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How Nigerian Traders Bypass Dollar Scarcity With Bitcoin Transactions

August 25, 2020

Indications have emerged that as part of efforts aimed at bypassing the huddles of the current foreign exchange shortage in Nigeria, some Nigerian businessmen and women especially those engaged in importation are adopting the use of Bitcoin to bypass the forex shortages. The forex scarcity occasioned by the low forex inflow due to low remittances and low oil prices triggered by the coronavirus pandemic has had a devastating impact on importers who are mostly affected by the forex shortages. This is also compounded by the suspension of sales of foreign exchange to Bureau De Change (BDCs) operators by the central bank of Nigeria.

The present situation which is squeezing the life out of Africa’s biggest economy has been exacerbated by the fact that banks have stopped honouring card payments as monthly spending on cards have been capped in some instances to about $100. In an email to its customers late last month, Guaranty Trust Bank Plc, Nigeria’s biggest by market value, informed its customers that it has cut the amount of foreign currency customers can spend on payment cards abroad to $100 a month from $3,000.

To bypass these huddles, some are resorting to using Bitcoin to pay for goods from their foreign partners, especially those trading with Chinese exporting companies. According to those using Bitcoin, it is a faster way of exchange than the traditional foreign exchange, moreso, with Bitcoin, it is easier to leapfrog bank limits of $10,000 a day. Using an agent who acts as go-between, these businessmen pay with Bitcoin to the agents while the agents accept the Bitcoins and pay the suppliers in renminbi.

Rules on what companies do with the dollars they receive have also been changed. With restrictions and new rules such that foreign exchange deposits can only be accessed via withdrawals, while foreign exchange via inflows can only be accessed via outflows have made things harder for businesses. Analysts say that many banks are following a template they used when they went through a similar contraction in 2016, which was to cut customers’ foreign payments and wait for crude prices to recover before raising the limits.

Using Bitcoin according to them is the best way to bypass the restrictions and engage in seamless cross border transactions as they claim it is cheaper, easier and involves no paperwork making it quite seamless. Some say that they adopted Bitcoin because “it jumps borders with ease, where other currencies encounter friction. If the counterparty is willing to receive bitcoin on the other end, it’s often faster and cheaper than legacy payments. But this can be a big “if” because bitcoin is a newer way of transferring money and people aren’t exactly used to it quite yet”.

Dependent on oil exports for close to 70 percent of its revenue, the Nigerian government’s coffers have emptied after crude prices plunged in the wake of the coronavirus pandemic. There’s little prospect of a respite any time soon as analysts projected that the economy would needs oil prices at $70 per barrel and production of 2 million barrels a day to balance the 2020 budget, but with prices hovering around $40 and OPEC curbs have restricted the nation’s output to about 1.4 million barrels a day. Moreso, foreign investors are said to be struggling to get out their money while manufacturers are unable to import vital raw materials as output hurtles toward a second contraction in four years.All these contributed to push the central bank to halt weekly interbank foreign-currency sales since March. Now the effects of the dollar shortage are seeping through to the economy.

The International Monetary Fund predicts Nigeria’s economy will contract by 5.4% this year, the most in four decades. The latest official job figures put the second-quarter unemployment rate at 27.1%, the highest in a decade.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

Bitcoin is the 8th Largest Financial Institution Globally

July 21, 2020

Having grown in influence and impact, it is evident that Bitcoin could rank as the world’s largest financial institution if it were a normal bank with a market capitalization of $169.01 billion, says a new report from Buy Shares, a data company. This is because Bitcoin has continued to lead the cryptocurrency sector towards mainstream adoption on a global scale by directly competing with traditional players like banks. The asset’s high cap correlates with its impressive 27.18% ROI on a Year-to-Date basis.

From the data collected by Buy Shares, JP Morgan Chase’s cap of $433.5 billion makes it the biggest bank in the world while Bank of America with a market cap of $306 billion is ranked second. And ICBC ranks third with a capitalization of $290.9 billion followed by China Construction Bank with a cap of $218.4 billion.

Wells Fargo is the fifth-largest bank globally with a market cap of just $35.3 billion more than Bitcoin’s. Other banks ranked higher in the market cap above Bitcoin are Agricultural Bank of China and Citigroup at $178.8 billion and $171.5 billion respectively.

Bitcoin’s current market cap has surpassed other major banks like HSBC that currently enjoys a cap of $157.5 billion. Other banks with lower market cap than Bitcoin include The Bank of China’s ($146.6 billion), China Merchants Banks ($137.7 billion), Royal Bank of Canada ($116.6 billion), HDFC Bank Limited ($112.7 billion), Toronto Dominion Bank ($103.3 billion), Commonwealth Bank of Australia ($101.6 billion), and Morgan Stanley ($93.09 billion).

Compared to the stocks of major banks, Bitcoin holds a positive Return of Investment based on Year-to-Date overview. Bitcoin has an ROI of 27.18% with China Construction Bank Corporation coming second with an ROI of 2.52%. The Industrial and Commercial Bank of China has returns of 19.5%. JP Morgan Chase has an ROI of -29.58% followed by Bank of America’s -34.07% while Wells Fargo has the worst returns at -53.62%.

From the ROI review, Bitcoin has remained resilient against all odds. Tthe Buy Shares research report reads, “in the first and second quarters of this year, the coronavirus pandemic wrecked the global economy leading to the crumbling of most stocks. Major stocks ROI has been in the red zone but Bitcoin appears not to have been impacted greatly. Largely, Bitcoin has remained resilient throughout this season despite occasional tumbling attributed to fear to spread from traditional markets”.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

African Youth See Bitcoin as Opportunity to Build Entrepreneurial Ventures

October 4, 2019

Young Africans are searching for opportunities that will help engender their enterprising spirits and remove barriers to business initiatives, and Blockchain technology seem to be the answer to that expectations. This comes as the role of entrepreneurship in driving Africa’s prosperity in the Fourth Industrial Revolution (4IR) was among key topics at the last World Economic Forum (WEF) on Africa which was held in Cape Town recently. To this end, Paxful , a leading peer-to-peer global bitcoin marketplace, is excited about the improving economic outlook for Africa and entrepreneurial growth opportunities.

Ray Youseff, CEO and co-founder of Paxful

With nearly 3 million users globally and Africa being its fastest-growing customer base, Paxful has a unique insight into the development of the crypto economy across the continent. The company is seeing an increase in the amount of entrepreneurial activity on its platform. Many young Africans see bitcoin as an opportunity to develop commercial ventures; users set up side-hustles and their own full-time businesses including remittance businesses. Paxful has found that users from Nigeria, Ghana and South Africa have been the most active to date this year with many operating drop-shipping businesses, payment services, as well as import-export ventures amongst others.

Intra-regional trade is one of the highest priorities for African governments, as evidenced by initiatives such as the historic African Continental Free Trade Area (AfCFTA) agreement. By some estimates, the AfCFTA could boost Africa trade by more than 33% and generate billions of dollars of GDP gains for the continent over the long term. Various studies have shown that the digital economy presents an opportunity for Africa to deepen trade relations and boost the continent’s GDP.

Already Paxful is seeing that many African users prefer to trade with each other – territories like Nigeria, Kenya, Ghana, and South Africa lead intra-Africa trade activity on the Paxful platform. Over the years, Paxful has engaged many business owners who see a future for themselves in the crypto space. Beyond the big players, there are many ambitious up and coming bitcoin savvy business owners who focus on the African market. An entrepreneur-born in Malawi, named Grey, helps consumers buy and sell bitcoin. He has managed to expand his business to employ staff that helps consumers in Malawi to navigate the crypto space to better meet their financial needs. He also mentioned that many of his customers have limited access to credit cards, opting instead to buy bitcoin in order to purchase products and services on various e-commerce and streaming websites. Some of his customers will resell the products they buy for a profit. Others will keep the products for personal use or send them to loved ones.

Some of Grey’s customers even use bitcoin to purchase cars from vendors in Japan for resell in various African countries. Interestingly most of his customers find him on social media and through messaging apps.

Social development organizations that operate in Africa like Zam Zam Water and Grow Educare Centres have also expanded their sights to include cryptocurrency in raising funds for their projects. Zam Zam Water has built schools and pays teacher salaries for communities in need in Rwanda with money raised in the bitcoin industry. Bitcoin funds raised by Grow Educare Centres has bought supplies – including books, stationery, and toys – for low-fee kindergartens that support disadvantaged communities.

“While African entrepreneurs continue to face many lingering challenges, we have seen first-hand on our platform how the opportunity to use technology and innovate can achieve greater financial inclusion as well as socio-economic development and job creation,” Ray Youseff, CEO and co-founder of Paxful.

“As an African-born tech entrepreneur myself, my hope is that African governments, regulators and policymakers will create the right operating environment for the continent’s young Digi-entrepreneurs to succeed,” he added.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Africa’s youth see a future for Bitcoin beyond speculation

August 1, 2019

Paxful is on a mission to increase access to the bitcoin economy for the people of Africa through education.

Seeing a significant growth in digital currency transactions on the African continent in recent years, driven largely by users under the age of 35, leading global peer-to-peer bitcoin marketplace, Paxful is on a mission to increase access to the bitcoin economy for the people of Africa through education.

AN AFRICAN VIEW ON PEER-TO-PEER FINANCE

Benjamin Onuoha, Africa’s Regional Consultant for Paxful (Paxful.com), addressed delegates at a Johannesburg event recently to share insights on the bitcoin and cryptocurrency economy as well as present use cases observed from Africa’s consumers.

He commented: “The people of Africa have been the most ingenious and resourceful of our users – they are redefining our understanding of the uses of bitcoin. The world has much to learn from Africa about the future of crypto-economy.”

BITCOIN USE CASES ON THE CONTINENT

Reflecting on Paxful’s experience in Africa and further afield, Onuoha added: “Three developments made the crypto-economy possible. First, the emergence of peer-to-peer electronic currency, bitcoin, that is powered by the blockchain technology. The second and arguably the most important miracle is the human layer, that connects everyone in the world making this peer-to-peer revolution powered by the people. And lastly, the third miracle is the sharing economy.”

Onuoha listed the following as true use cases for bitcoin: grey markets, speculation, payments, e-commerce, remittance, wealth preservation, and social good.

“Historically, much of the news coverage about bitcoin has tracked speculative activity, where 90% of trading volume is currently centered. This toxic phase is in line with expected adoption trends as the crypto economy, still in its infancy, matures. The next focus point of the evolution is the end-user and their opportunity-laden journey in peer-to-peer finance. It’s about wealth generation – and giving people the means to do it.”

He noted that many young Africans see bitcoin as an opportunity to develop entrepreneurship ventures; users set up side-hustles and their own businesses – which include remittance, as well as import and export enterprises, amongst others.

Demonstrating how the cryptocurrency community can contribute to social good, Paxful recently completed the building of the second school in Rwanda, as part of the group’s strategic commitment to education. Through its #BuiltWithBitcoin initiative, the group is in pursuit to build 100 schools across the continent.

EDUCATION, EDUCATION, EDUCATION

With over 2,5 million users globally and Africa is the fastest-growing region, in 2018, Paxful disclosed it had seen a 200%+ increase in users in Africa over the previous 12 months. Paxful is observing a new generation of young African graduates and professionals making use of peer-to-peer finance as a way to better engage the global financial system.

Co-Founded by Egyptian entrepreneur Ray Youseff, who is passionate about empowering fellow African youth, Paxful is committed to reaching as many young people as possible to help them better understand the opportunities presented by the cryptocurrency economy. To this end, Paxful launched its first university education drive to expose youth to the true use cases of bitcoin, highlight how to avoid falling prey to bad actors in the crypto-space, and counter the over-emphasis on bitcoin speculation.

Launched at universities in South Africa and Kenya, the Paxful workshops provide key, practical insights, with each attendee also receiving free bitcoin to start them on their journey. Over 1000 youths have attended the events across SA/Kenya.

CHARITIES COULD BENEFIT FROM THE CRYPTO-ECONOMY

To date, Paxful’s #BuiltWithBitcoin initiative has raised over R3 million for charities across Africa and the Middle East. Paxful – has donated over 13,000 Rands worth of bitcoin to GROW with Educare Centres. The donation forms part of Paxful’s #BuiltWithBitcoin initiative and is its first South African charitable contribution.

As a non-profit organization, GROW with Educare Centres empowers qualified, passionate women to own and run successful high-quality Early Childhood Development (ECD) centers, such as daycares and pre-schools, in low-income communities using the principles of social enterprise and micro franchising. With reading being an integral part of the Educare programme, the donation from Paxful will be used to purchase books for their various centers’ mini-libraries.

The GROW with Educare Centres project was incubated by a partnership between The Clothing Bank and Grow Learning Company and currently has 31 ECD centers running across Cape Town, KwaZulu-Natal and Gauteng.

“This donation opens new opportunities for our organization to engage the crypto-community in charitable giving. An investment in Early Learning is one of the greatest investments you can make since one teacher influences a generation of learners. We hope that Paxful will inspire others to do the same,” says Helene Brand, Marketing and Fundraising Manager for GROW Educare Centres.

Paxful launched #BuiltWithBitcoin in 2017 to encourage the cryptocurrency sector to contribute funds for humanitarian projects.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

Afrikan Heroes

Tag: bitcoin

How Nigerian Traders Bypass Dollar Scarcity With Bitcoin Transactions

Kelechi Deca

Bitcoin is the 8th Largest Financial Institution Globally

African Youth See Bitcoin as Opportunity to Build Entrepreneurial Ventures

Africa’s youth see a future for Bitcoin beyond speculation

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