Nigeria in the last decade has maintained a decent position as one of Africa’s fast-growing destinations for fintech investments, a development that heavily aids the country’s strive to address a longstanding problem that initially existed as a restrained opportunity for fintech in Nigeria to thrive and achieve further financial inclusion.
Over half of Nigeria’s adult population are not within the formal financial system and exceeding 90% of transactions in the country are still carried out with cash, despite strong efforts by the Central Bank of Nigeria (CBN) to roll out a cashless society.
Nigeria’s Central Bank has a financial inclusion target of 95% by 2024 and analysts believe it will only meet up to this with the growth of companies that promote fintech in Nigeria, products, and funding.
A report according to Price Waterhouse Cooper (PwC), titled ‘Fintech and the Banking Sector in Nigeria’, says that investments towards fintech in Nigeria between 2011 and 2018 stood at $204m, whereas in 2018, over half of the total start-up funding to tech firms was generally channeled towards this market segment.
But the first quarter of 2020 saw Nigerian start-ups raise over $55m, more than the amounts raised in the same quarter of 2018 and 2019, and fintech start-ups represented 82.2% of that total fund, with most of the funding coming from outside of the country.
Alongside South Africa and Kenya, Nigeria is a top destination for funding and investment, not only in fintech but in other sectors such as agriculture and health.
One of the biggest companies within the Nigerian fintech space is digital payments firm Interswitch, valued at $1bn in 2019 after global giant Visa took up a stake in it.
Flutterwave, another successful fintech that has attracted international investment, raising $35m in a Series B funding round in January this year to bring the company’s total investment to $55m.
It even set up an e-commerce platform to help many smaller shops without an online capability to take advantage of the new demand for integrating payments and delivery.
Nigeria already benefits from its young tech-savvy population which is already launching or further developing existing technology solutions, and plugging the huge gaps in the market, although there’s high competition, which will lead to survival of the fittest in time.
The switch to online is stimulated majorly by the way data and tools have gotten less expensive with the competition in the Nigerian telecoms market causing a meaningful drop by 75% between 2014 and 2019
Despite the COVID-19 pandemic having an effect on the funding pattern most companies applied, it further stimulated fintech in Nigeria, and on customers’ needs and capability to pay for financial services, it also boosted the acceptance and use of e-banking and transactions as people now chose contact-less solutions for their daily requirements.
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