How Bitcoin can help Nigeria in the economy and beyond
Nigeria recently became the second-largest P2P market in the world by total volumes of Bitcoin exchanged.
The country has more than 200 million inhabitants, making it the largest country in Africa in this respect. In addition, precisely because of its large population, it is also by far the African country with the highest nominal GDP, thanks also to the fact that it is the largest exporter of crude oil in Africa, although not the first in terms of GDP per capita.
On the contrary, approx. 40% of the population, equal to over 80 million people, live below the poverty line and the GDP per capita is one-fifth that of Equatorial Guinea, for example. In addition, the unemployment rate is estimated to reach 32.5% this year and could rise even higher next year.
But the problems don’t end there. On the contrary, on a social level, they had exploded since last year, particularly to the Covid-19 pandemic, when several protests were bloodily suppressed with police literally firing on crowds of peaceful protesters.
Therefore, a real clash is taking place between the authorities and the vast population, although for some months now, the country has not been receiving such gruesome news as those of the end of 2020.
However, the financial problems had already started before, when, for example, in March 2019, the government suddenly banned access to foreign currencies, which are needed for imports.
The local currency itself, the Nigerian Naira, is in crisis against the US dollar; it has lost 23% in the last four years and even 61% over the previous eight.
The Bitcoin boom in Nigeria
In light of this data, it’s nothing to be surprised that a significant portion of the Nigerian population has decided to start using Bitcoin, so much so that the country’s government seems to be concerned about it.
The boom has happened this year in particular, with P2P trading volumes rising from $684 million in December to $2.4 billion in May.
According to an experienced Nigerian trader, Olumide Adesina, Bitcoin could help the country’s economy, first and foremost as a risk-on hedge against hyperinflation, but also by reducing the cost of cross-border remittances, achievable for example, through Lightning Network, as in El Salvador.
In such a scenario, cryptocurrencies could help, for example, those who do not have bank accounts or those who have to make numerous international transactions. Unfortunately, Nigeria’s central bank has banned commercial banks and payment service providers from dealing with cryptocurrencies, further magnifying the ongoing rift between the authorities and the population.
According to University of Louisville finance professor Anthony Okafor, the recent boom in the cryptocurrency market in Nigeria is precisely due to the loss of value of the local currency because, in an economy plagued by hyperinflation and high unemployment, cryptocurrency investments are seen as a means to preserve wages and wealth.
Bitcoin for Freedom
However, it may also not just be a purely financial issue.
In fact, the use of Bitcoin and cryptocurrencies also allows for considerable freedom in a country where the law is unfavorable, if not contrary, to those who want to freely use money or cryptocurrencies themselves, thus allowing citizens to take those freedoms that the state is otherwise unable to guarantee.
On the contrary, perhaps it is even possible to say that thanks to cryptocurrencies, Nigerians can assert rights that formally they do not have, such as the right to dispose of their resources at will, since the law itself, in fact in several cases, prohibits them from exercising what in free countries would be inviolable constitutional rights.
Even in India, the Constitution protects the right of its citizens to use the forms of money they prefer.
Of course, the constitutions and laws of different countries are different, but a country that prohibits its citizens from freely choosing which means of payment to use cannot be called free.
In fact, according to the Freedom House index, Nigeria is only partially free, with a score below the average (45). Although only partially free, India has a score of 67, while the first African country considered truly free, Botswana, scores a very respectable 72.
So Bitcoin, and cryptocurrencies in general, can help Nigerians cope with some financial and economic problems. Still, it can also grant them more freedoms and even rights that they don’t normally have.