Africa has become one of the fastest growing economies. A recent report by the AFDB estimated that the continent will grow by 3.8% and 4.2% in 2024 and 2025, respectively. And, 11 of the world’s fastest-growing countries will be from the continent. We work with plenty of brokers looking to target Africa with their forex, CFD and crypto assets so it’s a region we understand well. Here’s a look at forex trading in Africa – a 2024 snapshot for brokers.
Forex Trading Is Growing In Africa
Africa is becoming a significant player in the forex trading industry. While the continent represents just 5.5% of the total currency trading volume, the figure is growing, especially among young people. South Africa and Nigeria, the two biggest economies in Africa, have the biggest market share in the industry. It is estimated that South Africa has over 190k forex traders and over $2.1 billion in trading volume.
It is estimated that Nigeria has over 300k traders and daily volume in billions of dollars. Other African countries like Kenya, Ghana, and Cameroon are seeing strong demand for forex trading. This explains why some of the biggest forex trading companies in the world are setting up operations in some African countries.
To be clear: Africa is still a small market for most forex companies. The unemployment rate in most countries, including South Africa, is still high. Also, discretionary spending is much smaller than in other continents like Europe and Asia. However, in conversations with some of the companies that have established operations in Kenya, Nigeria, and South Africa, there is a sense of optimism. Most of the companies we talked to told us that their African operations were the fastest growing.
Africa has some of the best demographics in the financial services industry. It is the most youthful continent, with 70% of the population under 30. More than a third of the world’s young people will live in Africa by 2050. Other continents have an aging population that will likely not be as engaged in the forex trading industry.
African governments, keen to attract foreign capital and protect their residents, have been working to boost regulations in the forex industry. In countries like South Africa, Ghana, Kenya, and Nigeria, all forex trading companies are required to be regulated by their respective regulatory agencies. A closer look shows that many forex traders in Africa prefer using both local and international exchanges.
Introducing Brokers in Africa
An introducing broker (IB) introduces customers to forex brokers and earn rebates in return. The main difference between IBs and affiliates is that the latter earn revenue through the cost per acquisition (CPA) model, a fixed amount for introducing a client. The number of introducing brokers in Africa is growing as they take advantage of the continent’s potential in the industry. And with low national wages and high unemployment, many Africans are seeking a side hustle, which fits with the IB model.
Still, potential IBs face substantial challenges when moving to the African continent. First, unlike Europe, which has similar regulations, Africa is a continent with over 50 countries. These countries speak different languages and have varying degrees of regulations. Second, the GDP per capita and spending power in Africa is substantially lower than in other continents. In talks with some forex brokers, we found that the average account per customer is often less than $1,000.
Third, a newer challenge we found was the foreign exchange risk, with many African countries seeing currency devaluation against the dollar. The Nigerian naira has plunged by more than 50% in the past 12 months while the Egyptian pound has been devalued. The foreign exchange risk can have substantial challenges since most Africans are paid in local currencies. As such, it can be a challenge to fund their trading accounts, which mostly require the dominant currencies like the euro, sterling, and the US dollar.
How Forex Brokers Can Win Traders in Africa
Forex brokers seeking to grow their market share in Africa must use a different approach than in other developed countries. The first is to tailor their marketing strategies to each market because of the language differences in key countries. Second, forex brokers should have a holistic approach that starts with customer acquisition to education. The education element is a very important one since many young African customers are not financially literate or aware of the perks and risks of the online markets.
Many forex brokers have started holding workshops and seminars in key cities. In most cases, companies that invest more on these workshops tend to have faster growth than those that ignore it.
Third, social media is an important element in forex marketing. A large population of Africans are now using social media platforms like X, Instagram, TikTok, and Facebook. Companies must have a good marketing budget to use these social media platforms in Africa. Speak to our team about complete social media management for your Africa forex trading pages.
Facebook has more than 271 million users in Africa and the number is expected to continue growing in the next few years. X, formerly known as over 30 million active users in the continent while TikTok is the fastest-growing social media platform in the continent.
A single marketing campaign with a successful African influencer can lead to substantial lifetime value to the broker. Some of the top ones to consider are:
- Nicolette Mashile – South Africa – 200 million Instagram
- Kenyan Wall Street – Kenya – 173.9 X followers. @kenyanwalstreet
- SokoAnalyst – Kenya – 359k X followers. @SokoAnalyst
From our extensive experience in the region we believe that the route to brokerage success is education, human interaction, targeted social media strategies and a very different approach to Europe. At Contentworks, we have a team of experts with over a decade in the forex trading industry and we can help your broker grow your clientele in the African continent. Book a free Zoom meeting now.
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