The African Development Bank has recently released a report on Nigerian fintech, which notes that the country is one of the top fintech hubs in Africa. Cryptocurrency transactions are restricted in some countries and territories, which hinders the adoption of digital currencies and can slow down the development of the fintech sector.
This article looks at the restrictions on cryptocurrency transactions in Nigeria and the impact that these restrictions have had on the fintech sector, as well as Twitter’s ban on cryptocurrency advertisements and its impact on the fintech sector.
A new report describes how cryptocurrency restrictions and Twitter’s ban in Nigeria adversely affected foreign direct investment in the fintech industry and millions of Nigerians earning a living from the sector.
This report was entitled, ‘Africa’s Urbanization Dynamics 2022: The Economic Power of Africa’s Cities’. Developed with support from the African Development Bank, the work was published under the aegis of the Secretary-General of the Organization for Economic Cooperation and Development and the United Nations Secretary-General.
Various government policies can negatively affect young people’s engagement in the tech sector, the report states.
In part, the report read, “Jobs in the tech sector range from developing apps and trading digital currencies, to operating social media marketplaces and freelancing. As a result, many young people are able to plug into the global economy and make enough money to live on. Nevertheless, this involves the expense of data and devices, and it can be frustrating when government policies become arbitrary.”
It “Banning cryptocurrency transactions and outright banning Twitter in Nigeria have crippled foreign direct investment in the fintech industry and negatively affected millions of Nigerians who rely on it for employment.”
Despite these restrictions, many have found ways to circumvent them and carry on doing business,”.
Cryptocurrency Restrictions
As of February of 2021, transactions in cryptocurrencies in Nigeria are restricted by the Central Bank of Nigeria.
It “Further to earlier regulatory directives on the subject, the bank reminds regulated institutions to refrain from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges.”
Central bank officials ordered banks and other financial institutions to identify cryptocurrency exchanges and close all accounts operated by them.
In Three Deposit Money Banks in Nigeria were fined N800m by the apex bank in April for violating regulations barring customers from making cryptocurrency transactions.
Access Bank, Stanbic IBTC, and United Bank for Africa make up the three banks.
According to Paxful, a Bitcoin marketplace, despite these regulations, Nigeria has the most cryptocurrency transactions outside of the United States.
In addition, according to Chainalysis, the country has the highest proportion of retail users conducting crypto transactions under $10,000.
On Twitter was suspended by the Federal Government on June 4, 2021, after the social media platform deleted a tweet by President Muhammadu Buhari (ret.). The Nigerian Communications Commission had ordered that Twitter be blocked on June 5, 2021.
Following a seven-month suspension, Twitter agreed to terms set by the government to have its service restored within the country on January 13, 2022.
The NetBlocks Cost of Shutdown Tool, however, estimates that Nigeria’s economy loses N104.02m ($250,600) every hour as a result of the Twitter ban. N554.22bn was lost by the country as a result of the 222-day ban.
As a result of the suspension of the micro-blogging platform, Twitter, the Nigerian economy lost about N10.72 trillion in January, according to the Lagos Chamber of Commerce and Industry.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
