The crackdown on crypto has crippled foreign direct investments in Nigeria's fintech sector - report

Nigeria’s Central Bank bans cryptocurrency trading
  • The report stated that millions of young Nigerians who earn a living from fintech have been negatively impacted by the ban on cryptocurrency.
  • The report also noted that young Nigerians are at risk of being adversely affected by varying government policies.

Technology is changing our everyday lives at a faster rate. In developed markets, fintech, blockchain, and cryptocurrencies are shaking the financial market to the core, creating new possibilities for innovations in financial services. This has led to some countries welcoming the technological developments while others resist change.

In the case of Nigeria, the federal government put a restriction on cryptocurrency transactions in the nation in February of 2021 and ordered banks and other financial institutions to identify persons and entities operating cryptocurrency exchanges and close all such accounts. Despite these regulations, Nigeria accounts for the largest volume of P2P trading outside the United States., according to Paxful, a Bitcoin marketplace.

A new report has found that restrictions on cryptocurrency trading has crippled foreign direct investment in the fintech industry and adversely impacted millions of young Nigerians earning a living from the sector.

The report titled ‘Africa’s Urbanisation Dynamics 2022: The Economic Power of Africa’s Cities’ was published by the Secretary-General of the Organisation for Economic Co‑operation and Development and the Secretary-General of the United Nations, with support from the African Development Bank.

According to the excerpts from the report, young Nigerians are at risk of being adversely affected by varying government policies.

“Jobs in the tech sector range from creating apps, trading digital currencies, operating in social media marketplaces, to freelancing and gig work. Many young people can plug into the global economy and make enough to get by. However, this involves the expense of data and devices and can be frustrating when arbitrary government policies are enacted,” the report read in part.

“The restrictions on cryptocurrency transactions and the outright ban of Twitter in Nigeria have crippled foreign direct investment in the fin‑tech industry and negatively impacted millions of young Nigerians who earn a living from the sector. However, many have found a way to lawfully bypass these restrictions and continue the business, effectively denying Nigeria the taxes and transaction fees that would otherwise come into the system,” It added.

Globally, many countries have framed regulations around cryptocurrency and allowed it. Likewise, foreign investors have pumped in funds to these countries as the prices of cryptocurrencies like Bitcoin and Ethereum are skyrocketing. By banning cryptocurrencies, many crypto experts believe Nigeria may be headed backwards.

As a result, cryptocurrency experts believe that the government should focus on regulating digital currencies. They also claim that cryptocurrency transactions are very transparent and can be tracked online since they use blockchain technology, which is very practical.

This is a Business Insider Article, for more articles like this, visit africa.businessinsider.com

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