Cyprus-based retail FX firm Forex Time (FXTM) is in the process of restructuring its business network in Nigeria, with the office in Port Harcourt being closed. The company does not state any reasons for the move, but has detailed that the decision has been made so that it can service better the clients’ needs.
As of August 18, 2014, FXTM’s Port Harcourt facility had ceased operations and its staff, including account managers, were transferred to the offices in Lagos and Abuja. These offices will handle all of the sales and customer support matters.
The restructuring of FXTM’s Nigerian business comes amid a growing interest from retail FX brokers into finding methods of operating in the African country, a trend that gained speed over the past year. Having a physical presence in the nation is important, as transactions from Nigeria are often subject to concern from compliance departments, as well as the difficulties associated with transferring funds to deposit into overseas accounts, especially those which hold funds for the purpose of trading or investing due to Nigeria’s somewhat unorthodox and colorful business environment.
In January IronFX opened an office in Lagos, Nigeria’s main financial and commercial center, as a part of its plans for an international expansion. June saw an interesting development with FX giant Alpari setting foot in Nigeria. Further interest in establishment of FX brokerages in Nigeria include LiteForex’s foray into the region in July this year, with the company having opened a new office in Benin City, while MTrading, the new brand of Admiral Markets, began offering a dedicated service to Nigerian clients.
Retail FX brokers get to benefit from the relatively low penetration of rivals in Nigeria, as well as the growing interest into online trading, as well as relatively low client acquisition costs as Nigerian clients tend to be referred to FX firms by introducing brokers, and something of a cameraderie exists in which recommendations via word of mouth count for a proportion of business.
Regulation of the FX sector in the African country is mild, permitting any broker registered with an authorized dealer to operate legally. There are added practical advantages, including the daylight time coinciding with the busiest periods of the London and New York sessions, so that online trading can actually be comfortable for residents.
On the downside, certain regions in Nigeria are still marred by insurgency. There is also the issue of power supply deficiencies and poor internet connectivity. On top of this, last year’s demise of Liberty Reserve made it harder for Nigerian traders to transfer funds abroad and deposit money with brokers.
Hence, FX firms willing to operate in Nigeria have plenty of problems to solve. By the looks of it, however, they are doing pretty good job in this respect. For instance, Alpari enables Nigerian traders to deposit funds from their accounts with local Nigerian banks. And the interest of newbies is attracted thanks to educational meetings, low initial deposit demands, and lucrative bonus campaigns.