In Nigeria — where cryptocurrencies often underpin local economies — Bitcoin remains as popular as ever, despite a few shaky weeks elsewhere.
Nigeria is West Africa’s largest economy, and has the world’s third-largest Bitcoin holdings as a percentage of gross domestic product (GDP), behind Russia and New Zealand, according to Citigroup. This affinity with Bitcoin is related to the fact that blockchain-based payment systems drastically improve the ease of doing business in the country, helping liberate Nigerians sidelined by the global financial system.
Take Olaoluwa Samuel-Biyi, a 27-year-old entrepreneur. He first considered using cryptocurrencies when credit card firms and other established payment providers refused to partner with his global remittance company, SureRemit, deeming the venture too risky. “They said the markets were too high risk and that people could finance terrorism,” he told global news agency AFP. “It’s ridiculous.”
“It’s so hard to send money from Nigeria to Zimbabwe, or from the United States to Sudan,” he explained. Banks were “very tedious” and payment companies “generally exploitative,” he said. “There’s heavy discrimination, definitely. We have to go all around them to succeed.”
In time, Samuel-Biyi realized that cryptocurrencies offered a solution to his problem: So SureRemit developed its own virtual coin. The coins are used to buy vouchers, which may be used to purchase goods and pay bills at participating merchants in eight countries in Africa and the Middle East.
In January, SureRemit held its initial coin offering (ICO) — which sold out in just two days, garnering $7 million dollars for the company. The 500 million tokens, each worth two US cents, were snapped up by major cryptocurrency players, including Hashed, a leading crypto-fund based in South Korea. “We were expecting scam allegations,” said Samuel-Biyi, referring to Nigeria’s reputation for online financial fraud. “But the world really accepted it.”
It’s not surprising that SureRemit was conceived in Nigeria: Remittance flows in 2016 were worth $19 billion — more than 4% of GDP (worldwide, the remittance market was worth $429 billion in 2016, according to the World Bank). Sub-Saharan Africa has some of the highest remittance costs in the world, certainly the most expensive fees seen within the continent. Case in point: To send money from France to Mali incurs a 5% fee, a quarter of what it costs to send money from Nigeria to Mali.
Such high fees have for years forced Nigerians to find alternative, sometimes risky, ways to transfer money. “I remember back in 2004, E-gold (a defunct cryptocurrency) was the only option anyone in Nigeria had to make online payments,” said Tim Akinbo, the founder of Tanjalo, a Nigerian exchange where people can buy Bitcoin with the local naira currency. “There are still African countries cut off from international commerce online. Bitcoin is technology that allows financial inclusion.”