What does forex trading in Africa look like now? It is one of the most promising financial markets globally that brokers and stakeholders are eying.
Forex trading is one of the biggest financial markets globally, with a financial turnover of $6.6 trillion daily. The biggest forex markets are New York and London, and other major markets include Australia, Canada, and Japan. The USA, Europe, and parts of Asia have well-established financial markets. For years, forex trading in Africa has been relatively insignificant compared to other continents.
However, Africa has observed a steady growth in forex trading over the past few years. According to a survey, brokers operating in Africa have experienced a mean growth of 21% to 35% from 2019 to 2020.
The biggest forex markets in Africa are South Africa and Nigeria. Other countries that have recorded steady growth in forex markets over the past few years are Kenya, Namibia, Botswana, Tanzania, and Rwanda.
South Africa is the market leader in forex trading, with a daily volume of up to $72 billion. The average monthly deposit for South Africa is $742.04, followed by Nigeria and Kenya at $514.42 and $363.56 billion, respectively.
Is Forex trading legal in Africa?
If you are interested in the African forex markets, you probably wonder, is trading legal in Africa? While you cannot say it is legal to trade forex in Africa, it cannot break any law.
In most African countries, forex trading is unregulated. In Nigeria, one of Africa’s largest forex trading markets, the Nigerian financial regulator provides that they do not have a solid regulatory framework for online trading.
However, you are free to trade forex in South Africa, Nigeria, Kenya, Namibia, Egypt, Tanzania, and more. However, the lack of regulation makes it hard for traders to identify unscrupulous dealers.
Although there is a steady growth of forex trading in Africa, it only represents just a small fraction in the global arena, and it only represents 5.5% of the world’s total forex trade. However, it is speculated that the forex markets in Africa will keep on expanding.
Factors contributing to the rise of forex trading in Africa
Several reasons have caused the African forex markets to blossom over the past few years. The growth can be attributed to factors such as:
1. Improved telecommunication networks
Communication and the internet have greatly improved throughout the continent. According to Statistics, Kenya has the highest percentage of internet users at 87.2%, Libya at 84.2%, and Nigeria at 74%.
The internet penetration in African countries has resulted in a high rise in forex trading and other types of trade. As internet usage increases, more forex trading opportunities continue to open up.
2. Covid-19 pandemic
The unprecedented covid-19 pandemic resulted in job losses and mandatory lockdowns. The hard situation pushed people to look for an alternative source of earning online. One of the ways of making a living online is through forex trading. Young people have since taken up forex trading as an alternative source of Africa’s livelihood.
3. Heavy marketing by brokers
The forex brokers have realized the growth potential of the African financial markets and want a share of it. They are heavily advertising their firms to potential investors throughout Africa.
The advertisement is taking place both in the mainstream media and online platforms. Brokers aggressively target young people on social media while offering them zero fees and their local currencies as the base currency.
The aggressive marketing by brokers, low transaction costs, and other favorable conditions attract more young Africans to forex trading.
4. A change of regulations in Europe
A change of forex regulations in 2018 by The European Securities markets authority (ESMA) has limited options for the small scale brokers. Also, Australia intends to make the forex trading regulations stricter. So the brokers have started shifting their focus to the less exploited global markets, which is majorly in Africa and some developing Asian countries.
Conclusion
The African economy is growing at a high rate. Investors are discovering lucrative opportunities in Africa, including the financial markets sector. Forex trading in Africa continues to grow, thanks to stable and fast internet across the continent; forex trading in Africa continues to grow.
However, the African countries need to put in place solid regulatory frameworks for online trading to prevent fraudulent brokers and unauthorized activities from exploiting the upcoming African traders. If you are interested in forex trading, there are several brokerages that you use to help you get started.
