

For being here thank you for inviting me to speak uh most importantly the information was passed across via X um formerly known as Twitter two days ago by the current special advisor of the president on information and strategy U Mr bio onuka and uh that’s the I would say that’s the clearest

Um connection with the federal government in terms of like the policy announcement and according to uh what that tweet or what that post on X said these crypto uh platforms for instance like binance and coinbase were setting Benchmark uh for how the uh Market The Unofficial market prices of the Nara

Against the dollar and other uh currencies well so to an extent what they’re trying to say is that these crypto platforms are now an appendage with which the the narrow is losing its value um again from other quarters is expected that um federal government is looking at the crypto sector as a

Potential uh way to stop certain leakages you know in terms of liquidity leakages um there has also been talks about foreign um remittances from the Nigerians in the diaspora dwindling over the last two years largely due to the Advent or the um reinforcement of um crypto as now a

Viable sector with which Nigerians can use to uh send their monies from uh abroad into the country so if you you you you had an economy that used to takeen roughly 20 to 25 billion uh dollars in foreign remittances and then all of a sudden just after the lockdown

Period in 2020 and the covid period and of course that led coincidentally to the Sprout of crypto uh you start to have lower numbers um there of course some people in government will start to look at the crypto sector as a buing point and just to conclude

That bio Ona um highlighted also that the crypto sector is bleeding the Nigerian economy I have no idea what he means by that but um I think this is the clearest we can get from the federal government with regards the the rationale behind this this crypto band

Well I am curious to know what your thoughts are on this move because uh many have seen it as a sort of U-turn uh on cryptocurrencies uh from this current government because because it had said uh it was all about Market friendly reforms which of course investors loved

Is this move seen as an about face on policy and also regulation around cryptos in Nigeria yes it is um just a week ago the Nigerian Ministry of digital uh Communications uh met with a superstar Hollywood and British actor Idris Elba uh and in the meeting he continuously touted uh cryptos especially with

Regards alternative Finance um as one of the potential sectors for Investments for Nigeria as well as collaboration of course with Idis Alber and the number of things he’s currently doing for those who do not know Idis Elbert has been doing a lot of I would say business

Moves not only in Ghana and in Rwanda and Uganda and Kenya but also in Nigeria so this I I suppose was a business meeting and it’s an opportunity for a top government official to talk to a potential investor and he touted uh crypto as a potential sector for

Investment and only for a week after that government announces this and again whether we like not it a subtle ban a subtle ban of crypto transactions when you uh stop access to these uh particular platforms so it’s a it’s a direct reversal it’s an auto reversal on

The policy um it also sends a lot of shock waves to the Nigerian crypto Community as well as investors who are looking at crypto alternative Finance as another sector that they can invest in Nigerian uh economy uh yeah I mean it for me from my from my own perspective

The lack of policy Direction the lack of policy Clarity is also you know doubling down on why the Nigerian economy is going through what it’s currently going through and the near crisis moment I would say well I’d like to pick up on something you said which is the shock

That it has had on the crypto sector in Nigeria because as you mentioned cryptocurrencies is on the rise in Nigeria according to research of from chainalysis uh Nigeria is actually the second only to India uh last year in the proportion of private wealth which is stored in cryptocurrency so how are

Stakeholders in the sector reacting uh to this news yeah so to just reiterate my point uh the Nigerian crypto community of usly has taken this as a huge shock uh they think that it is tyranical from the government they also think that the government really did not have any idea

What is going on in the sector and ask for uh policy makers in the federal government in Nigeria to come and have a look at what’s happening in the sector and have more clarity um it makes a lot of sense that they would be uh Angry

First foremost uh on a year on year year basis the volume the transaction volume in crypto when it comes to Nigeria the Nigerian Market it’s about 56.7 billion US dollar uh more stats from chain chain analysis the company where you got the start about us being the second larges

In terms of like private wealth storage is that the major reason why we or a number of Nigerians are you know viewing crypto as a a space where they can store their their wealth or the store value is because the NRA is increasingly using the statute as a store value um

Devaluation by over 70% since the um switch to a foreign exchange uh manage Flo system is another reason why of course no one is Thea as a store of value you know I mean if you put the stats I think about we the fourth largest P2P exchange when it

Comes to peer-to-peer Exchange in the crypto sector globally and the major reason for that is again uh because people really do not view the Nar as a store value so where do you have access to to hedging against Nigeria’s inflation and hedging against the the

Nar devaluation you go via P2P and so in P2P you’re able to change your narra to um a usdt a stable coin that is sp against the dollar and when you do that you keep it line follow so that maybe after six or seven months when the is

Devalued by another 30% you can look at your Holdings and say oh wow I actually against inflation and invation well whatever happened to Nigeria’s uh digital currency the enira uh give us a sense of the progress on its adoption uh the government’s plan to make uh that

Currency a main stream as you said right now there’s not so much Clarity in terms of policy Direction yeah there’s no Clarity in policy Direction I think one of the areas for policy fine tuning definitely be our crypto policy just a mess but yeah going back to the e n when it was

Launched in 20 or announced in 2021 it was allowed everywhere globally um I’ve read some IMF papers in fact it was an IMF paper that came out uh last year in 2023 basically uh reviewing the uh progress of the in and as at that time volume transaction

With regards to the Ina uh was very low just about $40 million us according to IMF that IMF paper of course and then there’s more stuff to tell you that um it has been very slow adoption rate is below 0.5% so roughly about 1.1 million Nigerians have used in a 0.5% adoption

Rate is you know this is a country that is posing near 60% in terms of electronic Financial transactions and then you have your um I would say your your own cbdc uh having just 0.5% adoption R there seems to be a problem and a number of stakeholders in

The sector are saying another major reason why um inera adoption is very low is because of infrastructure um Network effect has not taken play for those who are conversent with Nigeria’s Financial technology space there is a a revolution in that space with regards merchants or what they call agent banking so this

Agent banking model is what a lot of financial technology pairs in Nigeria use for penetration and for Network effects so almost every corner right now in Nigeria in both the rural areas or the semi Oran areas or even the open areas there is a stand with someone with

A p machine uh that has access to a number of payment mediums for Nigerians to be able to make transactions wases like transpiring money or paying for um utility bills or even you know um uh putting in some monies in their respective bank accounts uh but then Ina

Isn’t amongst those payment mediums so there has to be a lot of work that the CBN will carry if they want to increase the in adoption it is actually very tough to use I’ve personally attempted using it so I’ll give you my own anecdotal experience it’s really tough

To use U last that I checked the CBN were looking at tweaking the model and one of the things they wanted to include the model was Conta less payment um it hasn’t obviously the desired results because um it’s still not ined still not popular uh maybe because they haven’t built on

Network effects nature of the Nigerian Financial technology space which means that you do more Merchant education you hire more Merchants uh uh you carry out some PR campaigns to make sure Merchants understand how it use and then of course from the user U interface and user experience perspective you make it

Easier to use the platforms to use there also be structural and infrastructural uh backlog you know internet um access while being high in terms of um people that access the internet using mobile um is still a problem we have to talk about that the internet quality is also a

Problem and then electricity and access to smartphones um at the highest level of projections only about 40 million Nigerians out of 217 million Nigerians use smartphones so um again because Nigerians are not using smartphones in their numbers then it’s hard for them to want to look at Ina um as a medium for

Payments very true that’s exactly yeah