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.