Nigeria’s Crypto Boom Continues in 2024

• Nigeria ranks second globally in crypto adoption, driven by inflation hedging and business payments.
• Stablecoins account for 43% of Sub-Saharan Africa’s total crypto transaction volume.
• South Africa is seeing rapid growth in crypto adoption, driven by institutional activity.

Nigeria’s cryptocurrency economy has boomed, making it a global leader in crypto adoption. According to a report by Chainalysis, between July 2023 and June 2024, the African country ranks second worldwide. 

A key factor behind this rise is the increasing adoption of stablecoins across Sub-Saharan Africa, driven by the need for inflation hedging, cross-border payments, and business transactions in countries like Nigeria, Ethiopia, and South Africa.

The report highlights that Sub-Saharan Africa recorded $125 billion in on-chain value during this period, a $7.5 billion increase compared to the previous year.

Stablecoins Mitigate Inflation and Currency Devaluation

Countries with volatile local currencies, such as Nigeria and Ethiopia, are turning to stablecoins like USDT and USDC as a reliable store of value. This is particularly critical in Nigeria, where the naira has significantly depreciated, hitting unprecedented lows in February 2024. As a result, stablecoins now account for 43% of the region’s total cryptocurrency transaction volume.

Chris Maurice, CEO of Yellow Card, attributes this growth to the widespread foreign exchange (FX) shortages across the continent. He said,

“About 70% of African countries are facing an FX shortage, and businesses are struggling to access U.S. dollars. Stablecoins offer a much-needed alternative.”

The report also noted a direct correlation between naira depreciation and the increased use of stablecoins in transactions under $1 million, with inflows particularly spiking during its devaluation.

Nigeria’s Crypto Economy Grows

Chainalysis reported that Nigeria received an estimated $59 billion in cryptocurrency value over the past year, with stablecoins making up 40% of the inflows. 

Many Nigerians choose stablecoins because they are faster and more affordable than traditional methods. The study found that the average cost of sending a $200 remittance via stablecoins is 60% lower than using fiat channels, according to the study. 

The report also highlighted that Nigeria’s crypto activity consists mainly of smaller denomination retail and professional sized transactions. As context, approximately 85% of the value of transfers received is under $1 million. 

Moyo Sodipo, co-founder of Busha, said that the perception of cryptocurrency has changed. He stated that people are now beginning to witness the real-world utility of cryptocurrency, especially in day-to-day transactions, and moving away from the idea that crypto is just a get-rich-quick scheme.

In addition to remittances, decentralized finance (DeFi) is growing rapidly in Nigeria. The DeFi platforms are providing new opportunities for Nigerians to access loans and earn interest outside the traditional financial system. Last year, over $30 billion was transferred through DeFi platforms in Nigeria. 

South Africa Sees Institutional Interest

As the crypto boom continues in Nigeria, parts of South Africa are also experiencing significant growth in crypto adoption. Last year, South Africa received over $26 billion in cryptocurrency value. This growth is largely driven by institutional players, with many traditional financial institutions exploring crypto services like custody solutions for digital assets.

Rob Downes, Head of Digital Assets at Absa Bank, emphasized the growing intersection between traditional finance and crypto. He stated that institutional clients are more inclined to use stablecoins to manage and mitigate market volatility.