Listen to the Article: Let the Google Trends Results of FX Keywords Tell You A Story of Africa

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If you search for keywords like "forex" or "forex trading" on Google Trends and choose the past 12 months as the time frame, you'll notice that African countries are consistently among the top search hotspots globally. You might assume that South Africa, being the most economically developed country on the continent and backed by the Financial Sector Conduct Authority (FSCA), has the highest search volume in sub-Saharan Africa. 

However, according to the Google Trends data, Botswana actually takes the top spot with nearly 100 searches each time. Furthermore, the capital of Botswana, Gaborone, consistently ranks first in the city rankings.

South Africa vs. Botswana

The South African market has always been a fiercely contested one for brokers aiming to enter Africa. In 2022, Fazzaco reported on several brokers making their way into the southernmost country of this continent. For instance, XGLOBAL Markets announced in early 2022 that it had acquired 45% of the shares of South African broker 98 Degrees Alternative Risk (Pty) Ltd and renamed it XGLOBAL Africa​; eToro, too, announced that it was accepting traders from South Africa​; Admirals' subsidiary, Admirals SA (PTY) Ltd, obtained a license to operate as a CFD broker in South Africa​ and planned to establish its first office in Cape Town; INGOT Brokers also secured an FSCA license and established a brick-n-mortar office in the country​; digital infrastructure company Equinix disclosed a $160 million investment in a data center in Johannesburg​ to expand its business in Nigeria, Ghana, and Ivory Coast.

Regarding why Botswana ranks first in all searches, is it because Batswana are really into forex or because they have been exposed to marketing pitches from brokers? Obviously, the latter is more likely.

Brokers are interested in Botswana because the country is stable and relatively well-off. Although South Africa is the most economically developed, its per capita GDP is lower than that of Botswana. According to World Bank and CEIC, South Africa's per capita GDP was $5,120 in 2020, while Botswana reached $6,711. Between 2010 and 2020, South Africa's per capita GDP grew by 1.4%, while Botswana's grew by 4.3%.

As a landlocked country, Botswana's economy has been severely affected by the COVID-19 and the global economic slowdown. Therefore, online FX trading has become a way for people to earn extra income or hedge their assets. It is estimated that there are currently around 100,000 online forex traders in the country.

Due to the lack of effective regulatory agencies, Botswana's online trading is dominated by foreign brokers overseen in Europe, Australia, and others. Companies such as Tickmill, Exness, BDSWISS, IC Markets, and FP Markets all operate in the country and offer various training, sponsorship, and reward programs to attract clients. Additionally, online payment gateways such as PayPal, Skrill, and Neteller also offer services here, making it easier for traders to move funds.

What About Other African Countries (from the perspective of brokers' client traffic)?

If we look at brokers' client traffic, it appears that although the total number of clients in Africa is less than in Europe and Asia, the potential is gradually being developed. In addition to South Africa and Botswana, there are many potential market opportunities in other African countries as well.

For instance, Kenya is one of the most developed countries in Africa with a high rate of internet penetration. It ranks among the top ten countries in terms of sources of client traffic. The young and middle class in Kenya are increasingly interested in financial management, which provides potential opportunities for the country's forex market.

Moreover, Nigeria has the largest population in Africa, with a huge middle class and a younger group of internet users. Although the regulations in the country is strict, the development of fintech has led to rapid growth in Nigeria's online payment market, which has also brought potential opportunities for the country's currency trading. Scope Markets reports that 60% of their traffic comes from Nigeria, and another 8% comes from Kenya.

Other African countries such as Ghana, Tanzania, and Mali also have significant potential for economic development and high rates of internet penetration, making them target markets for some brokers.

CFD Trading is Rising in Emerging Markets Like Africa

In recent years, CFD brokers have been aggressively expanding into emerging markets in Africa, Latin America, and Southeast Asia. For instance, Exness does not accept clients from EU, UK, US, Canada, Australia, and New Zealand. Malaysia, Indonesia, and Thailand are countries where it does operate, yet in a restricted fashion.

While doing business in Southeast Asia is not new, brokers have increasingly turned their attention to LATAM and Africa since the implementation of restrictions by ESMA in 2018. Interestingly, the gambling industry has also set its sights on these regions. Super Group, the holding company for leading global online sports betting and gaming businesses: Betway, reported in its 2021 financial report that 17% of its total revenue came from Africa, and it is expected to rise from $1.5 billion in 2021 to $4.1 billion in 2026.

The gambling industry has a longer history and broader influence than CFD trading. However, its success in Africa may have set a benchmark for forex brokers offering CFD services to see the vast potential of the continent.