Despite government crackdowns, Nigerian cryptocurrency adoption is on the rise. Last month’s second-strongest week of record for peer-to-peer (P2P), trade volume for Bitcoin was posted by its second largest week.
According to data from Google Trends, Nigeria still ranks number by search interest for the keyword “Bitcoin” as of this writing. According to Useful Tulips, P2P Bitcoin trading in Nigerian Naira has increased steadily in 2021. Nigeria ranks second behind the United States in terms of peer-to-peer BTC trade, ranking second only to the United States.
The growing Bitcoin adoption in Nigeria has helped Sub-Saharan Africa emerge as the leading region by P2P volume, with the region posting $18.8 million in weekly volume to beat out North America’s $18 million this past week.
The convergence of economic and political crises has prompted local crypto adoption. This includes currency controls and rampant inflation.
Tensions in Nigeria have escalated since October, after massive public protests opposing police brutality and the infamous “Sars” police unit swept the nation.
The EndSars protests saw protestors attacked with tear gas and water cannons, with more than 50 civilians killed in total, including one dozen who were shot dead by police armed with live ammunition on October 20.
Economic repression was also a result of the government’s crackdown. Social organizations that provided food and medical assistance to protestors were quickly able to have their bank accounts frozen. In the midst of violence, protestors began to use cryptocurrency to put their economic activities out of reach of the government.
Adewunmi Emoruwa, the founder of Gatefield — a public policy organization whose accounts were suspended for providing grants to journalists covering the protests attributed Nigeria’s recent hostility regarding crypto assets to October’s protests, telling The Guardian:
EndSars, I believe, is the key catalyst to some of the decisions that the government is making. It created fear. They realized, for instance, that people could choose to bypass institutions and government structures to mobilize.
An anonymous source claimed to be representing a social organisation whose bank accounts were subject to turmoil. He also stated that the group was able to pay its members’ salaries using crypto, despite the financial embargo.
They stated that they kept some crypto securities, but not too many, but enough to be considered an insurance policy. “We were able to pay salaries when the ban occurred, which was a relief.”
In February, the government banned licensed banks from processing cryptocurrency transactions in an attempt to crack down on digital asset adoption.
However, Nigeria’s steady rise in P2P Bitcoin volumes suggests that the country’s crypto user base is largely being driven underground to gain access to crypto assets outside the government’s control.
Marius Reitz, Africa’s general manager for crypto trading platform Luno said that Nigeria’s ban had only made it harder to monitor cryptocurrency trading.
“A lot of trading activity is now being pushed underground, which means that many Nigerians now depend on less secure, more transparent over-the counter channels as well as Telegram or WhatsApp groups, where they trade directly with one another.”
The government’s moves to repress crypto have also received internal criticism, with Vice-President Yemi Osinbajo publicly rebuking the ban in February.
Despite its hostility towards decentralized crypto assets Nigeria is exploring the possibility of developing a central bank digital currency (CBDC).
In late July, Nigeria’s central bank revealed plans to begin trialing its CBDC from October 1 of this year.
