While perhaps not on the top of anyone’s lists for a growing forex market, Nigeria is quickly becoming a destination for brokers to market their products. Leading the interest in Nigeria has been the country’s rising fortune thanks to the energy exploration industry. The discovery of oil and subsequent oil boom of the 1970’s led to cultural changes taking place with energy replacing agriculture as the leading industry and the transfer of the nation’s capital to Lagos from Abuja. However, due to constant changes in government and military coups since Nigeria’s independence in 1960, the new found wealth hasn’t always reached the overall population. As such, even though the country can boast the two wealthiest people of African origin, Aliko Dangote and Mike Adenuga, Nigeria remains an emerging market with 70% of its population living under the poverty line. Currently, improvements are taking place with the enactment of economic reforms and foreign investments.
Like much of the world, retail forex in Nigeria began to gain popularity during the mid 2000’s. Among smaller sized accounts the forex market can thank its popularity to an overtaxed and overcharged equities market which has led investors to seek other assets to trade. This gap was easily filled by forex trading which offers low barriers of entry, free trading platforms, commissionless tradesmand a wide variety of tradable products. Also, with most clients beginning with mini accounts with an average of $500 forex’s large leverage has been a draw to clients.
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Due to Nigeria’s capital markets having a meager penetration within the general public, knowledge of trading is low in the country. As can be imagined, this led to many scams and fraud taking place as well as early entrants to the country offering wide spreads. Currently though, the local industry has been trying to improve its reputation. The number of Nigerian Forex traders is estimated to be at 300,000 to 500,000. Around 25% of these are active traders with trade volumes estimated between $500 million to $800 million. The main brokers who have penetrated the Nigerian market are Alpari, InstaForex, FXOpen, ACM Gold, GKFX and FXCast.
Having a low financial educated public has led to the establishment of trading schools sprouting up within the country. These firms are typically run by a few traders that teach attendees the basics and more advanced technical and fundamental analysis. They will also refer students to brokers that they have relationships with. The main independent education providers are Bullbear Trading House, run by an experienced trader with technical analysis qualification, Webiglad Investments, run by a former banker at GT Bank, and Wayves Systems Enterprise, an education provider in Abuja. Explaining what attracts Nigerian’s to the trading schools, Fashe Itopa CEO/MD at Wayves Systems Enterprise explained “The new learners like my method of teaching, I talk about the basics but always give them ideas and strategies on how they can make money.”
The above post is an excerpt from a longer article about the Nigerian forex market in our Q3 Forex Industry Report