When the Nigerian government suddenly banned access to foreign exchange for textile import companies in March 2019, Moses Awa* felt stuck. His business – importing woven shoes from Guangzhou, China, to sell in the northern city of Kano and his home state of Abia, further south – had been suffering along with the country’s economy. The ban threatened to tip it over the edge. “It was a serious crisis: I had to act fast,” Awa says.
He turned to his younger brother, Osy, who had begun trading bitcoins. “He was just accumulating, accumulating crypto, saying that at some point years down the line it could be a great investment. When the forex ban happened, he showed me how much I needed it, too. I could pay my suppliers in bitcoins if they accepted – and they did.”
According to bitcoin trading platform Paxful, Nigeria is now second only to the US for bitcoin trading. The dollar volume of crypto received by users in Nigeria in May was $2.4bn, up from $684m last December, according to blockchain research firm Chainalysis. And the true scale of crypto flows through Africa’s largest economy is likely to be much larger, with many trades untraceable by analysts.
An array of factors, from political repression to currency controls and rampant inflation, have fuelled the stunning rise of cryptocurrencies in Nigeria. In February, the government took fright and banned cryptocurrency transactions through licensed banks. In late July, it announced a pilot scheme for a new government-controlled digital currency – hoping to reduce incentives for those wanting to use unregulated crypto.A Lagos phone vendor who uses bitcoin in his business. Photograph: Temilade Adelaja/Reuters
But these measures have done little to dampen trading, with exchanges reporting a continued rise in transactions this year.
Nigeria’s experience holds lessons for governments around the world, many of which are now thinking hard about how to regulate digital currencies. Britain...