Exchanging your hard-earned money for another currency can be really painful if you exchange money with the black market. It is incredibly annoying, especially in a country like our “dear” Nigeria, where the black market is the only reliable means to exchange foreign and local currencies because Nigerian banks cannot meet the demands.
The exchange rates are always too high for buying foreign currencies because our local currency is ‘almost valueless’ like paper. Don’t get me wrong, the Naira has value on its own right here in Nigeria, but when converted to Pounds or Euros, you will see a big difference. Buying foreign currency is quite unfavorable; the black market is too expensive and only profitable for people who run the business than people exchanging money for themselves.
The ideal situation is that people should be able to exchange their local currency for a foreign one when traveling abroad, but that isn’t the case in Nigeria. Everyone is expected to use exchange companies and bureau de change. It is worthy to note that people from northern Nigeria dominate the exchange market. Also, the banking institutions do not grant personal exchange except you provide a two-way plane ticket.
Let’s say the Pound’s official exchange rate is £1 – ₦550 today; at the black market, it is likely to be £1 – ₦755. Imagine that are ₦205 extra charges on every pound you exchange. Whether you exchange large or small quantities of money, you will almost get anything substantial money out of it.
Recently, I accompanied a friend to exchange money around Sheraton Hotel. If you are familiar with Abuja, you will know that this hotel is a business place for money changers. Opposite the hotel gates across the road are ‘mallams’ sitting by their cars, waiting to profit from you. The street is lined with offices to exchange money.
My friend wanted to exchange ₦350,000 for British pounds, and guess what the rate was? If you guessed it was ₦700 or ₦710, you are wrong; the correct answer is ₦725! My friend had to rethink the transaction with the ridiculous exchange rate because the equivalent was too small. The ₦350k will only get her approximately £480.
Imagine that! ₦350k is more than enough to sustain a family of three to five persons for three months in Nigeria, but £480 can’t go that far in the UK. On average, the monthly living expenses for just one person in the UK is more than £480. Watching her huge savings shriveled up and folded into something very minuscule before her eyes, my friend decided to change only a portion of the money instead.
The smart way to exchange money
Basically, Nigerians (and every other nation in this category) have to live with these terms. Still, smart and sharp-thinking people will always think of a way out – a legit method you should explore.
The smartest way to exchange money without the high rates of the black market is by exchanging it on crypto trading platforms. Yes, it seems that we often talk about cryptocurrencies on this platform, but we can’t help it. It is both the modern and future way of getting things done.
How is it done?
Relax! No one is telling you to buy Bitcoin or Ethereum. Cryptocurrency trading platforms serve as a marketplace where you can exchange any listed currency for another, and guess what? You can exchange it for the official price!
There are cryptocurrencies called stablecoins, which monetary values do not change over time. In other words, they are simply money except in a digital spectrum. Do you know when you look at your account balance on your phone and see figures? Yes, that is stablecoins in a nutshell. One of the most popular stablecoins is USDT which is basically US dollars in its online form. There are also other stablecoins that you can exchange for official rates.
How it works
Before the Nigerian government banned crypto, many smart-thinking Nigerians used this method. Money used to be transferred from Nigerian bank accounts directly to crypto trading platforms. From there, money can be exchanged for a stablecoin and sent to foreign wallets, where the funds can be withdrawn in the currency of choice.
It’s true, it used to be like this, but then the Nigerian government struck. Now, no one can send funds directly from their Nigerian bank account to the crypto trading platforms, but as you know, there will always be a way.
This loophole allows you to use a middleman to exchange your money. It’s similar to the middlemen in the black market system, but the difference lies in the access to the official exchange rate. You only need to transfer the money to their Nigerian bank accounts while you withdraw the exchanged equivalent as you arrive overseas.
This method might be suitable for people who have foreign bank accounts – or moving overseas. After arriving at your destination, you can open a bank account with your documents and withdraw your transferred funds. You can receive the exchanged value in your crypto wallet and transfer it to your foreign or newly-opened account for withdrawal.
Tip: Traveling abroad soon? It’s best to change a few bucks for pocket money before you set out for your trip.
Do people use this method?
Yes, many people, especially the business class who travel to buy goods for importation, use this method. Instead of exchanging huge sums of money for nothing, isn’t it better to use a better non-exploitative means?
These days, few people visit the black market for exchanges, especially in Nigeria, with the constantly depreciating naira.
Also, I once received money online from a foreign country in a similar way when CBN’s new regulations on crypto came into effect. You can read about my experience here.