In Nigeria, forex trading became popular in the 1970s when the country’s disposable income increased due to a crude oil price surge. The demand has grown even more, particularly as the Nigerian economy has matured and diversified.
Africa has an estimated 1.3 million forex dealers, with South Africa and Nigeria leading the way and accounting for a significant portion of the total. Other nations where forex trading is gaining traction include Kenya, Tanzania, Angola, Namibia, and Egypt, as suggested by Forex Broker Nigeria.
In this post, we will talk about why Forex Trading is growing more and more popular in Nigeria over time.
7 Reasons Why Nigeria is the Biggest Forex Trading Market in Africa are:
1. Increased Broker Marketing
As technology has advanced to satisfy the demand for forex trading in Africa, brokers have been given to enhance their marketing efforts. As the industry has gotten more competitive, we’ve seen more aggressive marketing approaches used, with substantial welcome bonuses and access to well-known platforms like MetaTrader 4 at the forefront of such initiatives.
2. Increased Internet Penetration
Now the market leader, Nigeria has a 47 percent Internet penetration rate, which is expected to rise to 65 percent by 2025. This reflects the more significant rate across Africa, resulting in a situation where prospective traders have significantly more real-time access to the currency market. The equivalent percentage in Kenya is 87.2 percent, and dealers take advantage of this.
3. The Impact of Covid 19 Pandemic
As the coronavirus spread over Africa in 2020 and the first part of this year, individuals were confined to their homes for lengthy periods. Africa has seen a surge in traders as people seek ways to earn money digitally at their own convenience. Additionally, people have had a significant amount of time to learn and trade forex. So, forex is incredibly accessible because it is open 24/7.
4. Europe’s stringent regulations
New forex trading restrictions were established by the European Securities and Markets Authority (ESMA) in 2018. These restrictions, for example, limit leverage to a maximum of 30:1. It has also implemented a negative balance protection system and prohibited binary options. As a result, several brokers in Europe, one of the world’s largest forex trading centers, have witnessed earnings decline. Small brokers are increasingly looking to broaden their horizons internationally to generate quick money.
5. Improved Telecommunication
Massive numbers of new forex traders signed up to trade on the existing electronic trading platforms due to improved telecommunications across the continent and greater Internet access throughout Africa.
6. Lowered Transactional Costs
Other factors include the forex market’s strong liquidity and reduced transaction costs, making it easy for everyone to trade currency, mainly through mobile trading.
7. Africa’s Foreign Exchange Regulation
Forex trading is generally uncontrolled in Africa. The Securities and Exchange Commission (Nigeria’s financial regulator), for example, recognizes that there is no regulatory framework in place for internet trading. This is a critical issue since it is difficult for traders, particularly novices, to distinguish between legitimate and fraudulent brokers.
The Forex market has enormous potential for expansion. Yet, until definite rules exist, retail traders must exercise prudence and due diligence when dealing with forex brokers.