For retail FX companies, alot of clamor is constantly on the corporate agenda regarding which new markets to attempt to succeed in, as the competition, regulatory structure and sheer operating cost in regions which are populous with FX brokerages continue to be a bugbear. Client acquisition and retention methods are a large concern to many companies, however if there are new clients to acquire and retain in new locations, then vast opportunities may present themselves.
Many companies in the FX industry have attempted to enter African markets, with Nigeria being one of the most attractive in terms of its willing client base, lack of regulatory obstacles and ease of marketing due to the vast reliance on introducing brokers among traders. Nigeria, for most companies, has presented endless challenges which range from inability to ensure certainty of the origin of client funds, intermittent internet access and lack of reliable connectivity, corporate and government sanctions on the transfer of funds from Nigeria to overseas firms due to money laundering risk, and lack of an operational payment system with which clients can make deposits and withdrawals, as well as the need to provide time consuming and ongoing customer service to traders which place very small deposits. Since the demise of Liberty Reserve, a method by which many Nigerian FX traders deposited and withdrew funds to overseas brokerages, interest in Nigeria has dropped as many firms consider the effort far outweighs the potential gain.
Despite these factors, a few companies have taken the bold step of setting up an actual office in Nigeria, one of which was Alpari, another was Forex Time. If clients cannot come to the firm, then it is sensible that the firm goes to the clients. The question is, however, whether it is a worthwhile enterprise.
A company which has made substantial inroads into Nigeria’s market is Blackwell Global, which is experiencing commercial success from its office in the African nation. To ascertain the methodology that has led to this success, LeapRate spoke to Jean Raphael Nahas, Business Development and Director of Blackwell Global Nigeria.
In order to get to know you a little, please detail your industry background and how you arrived in your current position
My name is Jean Raphael Nahas, Business Development and Director of Blackwell Global Nigeria. I have been with Blackwell Global right from the start of its operations in Cyprus where I assisted in the setup of our Limassol office in 2012. I started off as an Account Manager working more on the retail side of things. Today, as a Business Development Manager I specialise in retail and institutional online trading and have been focusing on Blackwell Global’s growth in the EMEA region. This has led me to setting up our recent expansion into the Africa region by opening an office in Nigeria.
What factors led to Blackwell Global establishing an office in Nigeria?
Since we first tried to tap into the Nigerian market in 2013, we experienced an immense demand for our services in the country as traders showed great interest in trading with a transparent 100% STP broker. As the first STP broker in Nigeria, we gained a competitive edge in the market by offering traders the opportunity to explore a different model that they haven’t traded on before. Prior to opening our office in Lagos, we held a seminar for over 300 people which brought us significantly positive response from the public. Since then, our account numbers have been growing rapidly; not only retail traders want to trade with Blackwell Global, but there is also a great demand for our partnership programmes, particularly the Introducing Broker programme which attracted many Nigerians with its rewarding compensation scheme. Due to the great results and the rapid word-of-mouth growth amongst the forex public in the country, we decided to open our office in Lagos earlier this year.
Following the demise of Liberty Reserve, a method of payment that a great many traders in Nigeria used to be able to transfer their funds outside the country due to relative lack of credit card facilities and compliance / money laundering regulations, how does operating a branch office in the nation go some way toward resolving this? Can clients deposit funds relatively easily to a Nigerian bank account for client funds, and how does Blackwell Global then transfer its own revenues to its main operations outside Nigeria?
One of our first steps and most important aspects in our business model was to offer trust, honesty, and transparency to our clients in Nigeria. A good relationship is key! We place utmost importance on customer service and catering to our clients’ needs, so we took the time to listen to the public and do our homework. Digging deeper into the market, we offered everything that people looked for in a broker – transparency, training and education, local presence, customer service and of course, the convenience and safety of local deposits.
Due to many scams that happened in the past, the Nigerian market is extremely cautious about sending their money abroad and not knowing where their money is going. Our clients’ fund safety is just as crucial for us so we tackled the issue by opening a local bank account with Nigeria’s well-known Zenith bank where clients have the choice to deposit in USD or Naira. This ensures our clients’ money is 100% secure and also offers quick and convenient deposits and withdrawals, something which is also very important for Nigerians.
Blackwell Global has a separate bank account as we always keep our company funds fully segregated from client funds. As a strict policy across all our offices in the world, segregated funds provide our clients assured security and also allow us to easily transfer our own revenues outside the country.
Business in most African nations is often conducted via strong networks of introducing brokers. Blackwell Global has extensive experience with regard to developing IB networks as demonstrated by its extremely successful efforts in mainland China over the last few years. What are the differentiating factors between operating via IBs in Nigeria compared to the Far East?
Blackwell Global has always been very strong in working with its network of Introducing Brokers, not only in China, but in many other countries in the Far East. Since our expansion into Nigeria, we have experienced a strong potential of growth via IB networks as well. Despite the underlying and cultural differences in the African and Far East markets, our Introducing Broker model has proven to be successful in both continents.
We build our relationships with our clients based on trust and employ an open culture and methods of communication. The greatest similarity between the Nigerian and Far East markets is the fact that face-to-face meetings and open discussions help us build stronger partnerships rather than solely via electronic methods of doing business. Blackwell Global hosts a variety of seminars each month and collaborates with our IBs to help them build and expand their networks. In addition, we offer a highly rewarding package for our IBs including a multi-tier remuneration scheme, marketing support, Infinitum – our sophisticated back office system for their tracking and reporting needs, as well as a dedicated and personalised support system.
How profitable for Blackwell Global is Nigerian business on a per-client basis compared to other developing nations which many firms concentrate on such as Malaysia, Indonesia and Thailand, and how do traders overcome the frequent internet outages?
Our profit model does not so much focus on per-client basis, as much as looking at the picture as a whole, combining our extensive IB networks and retail trader profits. Our account numbers grow drastically on a daily basis and our existing clients remain loyal due to their stable and secure trading experience with Blackwell Global. This results in higher monthly deposits and subsequently increases trading volume. I believe that this is what is important at the end of the day – end of month results and hitting targets as a whole, and we have been surpassing each month’s expectations since the very beginning in Nigeria.
Internet outages are quite frequent in Nigeria so in order to overcome the issue and ensure our clients are always able to trade seamlessly, we have come up with a few solutions. Firstly, our office in Lagos employs an open-door policy where our clients can make full use of our fully-equipped trading room with fast internet broadband. Secondly, we offer free VPS to our Nigerian clients which provides smooth connectivity and trade execution anywhere and at any time.
Do traders often operate in groups, and do you think that there is value in running trading workshops and seminars in Nigeria?
There is definitely value in running trading workshops and seminars in Nigeria. The majority of traders in Nigeria enjoy operating in groups and having discussions amongst themselves. I believe this is part of the Nigerian culture; people enjoy discussing and doing things as a community which is a great thing. This aspect is strongly reflected in the success we’ve had with our seminars and workshops which offer professional education and training with our industry experts as well as the opportunity to interact with like-minded traders.
What sales tactics are most successful in Nigeria, a nation in which many retail traders may appear to be good potential clients, will negotiate for long periods of time and then only deposit $100, and then require resource-hungry customer support?
Blackwell Global uses the same approach in all parts of the world – we do not employ aggressive sales tactics which I am personally against. It is important to communicate properly with a potential client and listen to what they are looking for in a broker and take it from there. Negotiating for a long period of time is not necessarily a negative thing, it leads to a good relationship and trust, and once a client is converted they remain loyal to the company.
At Blackwell Global, we support all of our clients, whether they deposit $200 or $50,000. We cater to a variety of traders and have the means to support each trading style and client need. As stated previously, we look at our client base as a whole, and each of our clients is just as important. Someone who deposits $100 today can be depositing significantly larger amounts tomorrow. We are in Nigeria to provide an industry-leading online trading service, and it is our job to support all of our clients to help them grow in their trading experience.
Is the agency model ever likely to become commonplace in Nigeria, or is a b-book business the only viable method of operating?
The majority, if not all, of the brokers in Nigeria operate on the b-book model and there have been many discussions and debates within the forex community as to which is best. In Nigeria, many traders feel they have been cheated in the past by brokers with manual intervention and manipulation of trades. In the recent past, Nigerian traders were not aware of the difference between the agency model and the b-book model. I believe that now traders will be looking to move more towards the agency model due to its transparency. As I tell most of my clients, we are an IT company with a financial front. At Blackwell Global, trading is directly with global investment banks; our clients benefit from direct market access, superior execution speed and low latency trading that is ensured by our robust and innovative IT infrastructure.
What advertising and client onboarding methods are most effective in Nigeria?
Training, seminars and workshops are definitely the most effective on boarding methods in Nigeria, there is little online advertising needed for this market. As mentioned earlier, face-to-face interactions, discussions and personalised partnerships with our clients prove successful in establishing long-term business relationships. Word-of-mouth is our greatest promotional method as our clients become ambassadors of our brand.
What is Blackwell Global’s plan for the year ahead within its Nigerian operations?
Our plan is to continue pushing for greater results by offering the Nigerian market a true STP trading experience, maintaining and expanding our products and services across Nigeria. In addition to offering a solid educational and training programme in Lagos, we have also started to expand our IB networks across different states which may potentially lead to opening another office in the next year or so. We also have plans to launch our new institutional platform where hedge funds, family offices and multi-asset companies can benefit from this to clear huge volumes at ease with very favourable pricing. For institutional traders, it will be the perfect bridge to the liquidity providers without the need for huge upfront capital. In addition we have trading signals, EAs and managed accounts that we are looking to launch in a few months’ time. This will help us boost our offerings worldwide, as well as within Nigeria.