Best Forex Brokers in Nigeria of 2023
Remember that CFDs are a leveraged product and can result in the loss of your entire capital. Please ensure you fully understand the risks involved.
¹ Variable spreads vary according to the current market conditions, recorded for EUR/USD on 06.09.2023 at 10:42 GMT+1.
Nigeria’s financial market kicked off in 1962 with the formation of the Nigerian Stock Exchange. From inception till date, the predominant financial products traded on this exchange has been equities and bonds. The commodities exchange in Nigeria never really took off after the commodity boards were dissolved in 1986, and no other financial markets were in operation prior to the entrance of foreign currency brokers into the Nigerian market a few years ago.
Crude oil and solid mineral exploration in Nigeria has not led to the development of a local exchange where Nigerians can trade these assets. This leaves the Nigerian financial market lagging behind that of South Africa in terms of market depth.
Forex trading in Nigeria took off in 2005 when the first Cyprus-based forex brokers started to recruit traders using online advertisements. At the time, Marketiva and Northfinance (now FxPro) were the main forex brokers in Nigeria. There was no physical presence, and these brokers preferred to use online adverts and local affiliates to recruit clients onto their platforms.
According to forexbroker.ng by 2007, the forex market in Nigeria hit a solid peak. However, there were still no foreign brokers in the country. By the time the 2008 global financial crisis hit, FX trading in Nigeria took a nosedive. Many offshore brokers with questionable regulation simply folded up and absconded with the funds of many traders. These occurrences severely impacted the confidence of Nigerians in the forex market and offshore brokers saw a nosedive in the new client registrations as well as account reactivations. It was clear that the era of Nigerian forex traders simply wiring money out to unknown forex brokers whose locations could not be verified was gone.
It was against this backdrop that the first of the best forex brokers that currently operate in Nigeria, set up shop in the country and dived into the hitherto untested waters of the domesticated forex brokerage business.
The Nigerian financial market is regulated by the Securities and Exchange Commission (SEC). The role of the SEC has been primarily focused on the local stock exchange and the assets traded in it, and not much attention has been paid to the regulation of other derivative products.
With regards to the regulation of the forex market in Nigeria, the attitude of the SEC has been one of “see no evil, hear no evil, speak no evil”. The agency knows that Nigerians are trading forex with foreign brokers. They know that at least four brands have sited offices in Nigeria and are actively onboarding clients. Yet, the organization has no regulations in place and hardly even comments about the market, except for a few general warnings that ask investors to act responsibly when engaging in speculative investing, without addressing the forex market in particular. This behaviour is on contrary to the South African financial regulator FSCA, which is very active regarding forex regulations.
In late 2019, there were attempts to initiate a discussion on the regulation of the forex and cryptocurrency markets in Nigeria, but these quickly lost steam when the COVID-19 pandemic struck, diverting the agency’s attention to other matters.
So we have a situation where the forex market in Nigeria is unregulated. The local branches of the international brands that have an office in the country are not regulated nor licensed, but they are operating legally because there are no laws prohibiting them from doing so.
The best forex brokers in Nigeria are those brands whose parent companies are found in Cyprus, and which have offices in Lagos or Abuja, Nigeria. These are the only two cities that have a local presence of some CySEC-regulated forex brands in Nigeria. However, there is no local regulation, so there is no central register where you can visit to check the status of any brand that says it is a forex broker in Nigeria. However, locally based traders can always conduct spot checks to see if the brands still do business in the country or not.
A search of various Nigerian forex brokers indicates that bonuses are still given freely by forex brokers in Nigeria. These bonuses are mostly deposit bonuses, which provide extra capital for trading that ranges from 30% of the deposit amount to 100% of the deposit amount. Some of these forex brokers in Nigeria also conduct period giveaways, where users can get access to shopping vouchers and other gift items.
There are no leverage restrictions when it comes to forex trading in Nigeria. Nigerian forex trades can, therefore, easily access leverage of up to 1:500 on several local brokerage platforms. What does this translate into monetary terms?
Setting up a mini-lot position on the EURUSD requires $10,000 capital on the forex platform of a forex broker in Nigeria. A leverage size of 1:500 allows the trader to get 20-fold extra capital to setup a trade. This means that the trader would only need $20 setup a mini-lot trade. Using the conversion factor from a Naira-denominated forex account, this equates to a margin requirement of N8,000. In fact, the trader would be trading as if he or she had access to capital of N4,000,000!
Base Currency: USD or NGN?
The base currency of the forex brokers in Nigeria that we researched on this point revealed that Naira is not a common base currency available at most brokerages. That means, that traders from Nigeria usually opt for a base currency in USD, which is available basically everywhere. While this means you will have to convert your Naira to USD for a certain fee, remember that brokers automatically convert your account currency if you trade forex pairs in which your base trading account currency is not quoted. In practice, this means that if you have a base account currency in Naira and you trade the EUR/USD pair, your broker converts your NGN to EUR anyway.
Popular Forex Pairs in Nigeria
The local currency in Nigeria is the Nigerian Naira, or NGN. It is not traded on the forex market, as it is operating under a managed float system. Only currencies that freely float are traded in forex, which automatically disqualifies the Naira from the mix.
Therefore, traders from Nigeria tend to trade most of the major and minor currency pairs found in forex. USD pairs are especially popular.