AbokiFX, a Nigerian website that many rely on to get current parallel market exchange rates suddenly stopped showing rates two weeks now. The problem? The Naira (Nigeria’s currency) has been experiencing a free fall against major currencies in the world and the Central Bank of Nigeria is blaming it on sharp practices by Bureau de Change agents and websites like AbokiFX whom they say colludes with “black market” foreign exchange dealers for a fee.
The CBN via its Governor says they have proof that millions of Naira and thousands of dollars flows to the account of abokiFX and that the founder of the site is based in London where he feeds fat on the spoils. They say abokiFX doesn’t have any verifiable source of data and as such has no authority to post rates. They would according to the Central Bank of Nigerian Governor work with some people to fix rates (just like match fixing in football) and they enjoy the spoils by relying on their huge traffic to do this. To be clear, before the ban as per Alexa ranking, abokiFX was ranked about 6, 300 in a world that has over 1.5 billion websites. Now that’s elite status in the website world and this means that the site could be doing over 3 million page views per month. I must add that since the ban, the site ranking has dipped to about 7,000 and as the rate suspension regime continues, they could fall even further below 20,000. Now apart from the accusation of FOREX manipulation, the site features Google Ads all over its pages and if we go by the regular rule (not a very accurate one I must add) of $1/1000 page views on impressions, which means just being paid for people just seeing it without clicking, the site makes $3,000 from impressions. It is also estimated that with that amount of page views, the audience is diversified across the world and it is expected that such a site could be doing about 10,000 to 20,000 ad clicks per month. Now depending on where most of those clicks are coming from, they could be making $0.19 per click per day, which means that they make about $114,000 per month from Google AdSense alone.
So now we know that the site is a big one but how about the allegation by the CBN that abokiFX colludes with “black market” FOREX dealers to manipulate the rates to their favour by relying on their huge traffic? This the CBN says brings in millions of Naira and thousands of dollars to their accounts and that they have proof. Now that’s a big accusation that I believe is punishable not just by fines but prison time as it can be deemed as economic sabotage. But shortly after the allegations by Nigeria’s number one banker, the site release a rebuttal as seen below,
They have categorically denied that they trade FOREX but the crux of the CBN allegation is that they partner with some to manipulate the rates among others.
As good as the denial sounds to their brand, one can only wonder why abokiFX was quick to suspend their daily rates just after these allegations. Why didn’t they put up a fight with the CBN if the source of their data was clean?
One can argue patriotism and it may be ok but what if the allegations are right in the first place? As the Governor explained, there is no sane nation that allows an independent website that doesn’t reply on official data to determine rates even though that is largely the government’s fault. They say that they rely on data from Ivy league institutions and other sources to come to a conclusion but the problem with that is that data on something as crucial as a country’s official exchange rate cannot be gotten from a third party but from the government of that country. For example, the ADP releases unemployment figures in the United States before the official announcements at the beginning of a new month but investors largely react to official figures coming out of the Labour Department instead. Anyone who has been observing the movement in exchange rate this year in Nigeria may have seen the shocking fall of the Naira and with each passing week, it looks the currency gets devalued by at least 10 Naira. And yes let me state that the Nigerian economy is performing poorly with respect to poverty alleviation and inflation. The CBN stopped Bureau de Change operators from accessing dollar asking everyone to go to the commercial banks instead as is the practise in many developed nations. The Nigerian government has a lot to do to restore confidence in the economy.
Back to the point of why did abokiFX not put up a fight. Just less than 48 hours after the CBN threatened to take the fight to them, they announced that they were shutting their exchange rates section. Could this be because they thought the CBN fighting could eventually expose something about their business model ? Could it be that the CBN was right on this matter all along ? When Chaka, Bamboo and some other fintech startups were threatened by the government of Nigeria, they all fought back legally and by employing some other lobbying techniques. But AbokiFX to the best our knowledge just capitulated and gave up without a fight. Thousands of Nigerians and non-Nigerians were relying on their data daily and you see the Nigerian remittance market is one of the biggest in the world.
According to the World Bank data, in 2018, the Nigerian Diaspora remittance was $24.31bn; in 2019, it dropped to $23.81bn; and in 2020, it fell to $17.21bn and most of these is by Nigerians sending money to loved ones at home. In fact, the CBN saw this big market and decided to start giving monetary incentives on every thousand exchanged to Naira, so you can see how big it is. Now the biggest beneficiaries of this business besides the banks were the parallel market dealers. There is almost never a time you go to Zone 4 in Abuja where you don’t see a queue of people trying to change money and so what if sites like abokiFX were actually working behind the scenes with some of these dealers? Can you imagine the number of referrals they can make per day and this is not illegitimate. However, what if they saw a business out if this because come to think of it, imagine the kind of power you wield if about two-thirds of people who want to exchange money in Nigeria rely on your data? That kind of power will be fought by any sane government especially when they perceive you as a threat.
Look abokiFX does other things but when you ask anyone, most would say they go for the exchange rates only. The site has grown over time into a financial news and stock market website and has a traffic it can be proud of. But their capitulation to the government raises eyebrows that the government may have been correct in the first place.