LAGOS — Nigeria has become Sub-Saharan Africa’s dominant crypto market, pulling in $59 billion in inflows between July 2023 and June 2024, driven heavily by dollar-pegged stablecoins, the International Monetary Fund (IMF), said on Tuesday.
According to the IMF report “Stablecoins in Nigeria- A Growing Cross-Border Channel”, the country now accounts for roughly 60% of all stablecoin inflows into the region since 2019.
The explosive growth positions Nigeria second globally on Chainalysis’s Crypto Adoption Index, as citizens increasingly ditch the local currency for digital dollars to hedge against inflation.
“What began as a niche technology has become a meaningful cross-border payments channel. Its rapid growth is easing long-standing frictions in cross-border transactions.” IMF noted.
High traditional remittance fees, averaging 9% in Sub-Saharan Africa, and persistent foreign exchange illiquidity in official banks have forced households and businesses into decentralized peer-to-peer networks.
While these digital tokens offer cheap, near-instant cross-border transactions, the IMF warns they trigger severe “digital dollarization,” which threatens Nigeria’s monetary sovereignty and weakens domestic policy transmission.
The migration of massive financial volumes away from traditional banks into private digital wallets also complicates financial oversight, escalating potential money laundering and illicit finance risks.
To counter this, the IMF urges Nigerian authorities to enforce tighter monetary policy to stabilize the naira, alongside deploying blockchain analytics to monitor crypto-to-fiat conversion points.
The report emphasizes that suppression will not work, advising regulators to instead upgrade national payment infrastructures to directly compete with stablecoins on speed and transaction costs.
