In recent years, there has been a big boom, in online trading in Nigeria, with more and more people, signing up to give it a try.
Although, it takes most people, quite some time, to get the hang of it, it’s generating a lot of excitement, partly because, it’s the first chance many people have had, to do more with their money, than just spend it, or put it in the bank.
How has all this new economic activity affected the wider economy? How does it fit, into the wider economic picture and what could it mean, for the country, going forward?
What is online trading worth?
Between $10m and $15m is traded through the forex markets, by private individuals in Nigeria today.
Because 90% of forex trading is carried out by financial institutions, including banks and other lenders, this gives us a total of $100m to $150m.
It’s more difficult to establish online trading volumes, when it comes to stocks and shares, or commodities, as those markets are far more volatile and the overall percentage, of each undertaken online, is smaller.
Since the oil crash, five years ago, the share market has been declining, but forex has grown.
Commodities are now starting to grow, especially, oil traded as a commodity, but are still not well established online, something that is likely to change over the next few years.
Measuring the overall contribution of trading, to the economy, however, is more complex than looking at trading volume alone.
Online brokers and the service sector
Nigeria’s home grown brokers, form an important part of the service sector, which currently accounts for 16% of economic output.
At present, many Nigerian traders prefer to use international brokers likebecause, they are more confident about the security these companies offer, but even international companies, sometimes employ Nigerian staff, to meet the demands of their customers.
There are increasing calls, for tighter regulation of brokers, under the law and once that happens, our own online trading businesses, should be able to close the gap and start competing, on an even footing, in the international marketplace.
Having more of such services, based here, will help to create more good jobs, for young people with good mathematical skills.
Expanding options in rural areas
Online trading is, already helping, to improve employment options and economic productivity, by providing an alternative means of achieving success for people, in rural areas, some of whom are using it, as a stepping stone to good city jobs.
As long as there is, a reliable signal and you have a good quality phone, you can trade, no matter where you are.
This means that, in places, where the only jobs used to be in agriculture or construction, there are now ways for bright young people, to do something that really utilises their natural talents, which helps all Nigerians because, it generates more income for the State through tax.
Finance companies, can look at trading records, to see who will be a good hire, which lets them take on people, who might not have had the chance to progress very far, in formal education, but who have a lot of potential.
Membership of AfCFTA
Trading shares and commodities is, easier between countries in a shared regulatory environment.
The rise of online trading, means that, many more people had a direct interest in decreasing trade barriers and helped put pressure on the government to negotiate Nigeria’s entry into AfCFTA, as it did earlier this year.
This will strengthen intra-African trade and help to create more stable economic conditions for Nigeria in the long term, so that it’s not as vulnerable to changes in the Western appetite for oil.
The personal connections that are being made, through online trading forums are often key, to setting up the new trade deals that AfCFTA makes possible, providing an opportunity for traders with a shared interest in particular areas to connect, without having to go through middle men, or travel to conferences and hope to get lucky by bumping into the right kind of person.
Overall, trade makes up around a quarter of economic activity in Nigeria, but improved connectivity and ease of doing business online is, likely to increase that.
In combination with improved infrastructure for freight, online trading is, helping to open up opportunities right across the continent and beyond.
It has democratised business and it is helping, to create a new Nigeria, where having family money is, less important to success, with ability and hard work, finally getting the rewards they deserve.
Featured Image: thetrentonline
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