Naira's Value Is Uncertain, Nigerian Art Workers Choose To Sell Works With Crypto Currency

JAKARTA - Nigerian art dealer Ebuka Joseph started using cryptocurrencies last year when business ground to a halt due to COVID-19. Now he is hooked even though the financial authorities disagree.

"Crypto just allowed me to transact freely and within minutes we were done with our transaction," the 28-year-old told Reuters from a friend's studio in Lagos where he displays his works.

Nigeria's Central Bank banned local banks from working with cryptocurrencies in February, warning of "severe regulatory sanctions" and freezing accounts of companies it said to use them. But Joseph's appetite for crypto, like many in Nigeria, continues to grow.

For people like him, the crackdown has highlighted the benefits of using currencies outside of central bank control, and Nigeria remains the largest market for cryptocurrency trading platforms like Paxful.

According to experts as quoted by Reuters, people in Nigeria are turning to crypto for business, to protect their savings as the naira loses its value, and to send payments overseas as it is often difficult to get US dollars.

In March, right after the central bank's ban, the volume of cryptocurrency dollars shipped from Nigeria rose to USD 132 million, up 17% from the previous month, research firm Chainalysis said. Transactions in June were 25% above the same month last year.

Sly Megida, another artist who uses cryptocurrencies to sell his work, says his buyers around the world are ready to accept the use of digital currencies and they are also protecting his finances.

"Naira is deviant and we are trying to keep up the art," he said, calling crypto "a currency where people don't think I'm paying too much or too little".

Joseph's peer-to-peer platform Paxful saw a 57% increase in trading volume in Nigeria in the year to June, while user numbers jumped 83%.

Exchange Yellowcard, which has adopted a peer-to-peer model in Nigeria since February, told Reuters that usage was "really skyrocketing".

Both Paxful, which has opened an office in Abuja to lobby the government to change its attitude towards crypto, and Yellowcard say Nigerians are generally turning to crypto for business rather than speculation.

Chainalysis, in a report last month on African crypto, said the central bank ban locked out most Nigerians from traditional crypto exchanges, leading many to turn to peer-to-peer systems.

This is done through platforms like Paxful or Local Bitcoins, which check on both sides. But other users just exchange crypto for Nigerian naira or other currencies with people they find on WhatsApp or Telegram.

As a result, Chainalysis says Nigeria's crypto usage is likely even higher than the numbers suggest.

However, the risk remains. In August, the central bank froze the accounts of several crypto users for allegedly obtaining funds from illegal foreign exchange dealers, making many companies using cryptocurrencies reluctant to talk about it.

However, Joseph was not affected. “You can sell to people overseas, and they can actually pay in a different currency, which you can always convert,” says Joseph.