Forex Trading Facts in Nigeria

It is legal to trade forex in Nigeria as long as you are using your own money.

Forex Trading Facts in Nigeria

Financial industry in Africa is increasingly prominent. Although the continent lags in terms of market capitalization, more and more cities enter the list of world-class financial centers. One of them is Lagos, the largest city in Nigeria.

Nigerian investors are always looking for the next profitable ventures, including but not limited to forex trading. In fact, the daily average forex turnover in Nigeria rises each year.

Nigerian media Vanguard reported that the volume of dollars traded (turnover) in the Investors and Exporters (I&E) window of the Nigerian Foreign Exchange Market rose sharply by 63.8 percent year-on-year (YoY) to $2.13 billion in February 2022 from $1.3 billion in February 2021. While there are no data related to how many of them are intended for commercial and speculative purposes, we could infer that forex trading in Nigeria is HUGE. And here are some facts you need to know about forex trading in Nigeria.

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Is Forex Trading Legal in Nigeria?

It is legal to trade forex in Nigeria as long as you are using your own money. Nigeria has loose regulations around forex trading. However, you would need a license if you are looking to manage trades on behalf of others. Fund/Portfolio Manager licenses are registered by the Securities & Exchange Commission (SEC).

See Also:
Is Forex Trading Legal in Africa?

Who Oversees Forex Trading in Nigeria?

There's no particular regulatory body formed by the Nigerian government to oversee forex market and its related financial institutions. The Central Bank of Nigeria (CBN) is the de facto regulator of foreign exchange transactions, but they don't have sufficient authority to supervise and provide licenses for forex brokers.

A few years ago, there are rumors that the SEC had met with the CBN to create a regulatory body that will oversee forex trading in the country. However, subsequent progress is scant.

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Identifying Fake Forex Brokers in Nigeria

Is Forex Trading Taxable or Tax-Free in Nigeria?

Forex trading is taxable in Nigeria. All profits from forex trading are classified as "capital gains", and Nigerian residents have to pay capital gain taxes at 10% of the gross. It is applicable regardless of whether they trade with local or overseas forex brokers. Brokers would not arbitrarily deduct your gains, but you have to declare them as part of taxable income in your tax returns anyway.

Can You Use Overseas Brokers in Nigeria? Is It Legal?

As mentioned above, Nigeria has a poorly-regulated financial market. There's no prohibition to trade with overseas forex brokers as there's no locally-regulated forex broker either. Therefore, you can legally trade with any overseas forex broker.

Most Nigerian forex traders are registered with European or MENA-based online brokerage companies. Some favorites are:

Exness
Exness possesses licenses from UK FCA and CySEC, making it one of the most popular forex brokers in Nigeria. Advantageous features include extremely low fees, a wide range of trading instruments, user-friendly trading platforms, and a local bank transfer option for funding & withdrawals. Learn more on Exness website.
XM
XM promotes low trading fees, reliable no-requotes policy, and guaranteed instant order execution. The broker also frequently holds free forex seminars in Abuja and Lagos. Learn more on XM broker website.
FXTM
FXTM has one of the widest networks of IBs in Nigeria, with local offices in Lagos and Abuja. The broker offers local payment options, and you can even deposit and withdraw in Naira at zero fees. Additionally, FXTM often releases online webinars and offline seminars for Nigerian traders. Learn more on FXTM website.

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