• The National Bureau of Statistics (NBS) reported on Tuesday that foreign direct investment (FDI) in Nigeria, the largest economy in Africa, dropped by 33% last year due to a severe shortage of dollars.
• The adoption of crypto in Nigeria has grown at an exponential rate. In Chainalysis‘ 2020 Cryptocurrency Geography Report, Nigeria ranked eighth in crypto adoption and usage rate among 154 countries included in the study.
• Despite this growth, FDI has decreased by approximately 90% since its peak of $4.7 billion in 2008.
Record Low Foreign Investment into Nigeria
The National Bureau of Statistics (NBS) reported on Tuesday that foreign direct investment (FDI) into Nigeria fell by 33% last year due to a severe shortage of dollars, which discouraged crypto companies from expanding into the country. The investment declined to $468 million from the previous year’s $698 million, representing a decrease of approximately 90% since its peak of $4.7 billion in 2008.
Growth Of Crypto Adoption In Nigeria
The adoption of crypto in Nigeria has grown at an exponential rate with many citizens now preferring to store their money in digital currencies over fiat cash due to the constant devaluation of the national currency, the naira. According to Chainalysis‘ 2020 Cryptocurrency Geography Report, Nigeria ranked eighth in crypto adoption and usage rate among 154 countries included in the study.
Barriers To Foreign Investment In Crypto Companies
Despite this growth, local data analyst and crypto enthusiast Obinna Uzoije says that the low rate of foreign investment could be attributed to lack mainstream use for cryptocurrency within the country. This suggests that investors are still not confident enough about investing into Nigerian markets which would have brought more funds for expansion and development for local startups within blockchain technology or cryptocurrency industry as a whole.
Solutions To Increase FDI
In order to attract more foreign direct investments into Nigerian markets it is recommended that government should create incentives such as tax breaks and other benefits for investors who are willing to invest into local startups within blockchain industries or any other industries associated with cryptocurrency or new technologies related to decentralized finance (DeFi). This will create more opportunities for local entrepreneurs while also bringing more capital and technological expertise from abroad which will help develop innovative solutions needed within these industries while also increasing job opportunities across different sectors within Nigerian economy as a whole.