Why Forex Trading Is Exploding Across Africa

by Michael
(New York)

The African continent is on the verge of growth and Forex trading is one of the sectors that have experienced a massive boom. In 2020, Africa became the fastest-growing forex market in the world. Forex brokerage firms have reported an increase in traders from Africa. According to the Forex Suggest Survey, XM forex broker has reported a 35% growth in the Africa market in 2020. Similarly, Tickmill increased its number of African clients by 27%, but the biggest growth reaching to 100% has reported Exness, a popular forex broker offering to South African traders ZAR accounts.

Now, this begs the question; what is causing the explosion of forex trading in Africa? Well, below are the top reasons. Let's delve right in.

ESMA Regulation 

The European Security Market Authority has established a raft of regulations. Forex brokers planning to offer services in the European market are required to adhere to strict requirements. For instance, the leverage for major forex pairs is restricted to 30:1 while CFD for non-major FX pairs and gold are traded at 20:1 maximum leverage. 

As a result, the brokers are shifting to economies with less restrictive laws. Africa has proved quite ideal. The regulatory requirements are quite friendly and the market is not regulated by ESMA rules. In addition, there is high interest in forex currencies trading. Moreover, the continent has a huge population which provides a ready market to brokerage firms.

The Covid-19 Pandemic 

The Covid 19 has disrupted the usual way of life. During the initial stages of the pandemic, many people were forced to stay at home due to lockdown and movement restrictions. In addition, many businesses shut down their operations temporarily to curb the spread of the deadly virus. 

This created uncertainty in the security of income and employment even after the governments lifted the lockdowns. As a result, many people opted to look for suitable economic activity to provide an additional or alternative source of income. Forex trading proved an ideal venture. 

Luckily, people had a lot of time to learn and practice forex trading. Therefore, the pandemic was a blessing in disguise to individuals who have learned or improved trading strategies to match their trading objectives. 

The Influx of Brokers Accepting Traders from Africa 

In the recent past, many brokers have strived to get a footing and partake in sharing the massive African market which boasts immense potential. In addition, local regulations such as the South African FSCA require companies operating in the country to have a physical shop. 

Some of the brokerages operating in Africa include Forex Time (FXTM), FBS, Pepperstone, Tickmill, XM, Exness. In addition, homegrown brokers such as FXPesa in Kenya and CM trading South Africa have also boosted forex trading in the African countries.

The numerous forex brokers offer competitive and comprehensive trading products. A trader can open an account with a little as $1, which is a plus for rookie traders who want to practice trading with real money. Many forex brokers also accept mobile money payments, which are very popular in some African countries such as Ghana, Tanzania or Kenya. However, it is imperative that you explore the broker offering to avoid paying extra hidden costs. Regardless of your trading needs, traders in Africa can rest assured of finding a broker that meets their trading needs in terms of risk exposure, capital limitations, and finances. 

Financial Influencers 

Influencers have also played a significant role in the rise of Forex trading in Africa. Apparently, these influencers are successful traders who offer trading tips on social media platforms such as Facebook, Twitter and Instagram. There is a colossal number of influencers offering trading materials and tutorials. Going by their media profile, their lifestyles characterized by exquisite cars and expensive outfits is tantalizing. 

Therefore, many people, especially young people, join forex trading with hopes to experience the high-flying lifestyle of financial influencers. In addition, Africa has a high rate of unemployment. Therefore, well-learned people who can't find formal jobs delve into forex trading. This venture has a higher potential of a good return than opting for informal jobs such as artisan. 

Final Words

The forex market in Africa is on a growth trajectory - no doubt about that. This development will bring numerous mutual benefits to the brokers and traders. It meant more people from the continent, which has been lagging for years, can eventually participate in the biggest market in the world. Forex brokers, on the other hand, can expand their customer base and provide competitive products. However, the market regulators should move quickly to expedite regulation governing the market to protect traders. In conclusion, the growing forex market provides an avenue for African to play a wider role in the world economy.

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