Nigeria leads Africa in crypto adoption as stablecoins emerge as the main engine for crypto growth in Africa. Recent chainalysis data shows Nigeria received approximately $59 billion in crypto value between July 2023 and June 2024. South Africa follows with $27 billion and Kenya third with just over $8billion. Ghana, Uganda and Ethiopia make up the top 5 in Africa.
Image courtesy of Chainalysis.
Nigeria Crypto; Stablecoins Drive Cross-Border Remittances
Stablecoins are driving crypto adoption across sub-Saharan Africa. Countries with volatile local currencies are adopting dollar-pegged stablecoins such as USDT and USDC, offering businesses and individuals a reliable way to store value, facilitate international payment, and conduct cross-border trade. Stablecoins account for 43% of Africa’s total transaction volume.
Stablecoins are playing a critical role in Nigeria’s crypto economy, accounting for nearly 40% of all stablecoin inflows in Sub-Saharan Africa, the highest in the region. Nigerians are increasingly relying on stablecoins for cross-border remittances due to the inefficiencies and high costs associated with traditional banking systems. Stablecoins offer a faster and more affordable alternative for sending money across borders, which has become a crucial use case, according to Sodipo.
This trend is largely fueled by inflation and the depreciation of the naira, which hit a record low in early 2024. With inflation eroding purchasing power, stablecoins provide a more stable medium of exchange for small to medium-sized transactions, amounting to almost $3 billion in value during the first quarter of 2024 alone.
Similarly, the Ethiopian biir (ETB) lost 30% f its value in July. This is after the government eased currency restrictions in a move to secure a $10.7 billion loan from IMF and World Bank.
Defi gaining momentum in Nigeria crypto landscape
In addition to stablecoins, the report further shows Nigeria crypto space is also growing its Defi landscape rapidly. Over $30 billion in value has been received via Defi services over the past 1 year. Defi platforms are emerging as new platforms that offer Nigerians new ways of earning interest, accessing loans and trade without relying on traditional banking systems. According to Moyo Sodipo, COO of Busha, this shift reflects a growing interest in maximizing returns and accessing financial services that are otherwise limited in the country.
Nigeria is emerging as a leader in decentralized finance (DeFi) adoption, with over $30 billion in value received by DeFi services in the past year. DeFi platforms are offering Nigerians new ways to earn interest, access loans, and trade without relying on traditional banking systems. According to Moyo Sodipo, COO of Busha, this shift reflects a growing interest in maximizing returns and accessing financial services that are otherwise limited in the country.
Impact of Regulatory Changes on Nigeria’s Crypto Growth
The Nigerian crypto market has gained momentum since the Central Bank lifted its ban on banks serving crypto companies in December 2023. This change has facilitated smoother transactions and opened doors for partnerships, as noted by Sodipo. In June 2024, Nigeria’s Securities and Exchange Commission (SEC) launched the Accelerated Regulation Incubation Program (ARIP), requiring virtual asset service providers (VASPs) to register and undergo assessments before approval. This move toward regulatory clarity is seen as a positive step for the industry, although some financial institutions remain cautious about fully engaging in crypto activities.
Despite regulatory uncertainties, Nigeria’s DeFi and broader crypto market continue to thrive. Sodipo remains optimistic about the future, highlighting ongoing dialogues with regulators that may encourage more banks to enter the crypto space as the regulatory environment evolves.