Africa has been slowly becoming the hub of all the innovative technologies and mining has been a big part of it. But the other sector that has been thriving on the continent is Forex. The fact is that Africa is full of potential in both of these fields and the investors and brokers from across the world know that. Industry professionals are doing their best to get the most out of African talent and resources, which is definitely substantial.
Some countries are more successful in this regard than others, with South Africa, Kenya and Nigeria being the most developed ones in those industries. But the trend seems to be spreading across the continent and it’s not unlikely that we will soon see these trends evolve in other African countries as well. Youth unemployment has been a major issue in Africa and with mining and forex trading this problem has finally been solved, even if partially.
When it comes to bitcoin adoption, and fintech in general African countries have displayed outstanding abilities and have been one of the driving forces in the industry. The questions that largely circles around right now is whether mining or forex will become the dominant industry and source of income in Africa. Now the question is whether or not Forex will replace mining across Africa
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Forex Scene in Africa
Although, as mentioned above the forex scene is not the same in every African country, the general trends are very prominent. Forex in Africa has been widely talked about the phenomenon and it started about a decade ago. Some of the most successful brokers can be found in Nigeria, South Africa, Kenya, Tanzania, Rwanda, Botswana, Namibia, and Angola. In these countries, the forex is thriving while the interest from the public is increasing daily.
You might think that the African Brokerage scene is full of native but actually there has been a huge wave of European brokers flooding in Africa. Part of what pushed the growth in this direction was the 2018 ESMA regulations. The European Securities Markets Authority introduced regulations for the retail Forex market in the EU.
These regulations included limits on leverage, banning bonuses and promotions and binary options as well as mandatory negative balance protection for all customers. With these strict additions to the existing regulation, it’s not surprising that these brokers fleed to Africa where regulations arent as strict and it’s easier to penetrate the market. African forex markets offer their trading platforms on mobile devices and require very low deposits starting as low as $1.
Considering the very favorable conditions Africa forex market is very attractive to anyone working in the industry. And with the raised popularity of the market, the interest is rising from the investors and broker alike. Compared to the very tight regulations especially, this specific market is very profitable especially if you’re small a broker or are just starting out in this field. While some countries have more favorable regulations, some have absolutely none for example Nigeria. And these countries are not taking too much effort to create regulations.
They’re gaining a lot of benefits from these markets so are the customers. These countries don’t shy away from speaking about the lack of regulations openly. But for example, South Africa has been working hard to create a healthy, regulated market for Forex and has been actively cracking down on criminal Forex brokers that have become a problem with the largely unregulated ecosystems. The problems with regulations seem to run across all the major industries that have been gaining momentum on the continent.
Mining has also been faced with criticism connected to regulations and the safety of the process which is the universal process across the world with government wanting to adopt the blockchain technologies and to dive into cryptocurrencies but struggling to come up with a solution to ensure the safety and the privacy of the process without taking away its most valuable characteristics. And Africa isn’t an exception in this case. But for what it’s worth Forex trading while driving some criminal action has largely been beneficial for the countries and has helped put a lot of them on the map for Forex Industry potential.
Future of Forex in Africa
While the trend of stricter regulations has long exceeded Europe and is now becoming more widespread there is a chance that the Forex heaven that is Africa might lose its magic qualities soon enough. South Africa leading the way with the regulated market is a sign that these countries are waking up to all the risks of unregulated markets, even if the benefits are good. But considering that Africa has been hit with the wave of fraudulent Forex activities it’s evident that it can’t be all good when you take a risk of having the unregulated market.
While restricted regulation swill probably scares off some brokers the benefits of having low entrance deposits will remain. We already have examples of other African countries following the footsteps of SA, with Kenya recently adopting a new set of regulations and issuing public warnings about working with unlicensed operators in the country. Before that can happen across the continent the consumers are advised to treat all forex brokers with caution since it has become a little difficult to distinguish between the scammers and the actually good ones.
Africa is full of potential and the countries are slowly starting to build on that potential. But like with everything that goes largely unregulated the risks are high and sometimes they might not be worth it. With this new trend of implementing new regulations, Africa has a chance to eliminate the crime, therefore gain the trust of customers and possibly get some new ones as well. It isn’t its broker’s benefits that matter and the public are waking up to that.
There have been multiple cases of fraudulent brokers going after young men through social media to trying to get them to invest into a scam, if Africa can eliminate this aspect of its Forex market it will have a higher chance of growing and succeeding and hopefully this trend will continue at the same speed in the future.