West Africa in Focus /

Nigeria plans virtual free trade zone, amid love-hate relationship with crypto

  • New deep seaport in Nigeria set to start test runs – great news for trade in West Africa's land-locked economies

  • Nigeria plans a 'virtual free zone' to boost blockchain, despite the central bank's ban on crypto trading

  • Ghana’s inflation spikes to 21-year high as the cedi deteriorates, despite rate hikes by the Bank of Ghana

Nigeria plans virtual free trade zone, amid love-hate relationship with crypto
Janet Ogabi
Janet Ogabi

Senior Research Analyst

Tellimer Research
16 September 2022
Published byTellimer Research

West Africa’s land-locked countries – Niger, Mali and Burkina Faso – will receive an economic boost as the Lekki deep seaport approaches launch in Nigeria. The US$1.5bn facility will allow Nigeria to import more cargo, significantly boosting trade. Meanwhile, Nigeria’s federal government is in talks to set up a 'virtual trade zone', which will boost blockchain and crypto activities despite the Central Bank of Nigeria's (CBN) clampdown on crypto last year.

Separately, Ghana and Nigeria are seeing a spike in inflation on pressure from depreciating currencies and surging food prices. But only Ghana is providing positive real returns for investors. And Africa’s e-commerce giant, Jumia, is getting ready to kick off drone deliveries in Ghana, in partnership with US company Zipline. Could this innovation be of benefit to the rest of the continent?

West Africa's land-locked countries set to receive a boost from Lagos's new port

Nigeria is set to begin dry runs and testing of its second deep sea port – the Lekki facility – today (16 September). The new automated US$1.5bn seaport was last reported to be at 98.07% completion and will allow for bigger ships to dock at the port. This is a boost for Nigerian trade as more cargo and tonnage can now be imported.

This port not only stands to benefit Nigeria’s economy but also the neighbouring land-locked economies in West Africa – Niger, Mali and Burkina Faso – which depend on neighbouring countries for access to the sea.

Trade is among the lowest in West Africa's land locked countries - Niger, Mali, Burkina Faso

Despite the CBN's crypto ban, Nigeria is collaborating with Binance to set up a virtual free trade zone

The Nigerian government and Binance (a leading cryptocurrency exchange) are in talks to set up a ‘virtual free zone’ – a special economic zone aimed at supporting crypto and blockchain business activities.

Nigeria is becoming more crypto-friendly, despite the central bank’s clampdown on cryptocurrency activities in 2021, when banks were banned from allowing crypto transactions. However, since then we have seen interest in digital currencies increase rapidly (the highest in the world).

Earlier this year, the country’s Securities and Exchange Commission released regulatory guidelines on the issuance of digital assets, and the registration of digital exchanges and custodians. Moreover, the Nigeria stock exchange plans to start a blockchain-enabled platform in 2023. The CBN’s launch of the e-naira is another testament to the country's growing fondness of the digital asset space.

Crypto obsession score based on total google search history by countries

Inflation isn't falling in Nigeria or Ghana, but only one gives positive real returns

The release of Nigeria and Ghana August numbers showed inflation is still raging in both countries. In Nigeria, consumer prices increased by 20.5% (19.6% in July) and, in Ghana, by 33.9% (from 31.7% in July) – the highest readings since 2005 and 2001, respectively. The surge came despite recent rate hikes in both countries – Nigeria: +100 bps to 14% in July; Ghana +300bps to 22% in the August emergency meeting. Imported inflation is a particular problem.

Despite the similar story in both countries, Nigeria's one-year treasury bill yields (+3ppts yoy to 12%) is rising at a much slower pace and prints much lower than Ghana' (+19ppts yoy to 36%), due to the CBN's unorthodox monetary policy. As a result, local investors are booking negative returns in Nigeria (8ppts), while Ghana is in positive territory, with a 2ppts spread.

That being said it is worth adding that Ghana's fiscal challenges are priced into the country's yields. Ghana is currently in talks with the IMF for a US$3bn financing programme to help it navigate through its economic problems.

Nigeria and Ghana inflation surges to new highs, but real returns are only positive in Ghana

Jumia and Zipline to begin drone deliveries in Ghana

Africa’s 'Baby Amazon', Jumia, is partnering with a drone-delivery start-up, Zipline, to handle e-commerce deliveries to remote areas of Ghana. Zipline, a US-based company, already handles the drone delivery of medical supplies and vaccines to some parts of the country.

It will be interesting to see how successful this innovative approach turns out to be. It could eventually be of great value to rural areas across Africa – a mere 43% of rural populations have access to proper roads, compared with 60% globally.

Nigerian government threatens sanctions against airlines selling tickets in dollars

We have previously reported on the challenges faced by foreign airline operators who are unable to repatriate their investments – the International Air Transportation Association (IATA) estimated there was US$464mn of trapped funds in the country in July. This forced the likes of Emirates Airline to threaten to suspend their operations in Nigeria – later lifted after the CBN intervened.

The country's FX crisis has clearly evolved beyond just being a concern for portfolio investors. Investor exits from the real economy (such as the Emirates example) are a more significant risk to Nigeria’s economy than outflows of hot money. And the risks will likely remain as long as the FX problems persist and the CBN is unable to meet investors’ demands to repatriate their investments.

Some airline operators in Nigeria have reportedly been forced to take matters into their own hands and have begun to, illegally, charge travellers in dollars. The federal government has threatened to clamp down on such operators.

Upcoming events

Cote d’Ivoire inflation (23 September):

Cote d'Ivoire's inflation in July was flat in August at 5.4% (after it spiked 170bps in June). But analysts now expect inflation could print at 6% for the moneth of August - making it the highest in over 10 years.

Tellimer at the IMF and World Bank Annual Meetings (12-15 October)

Tellimer will be hosting a series of in-person bilateral meetings – with an online option available – with IMF teams and governments from emerging and frontier markets. Our full list of countries is here.

Our West African research


Nigeria's equities market has posted a loss of 0.2% over the past week, taking the year-to-date gain to 16%. Banks were the biggest losers this week: FBNH, ZENITHBA, FCMB and GTCO booked the highest losses. UBA, though, was the top gainer, following its impressive H1 22 financial results release.

As interest rates pick up, local Nigerian investors are likely to exit the equities market, which explains its losing streak. Looking ahead, we expect interest in the Nigerian market to remain tepid.

Tellimer's West Africa Equities Coverage


Market indicators

Nigeria's yield curve (%)

Ghana's yield curve (%)