NAIJAFEED

Wednesday, February 24, 2021

In Nigeria, One Bitcoin Can Cost $68,000. Here’s Why

Bitcoin has already passed the $68,000 mark in Nigeria, but that’s if you use the official exchange rate.

Awosika Ayodeji, a Nigerian blockchain project designer, isn’t complaining. He is happy to wake up and see bitcoin prices quoted using unofficial U.S. dollar exchange rates because it means he’d be getting more naira per dollar when he converts his crypto earnings to his local currency.

At the same time, however, “buying [bitcoin] becomes more expensive, too,” Ayodeji noted.

On Friday, Nigeria’s official exchange rate for the U.S. dollar was around 380 naira per dollar. Using this rate, a bitcoin listing on peer-to-peer platform LocalBitcoins in Nigeria of around 26,000,000 naira converted to $68,246. On the surface, this looks like a hefty 24% premium, which in this context refers to bitcoin’s price being much higher in specific locations than it is on average worldwide.

In Nigeria, these premiums aren’t consistent. On peer-to-peer platform Paxful, the listed bitcoin prices were based on $1 trading for around 475 naira. This rate converted to $54,736, a price much closer to the average bitcoin trading price of the day. In fact, the informal market dollar exchange rate in Nigeria on Friday was around 478 naira, reflecting the rate seen on Paxful and the bitcoin prices listed on LocalBitcoins.

In emerging markets that are facing a currency crisis, bitcoin prices can actually shed light on the informal market for U.S. dollars. In Argentina, Latin American crypto exchange Bitso listed the bitcoin price at 8,700,993 Argentinian pesos on Friday, which converted to a whopping $98,000 using the official exchange rate, which was around 89 Argentine pesos per dollar. But bitcoin listings on exchanges like Bitso indicated the dollar was worth around 150 pesos, reflecting the informal going rate for the dollar.

Yele Bademosi, chief executive officer at social payments app Bundle Africa said exchanges are most likely using informal dollar rates, thus inflating bitcoin’s price in local currency. According to Andrés Ondarra, country manager for Argentina at Bitso, the market exchange rate for the dollar is usually higher than the official exchange rate in Argentina as well.

“This is mainly reflecting the difference between the informal U.S. dollar rate and the official one. The gap between the official and the informal dollar in Argentina is around 70%,” Emiliano Limia, press officer at Argentine crypto exchange Buenbittold CoinDesk via an email.

Exchanges using informal rates instead of official ones indicate the local bitcoin markets exist outside of government rules, and that bitcoin trading might reveal the real value of the local currency against the dollar.

According to Gina Pieters, a professor of economics and the University of Chicago who published a paper on how bitcoin can detect exchange rate manipulation and capital controls, bitcoin premiums can occur for a number of reasons.

“It seems unlikely that the price should be that much higher unless there is the manipulation of the nominal exchange rate channel,” Pieters said in an email to CoinDesk, referring to the price of one currency in terms of another.

In fact, the thesis of Pieters’ 2016 paper was that bitcoin trading can be used to approximate unofficial exchange rates, “which, in turn, can be used to detect both the existence and the magnitude of the distortion caused by capital controls and exchange rate manipulations.”

Informal exchange rates

Due to the falling purchasing power of the naira, on any given day, Nigeria has multiple exchange rates for the dollar. The informal exchange rates are typically much weaker, with Nigerians having to dish out more naira per dollar, indicating the local currency may be worth less than what the government says.

According to a chapter in economist Koji Kubo’s book about Myanmar’s foreign exchange market, multiple exchange rates emerge within the unofficial market when governments implement “exhaustive exchange restrictions” or limitations on the amount of foreign currency that could be bought or sold.

In 2020, Argentina’s government imposed strict controls on the purchase of U.S. dollars, restricting the amount of dollars citizens could buy and hold to $200, in an attempt to stop capital from flowing out of the country. The dollar black market flourished as a result, with people scrambling to buy more dollars to protect their wealth, and even paying more pesos per dollar. This quickly spilled over to crypto as Argentines tried to ditch the peso for stronger currencies: demand for bitcoin soared in 2020.

Meanwhile, Nigeria’s facing a U.S. dollar shortage: in 2020, local media reportedNigerian banks were limiting the amount of dollars Nigerians can spend abroad to as low as $500. Thanks to the scarcity of dollars that could not meet local demand, the value of the naira fell in local informal markets as people showed willingness to pay more naira per dollar.

“The general market is now setting the price to $480 as that seems to be the present value generally accepted between buyers and sellers,” Ayodeji said.

The lower informal exchange rate can mean sending money to family in Nigeria or Argentina in bitcoin can be beneficial as one bitcoin can get you more of the local currency, but this also means that the purchasing power of the local currency is weakening. Sending money out of the country can be problematic, as your wealth converts to less dollars.

It’s typically difficult to estimate local informal dollar rates: Ayodeji said black market currency merchants might ask for even more naira per dollar. But bitcoin conversions can calculate a decent estimate, Ayodeji said.
Inflation

Still, premiums can exist even after you factor in the difference in exchange rates. One possible reason is, in countries with high inflation, people may be willing to pay more for bitcoin.

“In the euro area the prices are pretty much the same as spot prices in big centralized exchanges,” Jukka Blomberg, chief marketing officer at LocalBitcoins, said in an email. But “in countries such as Venezuela, there can even be quite big premiums.”

Blomberg explained this is because Venezuelans who are willing to sell their bitcoin in exchange for their local currency typically want a higher premium due to the risk they have to take by accepting a highly inflationary currency such as the bolivar. In Venezuela, where the inflation rate hit a staggering 10 million% in 2019, and the value of the bolivar was dropping almost daily against the U.S. dollar, people began turning to bitcoin. In fact, the local demand for bitcoin drove crypto adoption in Venezuela ahead of other hyperinflationary countries like Argentina.

Nigeria is also an inflationary country, and citizens have been turning to bitcoin to weather value drops in naira. Demand for bitcoin was so high that the central bank of Nigeria first ordered banks to shut down all accounts associated with crypto trading, and released a five-page explainer that said the measure was taken to protect the country’s financial system.

According to Ayodeji, the naira exchange rate on crypto platforms changed drastically the days after the ban was announced, perhaps driven by the panic that followed, and the demand for bitcoin dropping slightly: the unofficial exchange hit between 410 and 420 naira per dollar, Ayodeji said.

“But the market circled back,” he said.

By Sandali Handagama

Monday, February 22, 2021

Nigerian air force passenger plane crash kills seven people

A small Nigerian air force passenger plane crashed just outside Abuja airport after reporting engine failure on Sunday, killing all seven people on board, the air force said.

The plane, a Beechcraft King Air 350i, was on its way to the city of Minna, 110 kilometers (68 miles) northwest of the capital, air force spokesman Ibikunle Daramole said in a statement.

The aircraft "crashed while returning to the Abuja Airport after reporting engine failure," said Daramole. "First responders are at the scene. Sadly, all seven personnel on board died in the crash."

The chief of the air force has ordered an investigation into the accident, Daramole said.

President Muhammadu Buhari in a statement sent his condolences to the air force and families of the victims, saying he was "deeply saddened by the fatal crash."

In scrubland just outside the airport perimeter, dozens of military and airport officials picked through the charred remnants of the fuselage as fire engines and ambulances stood by.

The smell of burning chemicals lingered in the air but no fire or smoke were visible. Onlookers watched the rescue efforts from behind a cordon.

"As he (the plane's pilot) was going down, he struggled to go back to the airport, at the end he just crashed," said Alaba Lawal, who said she witnessed the accident.

"I just saw the whole thing explode, fire and smoke together ... When I got there I saw dead bodies on the ground."

The air force did not provide the identities of those killed in the crash.

The Beechcraft King Air 350i is a twin-propeller aircraft made by Textron Aviation, a unit of the U.S.-based Textron Inc conglomerate. The model was first released around 2009.

The company said in a statement that it had been notified of the accident, which it said is being investigated by Nigeria's Aircraft Investigation Bureau and the U.S. National Transportation Safety Board.

"As a party to the investigation, the company is prohibited by NTSB regulation from divulging any information about the accident or investigation," the company said.

CTV News

Kidnappers free 53 people seized on bus

Kidnappers released 53 people, including women and children, seized on a bus in Nigeria while dozens of others taken from a school in a separate attack are still missing.

Criminal gangs in northwestern and central Nigeria have scaled up attacks in recent years, kidnapping, raping and pillaging.

A gang last week seized 53 people, including 20 women and nine children, who were travelling on a state-owned bus in Kundu village in Niger State.

“I was delighted to receive the 53 … bus passengers who were abducted by armed bandits a week ago,” the governor of Niger State, Abubakar Sani Bello, said in a tweet late on Sunday.

It is unknown if a ransom was paid but state representatives have previously said they would not pay any.

“We went through one week of dialogue, consultations, hard work and sleepless nights because we had to secure their release within the shortest possible time,” the governor’s spokeswoman, Mary Noel-Berje, said in a statement.

The freed bus passengers received medical check-ups before being reunited with their families, she added.

In a separate incident, 42 people, including 27 schoolboys, were abducted from a school last week and are still missing.

“The Students of the Government Science College Kagara are still in the hands of their captives but everything is being done to ensure their release,” Noel-Berje said.

Attacks on a ‘daily basis’

Gunmen last week killed 10 people and abducted at least 23 others in two separate attacks in the state.

“We are witnessing these attacks now, almost, on daily basis and it is worrisome,” Noel-Berje said at the time.

The attackers are known to hide in camps in the Rugu forest, which straddles Zamfara, Katsina, Kaduna and Niger states. Despite the deployment of troops, deadly attacks persist.

The gangs are largely driven by financial motives and have no known ideological leanings.

But there is growing concern they are being infiltrated by armed groups from the northeast that are waging a decade-old rebellion to establish a so-called “Islamic state”.

The latest mass abduction came just two months after 300 students were kidnapped from a school in Kankara in nearby Katsina, President Muhammadu Buhari’s home state, while the president was visiting the region.

The boys were later released after negotiations with government officials, but the incident triggered outrage and memories of the kidnappings of Nigerian schoolgirls by armed fighters in Dapchi and Chibok that shocked the world.

Out of some 276 girls who were kidnapped by the Boko Haram group from Chibok, at least 100 are still unaccounted for.

Al Jazeera

Friday, February 19, 2021

Video - Why are school children increasingly being kidnapped in Nigeria?

Schools stormed and children held captive. For months now, that's become common in Northern Nigeria. Gunmen kidnapped dozens and possibly hundreds of schoolchildren in the latest assault on Wednesday. One student was killed in the attack on in the town of Kagara. The government has released the names of some who were abducted and a rescue operation is ongoing. Many of the previous attacks have been blamed on so-called bandits who ask for ransom. But the armed groups are not the only security challenge facing Nigerian forces. They've been fighting Boko Haram, that carries out similar attacks in the northeast.

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Gunmen kill one student and kidnap dozens more in Nigeria school raid

At least 42 people, including students, were kidnapped in an armed raid at a state-run school in Niger state, in Nigeria's Middle Belt region Wednesday.

The group includes 27 students, three teachers and nine family members, the state government said in a statement which names them all.

A student who died during the attack was named as Benjamin Habila.

This latest incident has raised questions about the safety of schools in parts of northern Nigeria as it comes two months after after more than 300 students were kidnapped in a similar invasion at Government Science Secondary School Kankara, in Katsina, President Buhari's home state. They were later released soon after their abduction.

Niger state's Governor Abubakar Sani Bello has closed all boarding schools in the area and dispatched the military to rescue those kidnapped from the school, according to his chief press secretary Mary Noel Barje.

President Buhari has condemned the abduction of the school children.

"The President has directed the Armed Forces and Police, to ensure immediate and safe return of all the captives," Buhari's spokesperson, Garba Shehu, said in a statement on Wednesday.
Students pack their bags to leave the school after the abduction.

"The President has also dispatched to Minna, Niger State a team of security chiefs to coordinate the rescue operation and meet with state officials, community leaders, as well as parents and staff of the college."

A former Nigerian senator, Shehu Sani, told CNN that the school has no perimeter fence and would have afforded easy access to militants.

Sani, who was also a student at the school, told CNN: "The town is at the epicenter of the insurgency in Niger State. Fulani bandits operate within the axis and there are thousands of people displaced in this area. The bandits of the northwest of Nigeria are becoming more lethal and destructive than Boko Haram."

Buhari recently retired all the heads of Nigeria's security forces and appointed new ones, amid rising insecurity and kidnappings in the country.

"The security situation in Nigeria is "overwhelming and threatens the peace of the country," Sani told CNN. "It is unfortunate the service chiefs were allowed to stay for so long," he added.

By Stephanie Busari and Isaac Abrak