Nigeria might not be the first country to come to mind when discussing cryptocurrencies. However, businessmen in the African nation have recently begun dealing in Bitcoin, as it is a more stable medium of exchange than Nigeria’s national fiat currency.
Nigeria’s currency, the Nigerian Naira, has consistently lost its value over the last five years. As the national currency has plummeted, Nigerian entrepreneurs have started to explore other means of payment that might be more steady than the Naira.
The uncertainty surrounding Naira presents a major problem for Nigerian entrepreneurs doing business with firms from other countries. The story of Silas Okwoche, co-founder of Nerve Mobile, paints the perfect picture as to why Nigerian businesses are starting to look for alternatives to Naira.
Nerve Mobile mainly purchased Android smartphones from China, over the popular e-commerce platform Alibaba. However, as the Nigerian Naira unexpectedly fell against the Chinese yuan by more than 15%, it became too expensive for Silas to import and resell these phones.
Another Nigerian entrepreneur dealing in hardware from China, going by the alias Temo, instead uses Bitcoin when acquiring Chinese components. Not only does this protect him from the price swings of the Naira, it is also far faster than going by normal channels, and does not entail any bank fees.
Although Bitcoin and other cryptocurrencies have often been accused of being volatile, they may very well present a means of payment that is more stable over periods of time than the national currency in Nigeria.
Furthermore, the extreme volatility of the Nigerian Naira makes it hard for businesses to plan ahead, due to not knowing what the exchange rate will be tomorrow – not to mention what the exchange rate might be in a year’s time.
A third Nigerian entrepreneur, a web designer by the name of Soji, has adopted Bitcoin as his primary means of payment. Soji has stated that Bitcoin allows him to “buy anything”, and send money to virtually anyone – except for “old people”, according to Soji.
It is not only Nigerian entrepreneurs who can benefit from Bitcoin and other cryptocurrencies. Other economies plagued by volatile financial markets can also find some solace in the relative stability of cryptocurrencies.
Toshi Times recently ran a piece on cryptocurrency donations and use in Venezuela, where the annual inflation rate was 24,600% this May. Venezuela is yet another market where Bitcoin and other cryptocurrencies represent a safe haven for people’s hard-earned money.
It would not be unthinkable that cryptocurrencies, in general, will become more prominent and widely adopted in developing economies with weak or unreliable fiat currencies. As always, only time will tell how things play out, however, the growing use of Bitcoin among Nigerian entrepreneurs is certainly intriguing.
Image Source: “Flickr”