By Chinenye Anuforo, [email protected]
Ray Youssef is the CEO/co-founder of Paxful, the largest peer-to-peer (P2P) crypto marketplace in Africa with a key presence across Nigeria, Kenya and South Africa.
Paxful recently opened PaxNaija, a tech educational centre in Abuja, to give opportunity for training and mentorship on how Nigerian entrepreneurs can leverage blockchain technology and digital currency in their process of developing goods and services.
In this interview with Daily Sun, Youssef speaks on the company’s activities in Nigeria.
Paxful is our baby. Yeah, my co-founder, Artur Schaback and I started Paxful about six years ago. Since then, we have been learning about what bitcoin is actually good for. The narratives about bitcoin are three. There is the old-world narrative about bitcoin that comes from central bankers and old established investors, and they think it’s a scam.
The second narrative would be people in bitcoin, who primarily talk about it as an investment or something to double, triple their money. Then there’s a third narrative. Nigerians, particularly the youth, have showed us what that narrative is and how it should be the winning narrative and that is, bitcoin, not as an asset class or speculation, but as a means of exchange that real people can use every single day along real-use cases like remittance payments, wealth preservation, commerce. We have been learning from the youth of Nigeria. We built our whole product around what they have shown us, and we are trying to bring light to this third narrative that will empower the entire global south.
Six years ago, we were saying to everyone that Africa is going to lead in bitcoin adoption, and no one took us seriously at all. And now, Africa is leading bitcoin adoption, particularly, Nigeria is number one. So, I think it is a landmark event. Nigerians pioneered bitcoin as a means of exchange and building an alternative financial system around it such that the government has to take action. This is impressive. Nowhere else in human history has that happened, that the youth of a nation built their own banking system.
Why Nigeria is biggest bitcoin market
There are two things that made Nigeria the biggest bitcoin market. The first one is the challenges Nigerians face with money. If you look around you, talk to people here in Nigeria and ask them about their day-to-day life, Nigerian financial system works very well inside the country. Nigeria has very technologically advanced banking system, NIBSS, which is instant. But the moment you need to send money to even the country next door, it becomes extremely difficult, and if you want to send money outside of the country to China, the U.S., Europe, it becomes a nightmare. And that’s for several reasons, not just the broken SWIFT system but all these foreign restrictions that are put on Nigerians and other global south markets from the West. And that pretty much cut off Nigeria from the rest of the world, especially the small-middle entrepreneurs. So, they had to rise and figure out a way around that. Then came bitcoin and peer-to-peer services like Paxful, and they gave them a way to do that. They went with it beautifully. You can see that remittances are now transferred over to crypto to bitcoin as Nigerian people figured it out. And once one Nigerian figures that out, they all figure it out. So, that’s the first thing and it is the problems; and the problems necessitate a solution and Nigerians always find solutions.
The second thing is that there is something exceptional about Nigerians themselves, you know, to call them over-achievers is an understatement. There’s something about the people here that just drives them to excellence, you know that Nigerian youth are ready to move forward, they see that their leaders are just not moving fast enough. They’re not sure why but they don’t care, they’re moving forward themselves. So, there’s something about their DNA here. The people here are just programmed to excel, driven to win, to conquer, and you see that when you talk to Nigerian immigrants in America, Europe, they just don’t rest, they’re always over-excelling.
Why investing in Nigeria Nigeria is a place: I have been telling everyone that if you want to change the world, have massive impact on the world and become a billionaire, just look at Africa, particularly Nigeria. The energy here is on a level that a few people can even begin to comprehend. And we are willing to put our money where our mouth is. We are investing here in Nigeria. We have an amazing team on the ground. We have opened an office in Abuja for education and incubation. We will open one here in Lagos soon, God willing, and I am thinking about staying at least six months in Africa and Nigeria, at least three months out of the six months in a year.
Four years ago, Paxful started investing back into the community. And by doing so it shows that we believe in Nigeria, we are not just talking about it but doing it with action. We built six schools on the continent so far in the past four years. Our mission is to build 100 schools and communities around the world, utilizing bitcoin, specifically here in Nigeria. In Kaduna State, we built a nursery and a primary school, almost 400 children go to school every single day with the power of bitcoin. Not only do they get quality education, they also get access to clean fresh water, have access to electricity through solar, and sustainable vegetation through our farming system. We provide uniforms, books, pencils, stationery, health insurance for the students; creating actual community on the ground in the rural communities is very important to us. If we want to ever attain universal bitcoin adoption, it is going to start in those areas.
Partnership with banks
We have been meeting with the banks. We had very fruitful and promising meetings with several banks here, and they are all very interested in what we are doing. However, currently, they can’t work with us in a direct capacity because of the CBN ban, but we’re all looking towards a future where the ban is lifted and an innovation-friendly regulation is passed. So, to that effect, we are talking with them, we are discussing various ways we can work together, so that, when the ban is lifted, we can all move out the gate, immediately, quickly, and we welcome all banks that approach us because we want to work with them. Banks know the world is changing. Literally, the ground is shifting under their feet and it’s not just cryptocurrency that they’re concerned with. Even the government structures are changing such that they don’t have the same exact position that they had before. So, they are beginning to innovate, and they see the importance of building and making the right partnerships.
Nigeria is our largest market, with 1.5 million users and over $1.5 billion volume to date (since 2015). Compared to last year, we are on pace to have 23 per cent more bank transfer trades in Nigeria on the platform than last year. Also, we are on pace to have 36 per cent more bank transfer volume in Nigeria on the platform than last year. Looking at year-on-year data from end of June 2020/2021, we see increase in bitcoin trading volumes of 57 per cent in Nigeria. Likewise, we see increases in user numbers of 83 per cent.
From February 2021 to March 2021, trade volume increased over 23 per cent in Nigeria, while, as of April 2021, bitcoin P2P trading has surged by 27 per cent since restrictions were introduced by CBN.
We would like to work with government directly on issuing some regulation that brings clarity to our users. We are here talking to our users, and they are telling us some horror stories that shouldn’t have to happen. These are honest business people trying to help other business people use their money, and they just want to be in the clear. Even if it is to pay a small tax on transactions, they’re fine with that too. They just don’t want to be in breach of the law. So, we are very open to dialogue with the government. We are here not just to help ourselves but for our users. Even with the ban in place, we are here on behalf of our users in the country to keep them safe, to make sure that their bank accounts continue to operate, to make sure that they are in the clear, and that is why we are going for licensing and regulation all over the world. That is why we brought our chief compliance officer. He is right here with us. So, we are hoping this will be the start of something very good and fruitful.