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Nigeria’s Booming Forex Trading Industry: A Risky But Lucrative Venture For Traders

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Forex trading has been on the rise in Africa, with Nigeria being the second-largest retail online forex market on the continent.

 

However, the absence of specific regulations makes traders vulnerable to scams and fraudulent activities. South Africa leads the way with a lesser but still significant number of 190,000 daily forex traders.

 

Despite the lack of regulations, the Nigerian forex industry has garnered a lot of interest from online traders, investors, and international brokerage firms.

 

According to Temitope Ijibadejo, the Nigeria Regional Manager of CM Trading, a licensed international brokerage and contract for difference (CFD) provider, the Nigerian forex industry is a “very buoyant one.”

 

He said the number of active Nigerian forex traders exceeds 300,000 with net deposits in billions of Naira annually.

 

In a 2021 report, it was estimated that there were roughly 300,000 retail forex traders in Nigeria, and there has been a substantial rise (46%) in female traders over the past couple of years.

 

Forex trading involves converting one national currency into another, and the most common currency pairs include GBP/USD and EUR/USD.

 

In Nigeria, the most common currency to trade with is the USD, which accounts for around 90% of Nigeria’s forex activity. Nigeria is a producer of crude oil, which is sold in dollars.

 

When prices increased in the 1970s, Nigeria saw a nice economic boost. This increase led to a growing interest in Africa in trading in dollars.

 

Since 2020, forex trading has seen a roughly 300% growth, and the majority of traders’ accounts (60%) are from Africa, Southeast Asia, and Eastern Europe.

 

However, the Central Bank of Nigeria July 2021 announced that it will no longer sell forex to Bureau De Change operators, saying the parallel market has become a conduit for illicit forex flows and graft.

 

According to the announcement, weekly sales of foreign exchange by the CBN will go directly to commercial banks. Banks are mandated to immediately and transparently sell forex to customers who present the required documents, and customers not attended to by the banks are to report to the CBN through a toll-free number or email.

 

In August 2016, the CBN banned nine deposit money banks (DMBs) from the foreign exchange market, for hiding over $2 billion belonging to Nigerian National Petroleum Corporation (NNPC) from the Treasury Single Account (TSA).

 

President Muhammadu Buhari was briefed on the breach by the banks, and all nine had been mandated to move the monies to the treasury single account.

 

The CBN also warned that banks that did not comply with the TSA remission plan would face possible fines and stringent punishment. This was made during the full implementation of the TSA in 2015.

 

As the naira continues spiraling downwards, the CBN is looking for a solution to stop the currency from hitting the bottom. However, despite its efforts, the regulator has been accused of not taking responsibility.

 

In response, the CBN has argued that the issue is not a result of its policies, but rather a reflection of external economic factors.

 

In September 2021, the Central Bank of Nigeria (CBN) accused AbokiFX, an exchange rates aggregator, of manipulating Nigeria’s foreign exchange market.

 

According to the CBN, AbokiFX was responsible for promoting the exchange of the naira for foreign currencies on the black market, which it claimed was fueling inflation and harming the economy.

 

In July 2022, the CBN issued a statement warning that it would arrest and prosecute anyone using naira to buy dollars, citing a law that prohibits the use of the Nigerian currency to transact business outside the country.

 

The CBN claimed that the use of naira for such transactions was undermining the stability of the country’s foreign exchange market and contributing to the depreciation of the currency.

 

“For those taking money from banks to buy dollars, it is illegal to do so. If the security agencies hold you, you will know the implication of that,” Godwin Emefiele said.

 

However all this measures did not stop the increase in the forex world as Nigeria forex trader find ways to remain in the forex world.

 

To get more insights, Biztellers interviewed a forex trader known as Yolofx who spoke about his ordeal in the forex world.

 

Yolofx is a trader with 10k followers on instagram, and 2k followers on Twitter. He also offers mentorship programs for aspiring traders which requires payment.

 

He said ” Forex trading is not for everyone as it requires taking risk, consistency and patience. Consistency to me means doing it all over again regardless of the losses incured. I started trading since 2017 till date making it 6 years In the forex world. It has not been easy as it drastically affected my academics. I had to spend extra one year in school because I was not focus rather I gave my all in learning the forex”

 

According to him, to enter into the forex world, one requires a broker who serves as a middleman between a trader and the commercial bank.

 

He said “there are various brokers in the forex world, since I started trading I have used 5 different brokers but presently am using exness broker and to me it has been the best so far”

 

When asked about the legitimacy of the forex trade, he stated that forex trade is very much legit as it requires a verification process before entering the market.

 

He said “to verify your account in forex trade, you need to have proof of identity which is either your international passport or National Identity Number and also proof of residence which requires your bank statement that is not less that 6 months”

 

He went further to say “to tell you how complex and risky the forex world is, you can make 500k in a week or two and lose the entire money in a day” He added.

 

According to him, forex trade has changed his financial status as he has not searched for a job since after graduating from Higher institution.

 

Uche Paragon, who began his trading career in 2007, has become Nigeria’s richest currency trader with an estimated net worth of over $16 to 20 million.

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Adeleke Flaunts Local Content Records, Industrialisation Progress

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Osun State Governor, Senator Ademola Adeleke has celebrated the local content achievements of his administration, claiming it has transformed the state’s economy and strengthened local businesses.

The Governor, represented by his Deputy, Prince Kola Adewusi, made this declaration at the 2024 Trade Fair of the Osun State Chamber of Commerce and Industry held at the Trade Fair Complex, Osogbo.

This year’s fair is themed “Developing Osun Local Content Value Chain for Shared Prosperity”.

Gov Adeleke, reviewing his records on local content in the last two years, expressed pride to announce that his administration had set an unrivaled record in the promotion and commitment to local content development.

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According to Gov Adeleke, “our major infrastructural projects are being handled by local contractors. We are building up our indigenous companies to handle major jobs outside the state. Our local engineers are fully engaged in all facets of the construction processes. Our supply chain feeding the construction processes is also locally focussed and sourced.

“As local content is a tool for economic development, our multi billion naira infra plan has a focus beyond Osun money revolving within the Osun economy. We seek to stop capital flights, thereby ensuring a financially vibrant local economy that contributes to the fight against poverty and underdevelopment.

“Beyond a solvent grassroots economy, our policy ensures skill transfer. Local workers are empowered with requisite skills which they subsequently deploy as skilled service providers. We are building a pool of skilled citizens across all sectors.

“Additionally, our local content agenda is a strategy for employment creation. By adopting direct labour in many project executions, we provide jobs for the artisans and the unemployed. Osun is indeed a huge construction site with increasing job opportunities for the unemployed.

“Local content as a state strategy also drives our focus on infra growth and development. We are eager to bridge the infrastructure deficit to enhance trade and investment. We have recorded huge progress in that respect.

“Our administration is also removing possible bottlenecks in business operations in Osun state. The processing of Certificates of Occupancy is now within a 45-day window. This is billed to enhance business capacity to attract financial transactions and support within the business ecosystem.

“The era of multiple taxation is coming to an end as Osun state has now introduced a harmonized tax system. Our tax agency has become truly business friendly.

“To facilitate investment, we revive and strengthen the Osun State Investment Promotion Agency (OSIPA). The agency puts under one roof all regulatory and certification agencies of the Government.

“To accelerate the pace of industrialization, we revive the Free Trade Zone to provide over one million direct and indirect jobs for the people. We establish Markets with modern facilities, set up farm produce aggregation centres, and put life into moribund industries among others.

“The State Government recently hosted an Industrial Investment Summit. The event attracted local and international investors. While the current industrial policy is being vigorously implemented, we plan to review the policy to accommodate new realities occasioned by modern innovations and Artificial Intelligence.”

While restating his administration’s readiness to partner with the organized private sector, Gov Adeleke urged the business chamber to expand its scope, calling on the business leaders to reach out within and outside Nigeria for the development of businesses in Osun state.

“As the voice of Osun business, you are not a government agency. You represent the private sector. Your task is to expand your scope and mobilize businesses to grow as an umbrella body. I task you to interact with all sectors of the state economy. You have a duty to shake off bureaucratic burden and truly act like a private sector body”, the Governor charged the chamber.

The Commissioner for Commerce and Industry, Rev Bunmi Jenyo listed out several programmes and policies of the state government designed to support growth and development of businesses in Osun state, declaring that Osun is open for business.

According to the Commissioner, the recent industrial investment summit showcased the huge potentials of the state and expressed delight at the huge number of investors who showed up and expressed interest to tap into the investment potentials of Osun State.

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Tinubu Seeks ₦1.767tn Loan to Tackle 2024 Budget Deficit

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President Bola Ahmed Tinubu has approached the National Assembly for approval of a fresh external borrowing plan totaling ₦1.767 trillion.

The loan, if approved, will help finance the ₦9.7 trillion deficit in the 2024 budget.

The request was presented during Tuesday’s plenary by the Speaker of the House of Representatives.

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Alongside the loan request, the president also submitted the Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for 2025–2027.

Additionally, Tinubu proposed amendments to the National Social Investment Programme (NSIP) establishment bill, aiming to make the national social register the central tool for delivering federal welfare programs.

Debt Servicing Costs Skyrocket in 2024

Nigeria’s rising debt obligations have been brought into sharp focus with new data from the Central Bank of Nigeria (CBN).

The country spent $3.58 billion servicing foreign debt in the first nine months of 2024, marking a 39.77% increase from the $2.56 billion recorded during the same period in 2023.

May 2024 saw the highest monthly debt servicing payment at $854.37 million, a staggering 286.52% increase compared to May 2023.

The surge in debt servicing costs reflects a sharp depreciation of the naira, which weakened from ₦899.39/$1 in December 2023 to ₦1,470.19/$1 by June 2024.

Experts warn that the rising exchange rate and escalating international debt obligations place significant pressure on Nigeria’s fiscal sustainability.

State Debts Climb to ₦11.47tn by Mid-2024

The debt profiles of Nigeria’s 36 states and the Federal Capital Territory (FCT) have continued to rise, reaching ₦11.47 trillion as of June 30, 2024.

This marks a 14.57% increase from ₦10.01 trillion in December 2023, according to data from the Debt Management Office (DMO).

External debt for states and the FCT climbed from $4.61 billion to $4.89 billion during this period.

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However, domestic debt decreased from ₦5.86 trillion to ₦4.27 trillion. Lagos State remained the most indebted in foreign currency terms, holding 26.9% of the total external debt, valued at $1.24 billion.

In naira terms, state debts rose by 73.46%, reflecting the impact of the naira’s devaluation on repayment obligations.

States Overly Dependent on Federal Allocations

A BudgIT report on fiscal sustainability has revealed that 32 out of 36 states relied on Federation Account Allocation Committee (FAAC) transfers for at least 55% of their revenue in 2023.

Fourteen states were even more dependent, deriving over 70% of their revenue from FAAC allocations.

FAAC disbursements increased by 33.19% in 2023, reaching ₦5.4 trillion, contributing significantly to the total combined state revenue of ₦8.66 trillion for the year.

However, analysts have raised concerns over this heavy dependence on oil-driven federal allocations, warning of the financial risks posed by crude oil price shocks.

Lagos and Ogun States were exceptions, generating significant revenue internally and relying less on federal transfers.

Economic Implications

The federal and state governments’ growing reliance on borrowing and federal allocations signals deep fiscal challenges.

Analysts caution that President Tinubu’s proposed borrowing plan, combined with rising debt servicing costs and exchange rate pressures, may exacerbate Nigeria’s economic vulnerability.

 

 

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Federal Mortgage Bank Increases Loan Limit Amid Housing Challenges

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The Federal Mortgage Bank of Nigeria (FMBN) has raised its loan limit from N15 million to N50 million, aiming to address the housing challenges faced by higher and medium-income earners across the country.

This significant increase in the loan ceiling was announced by the FMBN’s Managing Director, Shehu Usman Osidi, during an oversight visit by the House of Representatives Committee on Housing and Habitat at the Bank’s headquarters in Abuja on Monday.

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Osidi encouraged Nigerians to take advantage of this new opportunity to access funding for housing, highlighting that it is part of the government’s efforts to improve housing availability in the country.

The increased loan limit comes at a time when many Nigerians struggle with high construction costs and limited access to affordable housing.

During his presentation, Osidi also outlined the FMBN’s financial performance, revealing that the Bank had achieved an operational surplus of N4.9 billion in the first half of the year.

This success, he said, was a result of deliberate financial reengineering and effective strategic management under his leadership.

However, the FMBN is not without its challenges. Osidi pointed out that the Bank continues to grapple with issues of insufficient funding and a high volume of non-performing loans (NPLs).

To address these concerns, the Bank has established loan recovery task forces focused on improving the loan portfolio and reducing the NPLs.

One of the most persistent problems, according to Osidi, has been the non-performing loans associated with estate development.

He disclosed that more than a decade ago, the government placed a ministerial embargo on this category of loans to mitigate the growing NPLs, but challenges remain.

The oversight visit was led by the Chairman of the House of Representatives Committee on Housing and Habitat, Hon. Abdulmumin Jibrin Kofa, representing the Kiru/Bebeji federal constituency of Kano State.

The Committee members were briefed on FMBN’s progress and the key initiatives aimed at revamping the country’s housing sector.

In his concluding remarks, Osidi called for a review of the National Housing Fund (NHF) Act, which he believes will better support the Bank’s efforts to meet the housing needs of Nigerians.

 

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