Population: 206 million

Wealth in domestic bank deposits: 84 billion USD (December 2019)

Offshore expatriated wealth: 20.8 billion USD

Main offshore banking locations: N/A

Number of individual brokerage accounts: 3 million (2019)

Crypto adoption (% of population): 12.9 million (5.75%)

TLDR

Nigeria has complex foreign exchange controls and restrictions on foreign investment. Qualified investor rules are stringent. Crypto is popular but lacks regulation. The SEC has recently established crypto asset rules. Progress is being made to unify exchange rates and ease forex access.

Exchange Controls

Nigeria has historically maintained strict foreign exchange controls and multiple exchange rates, including official CBN rate, interbank rate, IE window rate, and black market rates. This has made it difficult for businesses to access foreign currency needed for investment and imports. Shortages of USD and other foreign currency have persisted.

The CBN previously barred importers of certain goods from accessing dollars and placed limits on daily ATM withdrawals and dollar sales to Bureau de Change operators. These forex scarcity policies aimed to stabilize the naira but have had mixed results.

In 2023, the new administration has pledged efforts to unify the multiple exchange rates into a single rate. This could streamline forex access, reduce arbitrage opportunities, improve transparency, and boost investor confidence.

Investors are guaranteed unrestricted repatriation of capital, profits, and dividends, if invested with Certificate of Capital Importation (CCI). But complex documentation and oversight by the CBN causes delays.

Distribution of Foreign Securities

Distribution of foreign securities in Nigeria requires registration with SEC and listing on a Nigerian exchange. Only registered Nigerian capital market operators can facilitate foreign security investments.

Confusion arose recently regarding fintechs offering foreign securities access, with back-and-forth stances by SEC. After initial approvals, SEC warned operators to desist. But leading fintech Chaka was later granted a Digital Sub-Broker License.

CBN restricts use of official forex for foreign securities purchases, but private foreign currency can be utilized. The opaque regulatory environment causes uncertainty for fintech innovators in this space.

Qualified Investors

Nigeria has strict qualified investor rules for specialized investment funds, requiring:

– Minimum N100 million in investment assets

– Minimum N5 million investment per fund

– Disclosed exposure limits to counterparties

– Disclosed fund manager expertise and shareholdings

This ensures participants have sufficient sophistication and wealth. But the high net worth requirements limit eligible investors.

Cryptocurrency Regulation

Cryptocurrency is popular in Nigeria, especially for payments and remittances, but lacks regulation. The CBN bans banks from enabling crypto transactions, but peer-to-peer trading continues actively.

In 2022, the SEC published comprehensive crypto asset rules, requiring exchanges to register as Virtual Asset Service Providers, meet capital requirements, implement cybersecurity measures, and more.

Proposed legislation would tax crypto income and transactions, improving policy alignment with global standards. But lack of legal tender status persists.

With over 5% crypto adoption, Nigeria is poised for further crypto innovation given appropriate regulatory support.