Forex and crypto offer numerous opportunities including trading and investing. Despite currency inflation across Africa and the bearish global crypto market, there has been an explosive increase in the number of Africans involved in the forex and crypto markets with forex brokers in South Africa. Out of all countries in the region, South Africa is currently leading the online retail trading space with its well-defined regulatory framework. Forex trading is simply the analysis of different currency pairs in order to place buy or sell trades based on the direction a trader believes the market will go in the immediate future. Also, crypto trading is similar to the forex trading concept. Whereas, crypto investors mostly buy their favorite cryptocurrencies with the hope to sell off for profit at a higher future price. Also, some crypto investors buy popular cryptocurrencies like bitcoin for daily business or personal transactions.
Online retail forex trading is rapidly increasing among South Africans and other African countries like Nigeria and Kenya. Simultaneously, crypto trading and its usage is experiencing a skyrocketing increase in the African continent. Among all African countries involved in trading, only South Africa and Kenya have a defined regulatory body that oversees operations within the country’s financial markets. Let’s take a look at the reasons and statistics behind the increased popularity of forex and crypto in Africa.
The Popularity of Forex in Africa
Forex trading and investing have experienced a notable explosion in popularity in African countries. With rising inflation and increased unemployment, Africans turn to forex trading as a new way to earn income, especially in foreign currencies. South Africa is currently leading in Africa’s online retail forex market which is largely due to the presence of a strong financial regulatory framework in the country. The Financial Sector Conduct Authority (FSCA) is the approved regulatory body in South Africa responsible for overseeing the country’s financial markets. Some other leading African countries involved in the forex market like Nigeria do not yet have any defined regulatory body overseeing the country’s financial markets.
This increased popularity of online retail forex in South Africa and other African countries is largely due to many reasons. Some of these reasons are listed below:
- Affordability with a Low Barrier to Entry: Forex trading requires very little capital to start as popular forex brokers in Africa often offer a very low minimum initial trading capital.
- Easy Accessibility to Forex Education: Learning to trade forex does not require a university degree or expensive specialized training. Many Africans learn forex trading through free educational resources that can either be found on youtube on blogs. Though, a few traders decide to invest in paid forex trading with the hope of gaining more insight into the forex market.
- Forex trading can be easily combined as a part-time source of income, especially if the trader is using intraday trading strategies.
- Increase in Internet Penetration in Africa: Stable internet connection is required to successfully monitor and trade the forex market. The increase in the availability of internet access within the continent is also a reason for the increased popularity of forex in Africa.
The Popularity of Crypto in Africa
Despite the fact bnb price and nearly all other crypto coins are experiencing the bear market in the recent past, there has been an increase in the popularity of crypto in Africa. This is largely due to the fact that Africans mostly use crypto for day-to-day transactions rather than for speculation purposes. A blockchain forensics firm which is known as Chainalysis states that four African countries- Kenya, Nigeria, South Africa, and Tanzania- all rank in the top 20 for global crypto adoption. In addition, the cryptocurrency market in Africa grew by over 1200% between 2020 and 2021.
South Africa is the most developed financial market in Africa with a well-defined regulatory framework. According to Finder’s Cryptocurrency Adoption Index report, 4.2 Million South Africans currently hold cryptocurrencies. Out of these 4.2 Million crypto owners in South Africa, 47% own bitcoin. Finder’s crypto adoption October 2022 report shows that South Africa ranks 17th out of 26 countries for global crypto adoption.
Forex versus Crypto Popularity in Africa
Forex and crypto have both gained increased popularity in Africa. Though forex and crypto are both parts of the financial market, their increased popularity in Africa has taken different dimensions. In the forex market, Africa has witnessed more of an increase in online retail trading. Whereas, crypto is more of direct usage of crypto coins for banking transactions as a means of overcoming the numerous banking challenges in the region.
As the forex market is more stable with high liquidity, many retail traders in Africa are more inclined towards forex trading. Though the increase in crypto popularity in Africa is more of direct usage, some traders also trade crypto with the aim of gaining profits. Also, South Africa is a target location for brokers and other financial markets businesses mainly because of its globally recognized regulatory framework that oversees operations in the country’s financial markets (forex and crypto inclusive).
Many Africans view forex trading as a new means to make additional income while crypto is a way to easily make and receive payments, especially from international clients or partners. There is more of a grassroots adoption of crypto in Africa as it is used for daily transactions. It is very difficult to give precise statistics on the crypto volume traded in Africa mainly because a huge portion of these transactions are not done on established exchanges like Binance but are rather informal peer-to-peer transactions.
Conclusion on the Popularity of Forex and Crypto in Africa
Forex trading and crypto usage are solutions to real problems that Africans currently face. As inflation and unemployment massively increase, Africans struggle to find new sources of income, and many view forex trading as a probable solution. Africa as a developing region is also experiencing banking challenges and Africans are turning to crypto as an easier and more affordable banking solution. In Africa’s financial markets, South Africa is currently leading with its well-defined regulatory framework and this is attractive to foreign and local investors.
The issues forex and crypto are currently solving in Africa are long-standing issues so some may wonder why the sudden explosion in popularity in recent years. From our critical analysis, increased penetration of stable internet and more access to mobile devices are major trends influencing the increased popularity of forex and crypto in Africa. This region is currently positioning itself as a major part of the forex and crypto markets. You too can tap into these juicy financial markets.