Are financial services from South Africa good for Nigerians?

Nigeria is described to be one of the fastest developing countries on the continent of Africa. Their dedication towards western values and systems have definitely helped them out within the last decade. Some of the money laundering schemes, corruption and bureaucracy have been completely eliminated, but this doesn’t mean that there are no more concerns for the country.

Wounds yet to be healed

There are still remnants of the former regimes that plague the country’s financial institution. The problems have grown to a point where some banks are unable to even collect the massive debts that the population owes them. The problems got so bad that some of the governmental institutions had to get involved. For example, the Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN) has promised a helping hand in collecting the debts. However, there have been many cases when the government gets directly involved in the financial problems of the country. Not making it sort itself out may cause some side effects that the population is not ready for.

In the worst case scenario, the debts will not be collected and some banks may be on the verge of failing, leaving the population to opt for foreign institutions and companies. Which will ultimately decrease the demand for local currency ultimately making it useless, inflating it to no end? So at this point, it needs to be decided if the government needs to help out or not.

There are other factors that plague the borders of Nigeria. The UN has been active in their part of the African region by featuring them in assisting missions in Somalia against Al-Shabab, a terrorist group. Since the country is so close to a hot-spot the currency itself falls under much speculation, further increasing the risk of the banks and brokerages failing. So what can be done?

A Knight in shining armor

Since the financial instability in Africa became quite dominant. Many people started to distrust banks and didn’t want to keep their savings on low-interest rate accounts. The solution to this problem came in the form of Forex brokers, which started to appear rapidly all over the continent. Even though it was hard to establish a good relationship with the locals, trading is now quite common. The first country to feature a forex broker was Kenya and later in Nigeria, but in terms of quality and quantity South Africa quickly caught up and surpassed everyone. The quality was in the regulation that South Africa provided, there was just no way an unregulated to broker in Kenya or any other country could compete with South African regulated ones, click here for regulated South African Forex brokers and you’ll definitely see the difference in quality, service diversity and security that these firms offer compared to their competitors somewhere else. The quality even rivals some of the more popular brokers that can be found outside of the continent as well.

But what would South African Forex brokers change for Nigerian traders and the country’s economy?

First of all, there is a massive benefit of safety. Should the Nigerian trader population switch to South African Forex brokers, they’d be able to put the Nigerian Naira out of the country’s circulation, therefore reducing the demand for it for a given amount of time. Although this could affect the inflation rates, it’s highly unlikely as most of the exchanges will be made on the Retail level. But what’s good about it is the outcome. More and more traders will soon start making profits in major currencies, therefore adding it to the circulation with the banks and cashing out Nairas. This not only increases the supply of major currencies for the bank but also helps appreciate the Nigerian Naira. With the help of these new supplies, the banks will be able to cover their losses while they are still trying to collect debts.

Nigerians not Welcome?

Although this may have some adversity as South Africa isn’t as accommodating to Nigerians as one may think. There is some serious tension with Nigerian Migrants living in South Africa. Although it is completely a social issue, it can be translated into financial issues as well. However, as we all know Forex trading is done digitally, therefore the social tensions and prejudices may have no role in it at all. But the fact is still to be considered, whether or not the South African Forex brokers will actually accept Nigerian traders.

Is there a bright future?

In the case of Nigeria, it is highly unlikely that there will be an economic catastrophe as the economy has been growing over the years. In terms of education and development, the country is definitely one of the leading ones in the region. However, the successes need to be consistent if it wants to avoid the fates of less fortunate countries like Zimbabwe and their trillion dollar bills.

First things first, it is important to save the banks, which are currently nearing the edge of collapse, and the best way is to tamper with the currency supply.