Exchange Provides Nigerians Bitcoin Access

“Bitcoin-naira transactions involved making a transfer to a dollar account, usually via a money transfer service like Western Union, and this workaround is not really in the spirit of the digital currency movement,” said Nigerian fashion designer Kunmi Otitoju.

Otitoju is the founder of Minku Leather Goods, “My company was the first to accept bitcoin in Nigeria, and so far, the only Nigerian company accepting bitcoin. So adoption hasn’t been high, though there is buzz and an interest, and I think people want to do things.”

Despite laggish adoption, the country has a lot of potential, according to Gareth Grobler, founder of iceCUBED. “As the biggest economy in Africa, with over 40 million people connected to the internet in one way or another, it’s only natural that Nigeria is looking to take part in the opportunities that the internet affords everyone around the world. We have to be realistic though, the Bitcoin technology has yet to be packaged and applied correctly for it to be a mainstream alternative currency, but as an agnostic payment settlement mechanism within a larger framework it ticks all the boxes and could perhaps have a significant impact on shaping the Nigerian digital economy landscape. It is a market that simply just cannot be ignored any longer.”

The company will be “packaging” bitcoin with help of Africa’s most popular mobile money processor, Vogue Pay. Vogue Pay has worked with ICEX3 to give Nigerians the payment rails it needs to on and off board the naira. Vogue Pay will allow their users to send naira to and from the exchange with their mobile phones.

“Building relationships with reputable companies such as ICEX3 in South Africa, who are also focused on making e-payment accessible to as many people as possible; we will continue to set the pace of the Nigerian online payment industry. The example we are setting will pave the way for young African entrepreneurs to foster better business relationships, making the online markets more accessible to millions of Africans,” said VoguePay Compliance and Marketing director, Geoffrey Weli Wosu.

Considered a high risk country with rampant online fraud, Nigerians have been cut off from the online economy but bitcoin could change that. “​One of the main obstacles faced by online retailers is fraud, which unfortunately means that a large consumer base is excluded due to inefficient systems being used for the transfer of value online. Further development of the Bitcoin protocol and the applications that it supports, coupled with consumer education, paves the way for a multitude of cross border transactions taking place transparently and securely via an agnostic payment protocol.

Should bitcoin adoption be successful in Nigeria, online retailers [will] have an additional market of over 40 million customers,” explained Grobler.

iceCUBED are also working to allow Nigerians to sell their goods to the rest of the world through bitcoin. They have teamed up with XBTerminal, an online bitcoin merchant solution provider, to bring bitcoin adoption to Nigerian merchants. The service will be launching in the early half of 2015.

Online ecommerce is just one opportunity for bitcoin in the country. Otitoju explains, “According to the World Bank, Nigeria topped African countries in home remittances, with $21 billion sent from Nigerians living abroad in 2013 alone. Remittance fees charged by money transfer companies like Western Union are usually 8 to 10 percent of the amount being sent, that’s somewhere between $2.3bn and $1.82bn in remittance fees in 2013 alone! I think most of us would prefer that more of the money end up with the intended recipients in developing economies, and this presents an opportunity for bitcoin, where money can be transferred for 0 to 0.1% of the amount being sent.”

Another opportunity for bitcoin is as a hedge against of the drop of the naira. As an OPEC nation and the largest oil producer in Africa, the country’s currency has been hit hard by the recent decline in oil’s price. The US/NGN exchange rate has fallen from 162 nairas for every US dollar in July to 183 in January, according to exchange-rate.org. The central bank is trying to defend the currency by imposing capital controls and raising interests but analysts predict a 15 to 25 percent drop in of value in 2015.

iceCUBED started in 2013 in South Africa, trading litecoin and bitcoin for rand. Run by a team of English and South African financial professionals, they designed the exchange for traders. The live order book exchange features a robust trading platform and low trading fees. In the upcoming weeks they be adding the US dollar and English sterling to their exchange.