EFFECT OF CBN CRYPTO CURRENCY ON

UNEMPLOYMENT IN NIGERIA

By

ALMUSTAPHA ABUBAKAR

(2220604001)

Being

A RESEARCH PROJECT

DEPARTMENT OF ECONOMICS

FACULTY OF SOCIAL AND MANAGEMENT SCIENCE

FEDERAL UNIVERSITY BIRNIN KEBBI

2025

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 CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background of the Study

The global financial system is no doubt embracing the
current transition from physical currency to almost virtual
currencies through the medium of technology. This wave has
ushered in the birth of crypto currencies. In the light of this
outbreak, there has been a lot of positive and negative
discourse on the value of cryptocurrencies to the Nigerian
fiscal system. Investors have in their masses invested in
crypto currencies, the most common being Bitcoins all in a
bid to some sort of recoup interests in the nearest future.
Economics research to this point has furnished little
perception into the economic relevance of cryptocurrencies.
Most current model of cryptocurrencies are built by Computer
scientists who mainly focus at the feasibility and security of
those systems. Such considerations, however, are pivotal for
understanding the optimal layout and, hence, the financial
price of cryptocurrency as a means of payment.
According to Nakamoto (2008), cryptocurrency is a peer-
to-peer Electronic Cash System. The peerto-peer system of
cryptocurrency is built on blockchain, thus, allowing
transactions to take place between users directly, without any
intermediary (Hameed & Farooq 2016; Grech, & Camilleri,
2017). It allows anonymous transaction between parties and
as such, parties do not know the true identity of each other
(Dierksmeier & Seele, 2016).

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 This may be necessary because, the entire details of the
transaction of every participant on the cryptocurrency
blockchain is publicly revealed to other users (Bech & Garratt,
2017). Unlike the traditional currency which is Camilleri,
2017). It allows anonymous transaction between parties and
as such, parties do not know the true identity of each other
(Dierksmeier & Seele, 2016).
This may be necessary because, the entire details of the
transaction of every participant on the cryptocurrency
blockchain is publicly revealed to other users (Bech & Garratt,
2017). Unlike the traditional currency which is Despite the
risks associated with this currency, the rate of its growth is
astonishingly benevolence and challenging. With its growth,
Governments are thrown into dilemma. However the
overwhelming benefits of cryptocurrencies has at as when
accessible serve as a source for meeting the daily financial
needs of masses with no positive employment status and
those who suffered unemployment.
Unemployment is one of the developmental problems
currently facing all developing economies of the world
(Patterson et al, 2006), and Nigeria is not an exception.
Unemployment or joblessness occurs when people are
without jobs and they have actively sought work within the
past five weeks (International Labour Organization, 1982;
Fajana, 2000). Though unemployment occurs to people of all
categories but its effect has bitten more sarcastically hard on
the youth. Unemployment is a global challenge, but worse in
developing countries of the world, with attendant social,
economic, political, and psychological consequences. It

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contributes to low GDP and leads to increase in crime and
violence, psychological effect, adverse effect on health and
political instability (Njoku & Ihugba, 2011).
Unemployment in not a recent challenge in Nigeria as the
national unemployment rate rose from 4.3 per cent in 1970 to
6.4 per cent in 1980 and have ever since increased. Nigeria,
the largest economy in Africa, has been unable to efficiently
tackle its increasing unemployment rate – a ticking time
bomb, if not addressed quickly. In 2020, the frontier market
witnessed a rise in its unemployment rate, due to an ever-
growing dependent population, reduction in the total output
of goods and services, and the unprecedented COVID-19
pandemic, which negatively impacted the economy and led to
job loss for thousands of Nigerians. Such unimpressive
economic data was however managed, since the financial
benevolence of cryptocurrencies was overwhelming it
triggered a massive engagement of Nigerians. Many
unemployed Nigerians can utilized the tools behind crypto
and blockchain to generate income, as traditional jobs
steadily become outdated. “Since the adoption of
cryptocurrency in Africa, Nigeria has become a major hot
zone in the African cryptocurrency space.
The adoption of blockchain/cryptocurrency by Nigerians,
has been able to give jobs to young Nigerians (Chike
Okonkwo 2020). Relatively, the Nigeria government has
placed a ban on cryptocurrency on on Feb. 5, 2021. In light of
Nigeria’s efforts to advance its digital economy agenda, the
crypto decision seems counterproductive and reactive. While
the crypto ban has led to an initial chill, with banks closing

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accounts of some owners with their funds, this policy has led
to loss of jobs as cryptocurrency companies in Nigeria were
shotdown and the traders unable to perform transactions.
The global financial system is no doubt embracing the
current transition from physical currency to almost virtual
currencies through the medium of technology. This wave has
ushered in the birth of crypto currencies. Crypto-currency has
been defined as a digital record-keeping device that uses
balances to keep track of the obligations from trading and
that is publicly known to all traders. Some of the forms of
crypto currencies include Bitcoin (BTC), Litecoin (LTC),
Ethereum (ETH), Ripple (XRP), Bitcoin Cash, Neo, Iota, Dash,
Qtum, Monero and Ethereum Classic. A crypto currency
system is defined by two parameters: money growth rate μ ≥
0 and transaction fee charge at a rate τ ≥ 0. Since the
creation of Bitcoin in 2009, numerous private crypto
currencies have been introduced. Since the advent of crypto
currency , it has been getting a lot of media attention, and its
total market value has reached 128.78 billion USD in 2019. It
operates based on a technology called ‘’Blockchain’’.
Unemployment rests on the relationship between the
price at which money can be borrowed and the total supply of
money in the economy. It is generally referred to as being
expansionary or contractionary, where an expansionary
policy increases the total supply of money in the economy
rapidly, and contractionary policy decreases the total money
supply, or increases it slowly. When a central bank embarks
on an expansionary monetary policy, it does so to stimulate
domestic economy and reduce unemployment, while

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contractionary policy involves raising interest rates to combat
inflation (Engler, 2011). According to Leahy (1993),
expansionary or contractionary policy (also known as interest
rates adjustment) do have a substantial influence on the rate
and pattern of economic growth by influencing the volume
and disposition of saving as well as the volume and
productivity of investment. Bernanke and Kuttner (2005) also
reported that tightening of money supply increases risk
premium that will be needed to compensate investors for
holding risky assets as it signifies a deceleration of economic
activity, and may influence unemployment dynamics.
Unemployment has a dual mandate of guaranteeing
high employment rate and price stability. At one time or
another, economic agents around the globe have also tried to
use Unemployment to achieve almost every conceivable
economic objective with economic growth and low level
unemployment often high in the list. As a case in point, Sellon
(2004) posited that when the Federal Reserve of the United
States raises its target for the federal funds rate, other rates
rise, reducing interest-sensitive spending and slowing the
economy, and when it is lowered, other rates tend to fall -
stimulating spending and spurring economic activity.
Choudhry (2013) also reported that the Bank of England
follows the U.S. Federal Reserve to link changes in its base
interest rate to the rate of unemployment. According to
Doğrul and Soytas (2010), unemployment is an important
macroeconomic problem due to its social and economic
consequences and therefore essential for policy makers to
identify the factors that are affecting it the most.

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 Despite the risks associated with this currency, the rate
of its growth is astonishingly benevolence and challenging.
With its growth, Governments are thrown into dilemma.
However the overwhelming benefits of crypto currencies has
at as when accessible serve as an employment and financial
opportunity for the employed and unemployed individuals. As
it enables them to meet their individual financial needs at
ease More also, the presence of companies who deals with
crypto currencies in developing countries as Nigeria creates
more job opportunity for its citizens, as job opportunities are
open for the unemployed citizens. These massive benefits
has to an extent made impressing contribute to Nigeria
economy.
However the evolution of crypto currencies has offered more
than just survival opportunity to the poor masses. Majority of
Nigerians took advantage of this flabbergasting platform to
over up the lapse or gaps created by poor economy.
Irrespective of all these as narrated above, the Nigeria
Government unprecedentedly placed a ban on the use and
trading of crypto currencies in its economy (nation) as
announced on the 5th of February 2021. this unpalatable and
extemporaneous executions however has left a certain effect,
impression, and perception on the citizens. Thus, this study
seeks to identify, investigate, and analyse the effect of CBN
crypto currency ban on the economy of Nigeria.

1.2 Statement of Problem

Cryptocurrencies like Bitcoin, Ethereum, Litecoin, etc
has helped the unemployed facilitate smallscale international

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trade. Crypto enables parties to sell products in exchange for
Bitcoin or other cryptos. These features of cryptocurrencies
has successfully serve as employment opportunity for
unemployed individuals in Nigeria (Nanus 2018). According to
Adebisi (2021), the ban on cryto transaction in Nigeria has
placed so many reactions, frustrations, mistrust and regret
among traders of cryto in Nigeria, as banks blocked all
crytorelated accounts, transactions and cryptocurrencies
companies in Nigeria are shut down thereby leading to loss of
job of hundreds of Nigeria citizens. Hence many Nigeria
citizens have returned to their previous unemployed status
thereby increasing the unemployment rate. Unemployed
citizens however suffers the ugly consequences of
unemployment, as meeting their financial needs becomes a
hard nut to crack. Thus this study oversees the homogeneous
effect of cryptocurrency ban policy on unemployment rate in
Nigeria.

1.3 Research Question

1) What is the effect of cryptocurrency ban on
unemployment rate of Nigeria?
2) What is the impact of crypto on the economy of Nigeria?
3) What is the effect of cryptocurrency on the finance need
of unemployed Nigeria citizens?
4) Does the ban of crypto business in Nigeria affect crypto
traders?
5) Was cryptocurrency an opportunity for unemployed
Nigerians?

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1.4 Objectives of the Study
i. To examine the relationship between the cryptocurrency
ban policy and employment opportunities in Nigeria’s
digital economy.
ii. To assess the extent to which the ban on
cryptocurrency trading has affected youth employment
and tech-based job creation.
iii. To analyze the impact of the policy on individuals and
businesses that relied on cryptocurrency-related income
or services. - work on your scope and limitations

1.5 Significance of the Study

The findings of this study will in no doubt be of great
relevance to the financial regulators, policy formulators, the
apex financial institution in Nigeria and the entire
Government body as it will apprise them on how the ban of
crypto in Nigeria is marful and deteriorating or beneficial to
the citizens of the nation and how this policy has contributed
to unemployment rate in Nigeria.
This study will as well serve a source guide to
researchers and students who would likely carryout further
research on a topic similar to the one discussed in this study.

1.6 Scope of the Study

This study will cover the effect of Cryptocurrency Ban Policy
on Unemployment Rate in Nigeria.

1.7 Limitation of the Study

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The major limitations the researcher encountered while
carrying out this research work were insufficient finance,
inadequate time and unavailability of relevant materials in
this research domain.

1.8 DEFINITION OF TERMS

Crypto currency: this is a digital currency that can be used
to buy goods and services, but uses an online ledger with
strong cryptography to secure online transactions.
Unemployment: This term is used to refer to individuals who
are employable and actively seeking a job but are unable to
find a job. Included in this group are those people in the
workforce who are working but do not have an appropriate
job.
Policy: A policy is a deliberate system of principles to guide
decisions and achieve rational outcomes.
Economy: this is an area of the production, distribution and
trade, as well as consumption of goods and services by
different agents. In general, it is defined 'as a social domain
that emphasizes the practices, discourses, and material
expressions associated with the production, use, and
management of resources'.
CBN: The Central Bank of Nigeria (CBN) is the central bank
and apex monetary authority of Nigeria established by the
CBN Act of 1958 and commenced operations on July 1, 1959
Government: the political direction and control exercised
over the actions of the members, citizens, or inhabitants of
communities, societies, and states; direction of the affairs of
a state, community, etc.

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