Business
Nigeria’s Booming Forex Trading Industry: A Risky But Lucrative Venture For Traders
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.
The Nigeria Deposit Insurance Corporation (NDIC) has announced revisions to the Maximum Deposit Insurance Coverage for banks operating within the country.
NDIC’s Managing Director, Bello Hassan, disclosed the updated coverage benchmarks during a media briefing in Abuja on Thursday.
The coverage for Deposit Money Banks has been increased from N500,000 to N5 million, for Microfinance Banks from N200,000 to N2 million, for Primary Mortgage Banks from N500,000 to N2 million, and for Mobile Money Operators subscribers’ pass-through from N500,000 to N5 million per subscriber.
Hassan underscored that the objective of the update is to enhance depositor safety, foster public trust, promote the inclusivity of financial services, and ensure the overall stability of the financial sector.
More to follow.. . .. .
The 63rd Annual General Meeting (AGM) of the Nigerian Exchange Group Plc (NGX Group), held at the Nigerian Exchange Group House on Monday, April 29, 2024.
During the gathering, the Group concluded on ordinary and special business matters, while also unveiling plans to embark on a comprehensive digital transformation strategy to expand its business operations in line with its overarching strategy.
The meeting’s agenda, approved by the Board of Directors, included the declaration of a final dividend, ratifying the appointment of Temi Popoola as the Group Managing Director/Chief Executive Officer of NGX Group, presenting financial statements to shareholders, re-electing non-executive directors retiring by rotation, authorizing, and disclosing remuneration, among other undertakings.
Notably, the NGX Group, subject to regulatory approval, discussed its authorization on a rights issue to raise capital of up to N10 billion with a subjoined resolution to increase its share capital to sufficiently accommodate the rights issue.
All resolutions were approved by shareholders just as appointment and reelections of directors were ratified.
Following substantial authorization across its agenda, the NGX Group introduced plans to propel the markets with a digital transformation journey that includes an online platform for public offers and deep investments in its technology stack amongst others.
The platform will provide a smarter and efficient way for Issuers to raise capital and enhances the subscription process and operational workflow of POs in the capital market including initial public offerings (IPOs), rights issues and other public offers.
On the development, the Group Chairman, NGX Group, Umaru Kwairanga said, “I am particularly grateful to our shareholders for their assent to the critical business we conducted today. As the Board oversees the strategic direction and gives management the necessary support and guidance, we believe that the coming year will be a better one in terms of value created for our shareholders.
“NGX Group is positioned to capitalize on opportunities amid the positive and forward-looking reforms by the government and our stakeholders should rest assured we will deliver excellently.”
On his part, Group Managing Director/Chief Executive Officer, NGX Group, Temi Popoola, said, “As we complete our 63rd AGM, I extend my sincere gratitude to our shareholders, customers, employees, regulators, and directors for their steadfast support. In a year that underscored NGX Group’s strategic agility and operational excellence, we witnessed growth stemming from our dynamic revenue streams. We are optimistic and well-positioned to forge a future marked by success, resilience, and prosperity.
Addressing the digital transformation agenda, Popoola stated, “The future of our business and the capital markets hinges on technology. That is why we are driving this digital transformation journey across our subsidiaries through the Group. NGX Group’s digital transformation will democratize access to public issuances for every Nigerian with a mobile phone, supporting capital-raising efforts for companies. Additionally, we aim to commercialize our technology solutions and expand our footprint across Africa”.
Key insights and proceedings from the NGX’s AGM can be accessed via the live recording available on NGX Group’s website at www.ngxgroup.com.
. . . Firm Declares N4.5bn Dividend For 2023
The Nigerian Content Development and Monitoring Board (NCDMB) has announced that it had received an interim dividend payment of N450 million out the N1.5bn declared by the Waltersmith Refinery and Petrochemical Company Limited.
The NCDMB made the disclosure on Monday, adding that the payment represented NCDMB’s 30% share in the company for the year ended 2023.
Recall that the NCDMB had in July 2018 invested $10m to acquire 30% stake in the 5000 barrels-per-day (bpd) modular refinery project located at Ibigwe, Imo State, to support the Federal Government’s policy on modular refinery, stimulate investment and create employment opportunities.
Rising from a Board Meeting of Waltersmith Refinery and Petrochemical Company Limited, the Executive Secretary, NCDMB, Engr. Felix Omotsola Ogbe confirmed that a total dividend of N4.5bn had been approved for the year 2023, pending final approval at the Annual General Meeting (AGM).
The company reported a total profit of N23.6bn as profit after tax for the same year.
The Executive Secretary hinted that NCDMB expects to receive additional 30 percent of the outstanding N3bn dividend after the AGM is convened later this year.
He added that the receipt of this interim dividend payment was a testament to the strong performance and profitability of Waltersmith Refinery and Petrochemical Company Limited.
He said, “The NCDMB is proud to be a part of this success and looks forward to continued collaboration with the company in the future.”
He affirmed that the company was upscaling the refinery capacity from 5000 bpd to 10,000bpd and the expansion project was already 44 percent completed and on time to be commissioned by early 2025.
The NCDMB’s investment in the Waltersmith project was also geared to catalyse the industrialisation of the Nigerian oil and gas industry and its linkage sectors and deepen Nigerian Content in the oil and gas industry. It was the first third-party investment embarked by the Board, and it provided proof of concept and paved the way for other successful investments by the Board.
Two weeks ago, NCDMB received a cheque of $1 million from Nedogas Development Company Limited (NDCL), being part of the return on investment (ROI) on one of the Board’s strategic investments.
The cheque was presented by the Chairman of the company, Engr. Emeka Ene when he visited the Nigerian Content Tower in Yenagoa Bayelsa State, where he was received by the Executive Secretary, Engr. Felix Omatsola Ogbe and other members of the Board’s management.
Nedogas Development Company Limited (NDCL) is a joint venture company between Xenergi Limited and NCDMB Capacity Development Intervention Company and it culminated in the construction and commissioning of a 300 MMscfd Capacity Kwale Gas Gathering (KGG) and injection facility located in the Umusam Community, near Kwale in Delta State, Niger Delta, Nigeria.
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