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ForEx & crypto brokers lured by growing African market
Africa may be soon become a very promising market for Forex brokers, as the continent is benefiting from a rising number of retail traders and from a soft regulation.
With 54 countries and 41 currencies, Africa seems to be fit for the Forex industry. African currencies are typically characterized by a high degree of illiquidity and volatility. According to the World Bank, currency imbalances are one of the biggest barriers to the economic and financial development of the continent.
Online trading platforms provided by Forex brokers could reduce the gap for local African currencies, by supplying greater liquidity thanks to modern trading technologies at more competitive prices. Furthermore, cryptocurrencies seems particuarly palatable for countries with illiquid currencies.
The Bank for International Settlements (BIS) showed that the African retail Forex market had a volume of $14 billion exchanged in 2013 which rose to $21 billion in 2016, with these figures to be expected higher in the next couple of years.
Nigeria and South Africa are currently the two largest forex markets on the continent. South Africa, in particular, is attractive for the country’s local regulator – the Financial Services Conduct Authority (FSCA), has relatively low regulatory requirements, which mean lower operational costs and therefore higher revenue for ForEx brokers.
Estimates on retail forex trading in Nigeria show a 350-450 million Naira daily volume in the market, and that this figure is on the rise. Investor interest in Forex has been steadily growing over the last 10 years, and there could be as high as 300,000 retail forex traders in Nigeria of which 25-30% are actively trading in the markets every month.
Based on the net deposit volume reports by Forex trading platform research firm CPattern, Nigerian forex traders on average make deposits of around $514 quarterly, behind South Africa ($742).