Nigeria: Over 13 Million Nigerians Hold Cryptocurrencies - UN Report

12 July 2022

No fewer than 13 million Nigerians are in possession of digital assets, as the United Nations Conference on Trade and Development (UNCTAD) has rated the West African country third among countries with the highest number of cryptocurrency holders in Africa.

Latest data from the UN agency's policy brief indicated that the country was trailing Kenya and South Africa, with about 6.3 per cent of the Nigerian population owning or holding cryptocurrencies.

From the country's estimated population of 211 million inhabitants, this meant that a little over 13 million were owners of digital currencies in 2021.

The UNCTAD policy brief put Kenya ahead of Nigeria and South Africa with the highest proportion of crypto-owning inhabitants than any other African country.

Kenya's digital currency ownership of 8.5 per cent as a share of the population was the highest in Africa and the fifth-highest globally.

Only Ukraine with 12.7 per cent), Russia (11.9 per cent), Venezuela (10.3 per cent), and Singapore (9.4 per cent) have a higher proportion of crypto-owning residents than Kenya globally.

South Africa was the second-ranked country in Africa and eighth globally, with 7.1 per cent of the population that owned or held cryptocurrencies in 2021.

Although the Central Bank of Nigeria's (CBN) restriction on banks to allow trading in crypto currency subsist, Nigeria is currently one of the biggest cryptocurrency markets globally.

Six Nigerian banks were in April reportedly fined N1.315 billion by the CBN in the 2021 financial year for failing to comply with the apex bank's directive prohibiting their customers from trading in cryptocurrencies.

However, the Securities and Exchange Commission (SEC) recently released guidelines on the liberalisation of the cryptocurrency market.

Out of the 20 countries that were surveyed by UNCTAD in the latest policy brief, Australia was found to have the least percentage of its population (3.4 per cent) that owned cryptocurrency in the said period.

UNCTAD acknowledged that cryptocurrencies have grown in their popularity because they are, "an attractive channel through which to send remittances."

The United Nations agency also revealed that it found that middle-income individuals from inflation-hit developing countries own or hold cryptocurrencies because they are seen, "as a way to protect household savings."

However, based on its findings, the UNCTAD stated that it determined that, "the use of cryptocurrencies may lead to financial instability risks," adding that their use potentially opens "a new channel for illicit financial flows."

The UNCTAD policy brief added: "Finally, if left unchecked, cryptocurrencies may become a widespread means of payment and even replace domestic currencies unofficially (a process called cryptoisation), which could jeopardise the monetary sovereignty of countries.

"The use of stablecoins poses the greatest risks in developing countries with unmet demand for reserve currencies."

To minimise some of these risks, UNCTAD recommended the imposition of taxes that discourages crypto trading, including "the mandatory registration of crypto-exchanges and digital wallets."

The agency also recommended imposing, "entry fees for crypto-exchanges" or levying taxes on cryptocurrency trading.

Doing this, it stated, would make the use of cryptocurrencies less attractive, even as he prescribed the restriction of cryptocurrency advertisements and the issuing of a central bank digital currency (CBDC).

Meanwhile, the value of global trade rose to a record $7.7 trillion in the first quarter (Q1) of 2022, an increase of about $1 trillion in the corresponding period of 2021, a report by the UNCTAD has stated.

The just-released UNCTAD Global Trade Update revealed that the growth, which represents a rise of about $250 million relative to Q4 2021, was fuelled by rising commodity prices, as trade volumes have increased to a much lower extent.

According to the report, although expected to remain positive, trade growth has continued to slow during Q2 2022.

"The war in Ukraine is starting to influence international trade, largely through increases in prices," the report noted.

It affirmed that rising interest rates and the winding down of economic stimulus packages would likely have a negative impact on trade volumes for the rest of 2022, even as volatility in commodity prices and geopolitical factors would also continue to make trade developments uncertain.

The report stressed that trade growth rates in Q1 2022 remained strong across all geographic regions, although somewhat lower in the East Asia and Pacific regions.

Export growth has been generally stronger in commodity-exporting regions, as commodity prices have increased.

Trade in merchandise goods reached about $6.1 trillion, an increase of about 25 per cent relative to Q1 2021, and a jump of about 3.6 per cent when compared to to Q4 2021.

The value of merchandise exports from developing countries was about 25 per cent higher in Q1 2022 than in Q1 2021.

In comparison, the figure is about 14 per cent for developed countries.

Merchandise trade between developing countries also strongly grew during Q1 2022

Trade in services grew to about $1.6 trillion, an increase of about 22 per cent relative to Q1 2021, and a rise of about 1.7 per cent relative to Q4 2021.

The report showed that most economic sectors recorded substantial year-over-year increases in the value of their trade in Q1 2022.

High fuel prices were behind the strong increase in the value of trade in the energy sector, it noted.

Trade growth was also above average for metals and chemicals.

By contrast, trade in the transportation sector and in communication equipment has remained below the levels of 2021 and 2019.

The report stated that the evolution of world trade for the remainder of 2022 was likely to be affected by slower-than-expected economic growth due to rising interest rates, inflationary pressures and concerns over debt sustainability in many economies.

The report pointed out that the war in Ukraine was affecting international trade by putting further upward pressure on the international prices of energy and primary commodities.

In the short term, because of the inelastic global demand for food and energy products, rising food and energy prices would likely result in higher trade values, and marginally lower trade volumes.

Other factors expected to influence global trade this year are continuing challenges for global supply chains, regionalisation trends and policies supporting the transition towards a greener global economy.

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