Best Forex Broker in Nigeria for 2023 [Updated]
British influence on Nigeria's culture and financial development reflect the nations’ interest in forex trading. Additionally, Nigeria is considered one of the most influential countries in Africa experiencing high foreign investment values. The COVID-19 pandemic has not slowed down the online forex trading industry much worldwide, while in developing countries like Nigeria it expanded. Nigerian’s currency, Naira, is one of the most traded currencies in Africa as the nation's economy is growing, though a bit unstable.
The economic slowdown, job cuts, and lockdowns turned many unemployed young Nigerians to forex trading. Nigeria is the 7th biggest country in the world by population, which is also very young at 18.1 years median age. The new flock of traders looking for alternative careers or sources of income has caused many forex brokers to consider Nigeria as their African hub. It is estimated there are about 500,000 active traders in Nigeria, out of 1.3 million total in Africa.
The Nigerian economy is heavily dependent on oil. The economic slowdown effect on oil prices drained Nigeria’s foreign reserves, urging the Central Bank of Nigeria (CBN) to intervene. The CBN opened the doors for foreign investment to have the ability to convert all capital invested into Naira at a market rate rather than a CBN-controlled one. However, in February 2021, the CBN has closed the door for cryptocurrencies, issuing a directive to all banks, Non-Bank Financial Institutions, and Other financial institutions to close crypto-related accounts. This caused negative reactions by the many dissatisfied crypto enthusiasts enjoying a very bullish market at the time. It is estimated that the people of Nigeria drive one of the world's top demands for cryptocurrency. As an alternative option to conduct crypto exchange, P2P markets have surged with new Nigerian crypto traders.
Trading education is mostly developed in urban areas with the inclusion of Introducing Broker networks. The young and unemployed population is a great target audience for forex brokers and schools alike. Consequently, many forex trading workshops have opened in the country, especially in Lagos.
The foreign exchange market in Nigeria is structured in several markets: the autonomous Foreign Exchange Market (AFEM), Inter-bank Foreign Exchange Market (IFEM), and Bureaux de Change - where exchange rates are market-determined. Several attempts have been made by the CBN to merge the 3 FX markets’ exchange rates into one. Despite the oil price recovery, the state of the Nigerian forex exchange market(s) is unstable.
The CBN is the main regulatory body in Nigeria, however, there is no authority for oversight and no defined framework for a forex brokerage and the FinTech industry. To protect naira from devaluation, the CBN introduced measures on foreign exchange which were met with criticism. However, the local brokerage market is regarded as unreliable, but this does not stop Nigerians to seek reputable international brokers available to them.
The only financial authority to curb financial crime related to the forex industry aside from the central bank is the Economic and Financial Crimes Commission (EFCC). Advance Fee Fraud and money Laundering were negatively impacting Nigeria's FDI (Foreign Direcy Investment) and the national business climate. This has improved since the establishment of the EFCC Act in 2002. The body maintains high levels of coordination with other Nigerian institutions to combat financial crime.
How to check if a Nigerian broker is legit?
Since the local market is deregulated, there is no way to be sure without additional research. Your first stop should be the EFCC. On the home page, you can find hotline numbers and contact EFCC by phone.
How to file a dispute with a Nigerian registered broker?
The institutions you should contact are the Central Bank of Nigeria (CBN) or EFCC. There is no dispute filing page. However, the CBN has a contact reference for forex-related issues here.
Only a few forex brokers have physical offices in Nigeria. One regulator that that many forex brokers doing business in Africa register with is the South African Financial Sector Conduct Authority (FSCA). Here is the list of Best South Africa Forex Brokers.
Are Nigerian brokers reliable?
Since there is no legal framework for brokerage business, a high level of corruption, and even the national foreign exchange market is segmented, it is very hard to say any locally based broker is reliable. It is often better to open accounts with internationally licensed brokers that accept Nigerian clients.