Nigeria Changes Currency for Oil Trade
Nigeria, Africa's largest oil producer, is ending the sale of oil in US dollars and switching to trading in its domestic currency – the naira. This significant decision was made by the Federal Executive Council (FEC) to strengthen the Nigerian economy.
According to Mohammed Manga, spokesperson for the Ministry of Finance, this shift is expected to improve the country's economic growth and stability. Nigeria, which holds approximately 37 billion barrels of oil reserves (3.1% of the world’s reserves), is facing an ideal opportunity to make this change due to geopolitical tensions such as those in the Middle East and the war in Ukraine.
Rising Oil Prices Due to Middle East Tensions
The conflict between Iran and Israel has driven oil prices up. Nigeria’s Bonny Light crude oil has increased in price from $73 to $78 per barrel. The global benchmark Brent crude oil has risen by over 10%, now trading at $79 per barrel.
Nigeria’s 2024 budget is based on a reference price of $78 per barrel. If the country meets its daily production targets, this development could help reduce Nigeria's budget deficit.
Potential Stabilization of Nigeria's Economy
Economist Dr. Abdulsalam Muhammad Kani stated that if oil prices remain high and production stays consistent, Nigeria could stabilize its economy. According to him, this could provide relief for Nigeria’s debt service and the financing of public projects. Additionally, a higher inflow of US dollars into the economy could strengthen the naira and lower import costs, which would positively impact the prices of goods.
Corruption and Oil Theft Remain a Challenge
Despite rising oil prices, Nigeria continues to face problems with oil theft and corruption, which undermine the potential benefits. Energy expert Eng. Sani Yabagi highlights that the profits from oil often end up in the hands of thieves, resulting in significant losses for Nigeria.
According to a report from the Nigerian National Petroleum Corporation (NNPC), 188 cases of oil theft were reported in the Niger Delta between August 24th and 30th, which drastically reduces the amount of oil Nigeria can sell, even as prices rise.
Challenges in Refining Oil
Nigeria has only recently begun refining oil domestically with the opening of the Dangote refinery, which is a private operation. However, its impact on national revenues has been minimal so far. While Nigeria is now selling oil to local refineries in naira, Yabagi warns that without further actions, this alone will not solve deeper issues.
Outlook for the Future
As the Middle East crisis continues, global energy prices are expected to rise. While this could bring short-term gains for Nigeria, without proper management, the country may not benefit as much as it could from this increase.
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In a bold move, Nigeria, Africa’s largest oil producer, has decided to stop selling its oil in US dollars and will now trade in its local currency, the naira. This landmark decision, announced by the Federal Executive Council (FEC), is aimed at strengthening Nigeria's economy during challenging global times.
According to the Ministry of Finance, this shift will help drive economic growth and provide much-needed stability. With 37 billion barrels of oil reserves (about 3.1% of the world’s total), Nigeria is seizing this moment amidst global geopolitical tensions like the Middle East conflict and the ongoing war in Ukraine.
🔥 Rising Oil Prices Amidst Global Conflicts
Tensions between Iran and Israel have caused a significant spike in global oil prices. Nigeria’s Bonny Light crude has surged from $73 to $78 per barrel, and Brent crude has seen a similar rise, now trading at over $79 per barrel. With Nigeria’s 2024 budget based on a reference price of $78, hitting production targets could be the boost Nigeria needs to reduce its budget deficit and ease economic pressures.
📈 Could This Stabilize Nigeria’s Economy?
Economists believe that if oil prices remain high and production stays steady, Nigeria’s economy could stabilize. This would lead to reduced debt service, increased funding for public projects, and a stronger naira. A stronger naira would make imports cheaper, benefiting consumers through lower prices on essential goods.
🚨 Challenges: Corruption & Oil Theft
Despite the potential gains, Nigeria faces significant challenges. Corruption and oil theft continue to plague the industry, with profits often siphoned off by illegal actors. In just one week, 188 cases of oil theft were reported in the Niger Delta, according to the Nigerian National Petroleum Corporation (NNPC), limiting Nigeria’s ability to capitalize on rising oil prices.
🛢️ Refining Woes Continue
While the opening of the Dangote refinery marks a step toward domestic oil refining, its impact has been minimal so far. Selling oil to local refineries in naira is a start, but more drastic measures are needed to address Nigeria’s deeper issues in the oil sector.
🌍 The Road Ahead
With rising global energy prices expected to continue due to the Middle East crisis, Nigeria has an opportunity to benefit from short-term gains. However, without proper management and efforts to curb corruption, these gains could slip away. It’s time for Nigeria to capitalize on this moment and steer its economy toward a more prosperous future.
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The Nigeria's crypto market is expected to continue its growth in 2024, driven by a young and tech-savvy population. Despite economic challenges like inflation and currency devaluation, Nigerians are increasingly turning to cryptocurrency as a means of financial transaction and store of value. The government's shift from hostility to support, as seen in the new president's vision for a "blockchain-powered" digital economy, is also expected to boost growth. However, regulatory clarity will be crucial in shaping the future of crypto in Nigeria. Some key trends to watch include:
1. Continued crypto growth: As more users come online and DeFi continues to evolve, crypto is likely to play an increasingly major role in Nigeria's economy.
2. Emergence of RWA tokenization: The Nigerian government's push for a blockchain-powered economy is expected to lead to a surge in asset tokenization, making assets like real estate and oil more accessible and liquid.
3. Improved regulatory clarity: The government is likely to continue developing a more favorable regulatory environment for blockchain, driven by its goal to create a "blockchain-powered" digital economy.
4. Renewed eNaira adoption drive: The government is expected to renew efforts to promote eNaira adoption, enhancing its features and functionality to make it more attractive to users.

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"Chukwumaeze Dike, a crypto enthusiast and cybersecurity specialist, said he finds the request for the top 100 users surprising and doubts Binance will comply.
Nigerian cryptocurrency stakeholders are weighing in on the government’s request for Binance to disclose details about its top 100 users in the country amid a crackdown on the exchange. Opinions in the crypto community vary, with some supporting the government’s actions while others disagree.
In interviews with Cointelegraph, local crypto stakeholders shared their opinions about the situation. Crypto analyst Rume Ophi said that the government was well within its rights, as requests like this are always made when the government is trying to investigate national security matters.
However, Ophi’s opinion doesn’t sit well with that of other local crypto enthusiasts who took to X to express their disagreement. Chukwumaeze Dike, a crypto enthusiast and cybersecurity specialist, said he finds the request for the top 100 users surprising and doubts Binance will comply.
However, Nigerian finance professional Olumide Adesina took to X to inform Binance users about the specified terms for disclosing such information via the company’s Government Law Enforcement Request System.

The Binance Government Law Enforcement Request System states that Binance may share user information with courts, law enforcement authorities, regulators, attorneys or other third parties to comply with laws and respond to law enforcement and regulatory requests, especially when compelled to by a subpoena, court order, search or seizure warrant."

Published by AMAKA NWAOKOCHA on Cointelegraph

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