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Driving Nigeria’s Digital Future Through Technology Innovations



Nigeria is gradually emerging a hotbed of technology innovations cutting across the financial services, agric, hospitality, entertainment and medical industries. In this article, CHIMA AKWAJA and BUKOLA IDOWU, take a look at the journey so far, what the stakeholders need to do to make tech innovations Nigeria’s biggest export.

With vice president Yemi Osinbajo leading Nigeria’s team on an investment roadshow in Silicon Valley, Carlifornia, USA, few days ago to inform the world of the federal government’s plan to diversify the economy by making technology an important foreign exchange earner, it has indeed put Nigeria on the global technology map.

From being an analog nation, less than two decades ago, the country is fast becoming a technology hub as innovation space is constantly being explored and widened. Whilst acceptance may still be lower than anticipated, information and communications technology (ICT) innovative products being churned out is making Nigeria attractive to the world’s venture capitalists and attracting angel investors to the country’s young and unregulated technology startups.

Technology innovation in Nigeria is being fast-tracked by the growing need in the financial technology as well as the need to make life much simpler for Nigerians. Over the years, there has been an increase in technology innovations companies and startups. There has also been an increase in the number of hubs where ideas are incubated and developed in the country.

Presently, Nigeria hosts the second largest number of active innovation hubs in Africa with 55 hubs, coming second after South Africa which has 59 active technology innovation hubs, while Lagos holds the ace in the top five ecosystems in Africa with 31 active hubs, the highest number for any state on the continent.

Huge Tech Capital Inflows

According to the African Startup and Venture Capitalist Ecosystem Report for the first six months of 2018 authored by Weetracker Media Incorporated, Nigeria recorded 31 tech startup deals, attracting $29.41 million of funding. In 2017, Nigeria emerged among the top three countries in Africa that attracted $560 million in venture capital (VC) funding in 2017.

The VC funding raised by African tech start-ups in 2017 surpassed $366.8 million raised in 2016 according to Collin Collon, general partner at Partech Ventures. The top three markets; South Africa, Kenya and Nigeria absorbed 76 per cent of the total funding, down from 81 per cent in 2016, he said.

Nigeria’s share of the funding in 2017 had increased compared to 2016 as the country attracted $115 million which is 20 per cent of total, a plus five per cent growth year-on-year (YoY); Kenya attracted $147 million (26 per cent of total), showing a strong +58 per cent growth YoY; while South Africa attracted $168 million in funding (30 per cent of total investment), showing a 74 per cent growth year-on-year (YoY).

Amazing Innovations from Nigeria

Whilst many of these innovation companies and startups are providing solutions in the financial space, many others find solutions in other sectors. Some of the most popular fintech platforms are Interswitch, e-Tranzact, Paga, Paystack, Piggybank, Remita and more recently Paylater. Fintech software, Paga, a mobile payment platform, is helping to drive financial inclusion in the country, where over half of the adult population remain unbanked and underbanked. Many of these solutions have been adopted.

Flutterwave, co-founded by a 26-year-old Nigerian entrepreneur, has the most impressive start, having attracted $10million in investment in 2017. It was founded just two years back by a team of ex-bankers, entrepreneurs and engineers, with the mission to provide a technology platform that allows businesses to make and accept payments anywhere in Africa.

Another solution developed 100 percent locally by SystemSpecs Ltd, is Remita, which has receiving ovation as it sits right at the heart of managing public funds. It attracted national and international validation when it was adopted as the payment gateway to Nigeria’s Treasury Single Account (TSA), as it has helped the government achieve incredible success in fiscal management such that the Minister of Finance, Kemi Adeosun, and other government leaders, including Benue State governor, – for whom the software identified 500 ghost workers – speak glowingly about the payment platform.

SystemSpecs, which owns Remita, also hosts Bank Apps Interconnect Solution which allows Nigerians with accounts in any commercial bank to have easy access to their account balances on one screen and conveniently make and receive payments through debit or credit cards across various bank accounts nationwide on a single platform.

Remita provides payers with a wide range of payment channels on a single platform, including debit/credit cards, bank branches, PoS terminals, Micro-Finance Banks, Internet Banking, collection agents, mobile wallets, account payment and direct debit. It can be used by billers, merchants, e-commerce sites etc.

Another innovating that changed the face of e-payment is the National Automated Clearing System (NACS) deployed by the Nigerian Interbank Settlement System (NIBSS) and developed by Precise Financial System (PFS), a Nigerian software powerhouse. The NACS is a future proof system that enables faster and more efficient clearing of cheques that is less resource intensive and accommodates various new requirements and practices in the clearing system.

PFS had also developed Mobile iTeller which allows bank customers to deposit cheques from their phones through iTeller Mobile cheque truncation solution remotely without visiting the banks. Another innovation that had come out of the many tech hubs in the country is Moneytor created by TeamApt, providing end-to-end solution which completely automates business processes, acquirers need to perform, acceptance of collections from merchants, from onboarding to settlement, arbitration and retirement. It provides solutions for corporate, retail and merchant banking. All features are available on both web and mobile interfaces.

There is CreditClub technology created by AppZone, addressing branchless banking challenges by providing a robust software core and embedded core banking application that seamlessly integrate with portable mobile phones and POS devices as well as third party core banking applications. It offers mobile banking self-service applications and functionality for issuing and managing debit cards.

It creates inclusion by extending the banking services, leveraging AppZone shared core banking and agent network to exploit the opportunity for customer acquisition and liquidity growth as well as to significantly increase operating margins through low cost and relatively stable savings funds. Tech innovations birthed in the country, strives not only to provide solutions to corporates and financial institutions, they have stoves in reaching out to the ordinary man on the street and getting Nigerians, particularly the youths.

Fintechs Birthing Digital Banking

One of such is Piggybank, a two-year old Nigerian fintech start-up which recently announced that it has raised a $1.1M Seed Fundraise, to grow its online savings platform, Founded by three students, Piggybank tackles the problem of savings, allowing subscribers deposit as little as $1 a day into a their online account, and cannot touch their savings, until an agreed withdrawal date, unless they are happy to pay a five per cent early withdrawal fee, whilst all the time accruing around six per cent interest per annum on automated savings.

There is also Paylater, an app that bridges the lending gap, helping increase access to finance as ordinary Nigerians get low interest collateral free loans from N7,000 up to N1 million with just a few clicks on their mobile phones.

Changing the Face of e-Commerce

Several tech companies have focused in particular on enabling small businesses receive online payments. Through their merchant marketplace models and in-house payment platforms, Konga and Jumia, Nigeria’s biggest e-commerce companies, have been responsible for much of the progress seen with unregistered businesses getting online and receiving payments. Neither company requires certificates of incorporation or a corporate account for merchants to operate on its platform.

Paystack, a two-year old Lagos-based payments company, is the latest startup looking to make it easier for unregistered businesses to plug into the digital economy. Paystack has removed the compulsory requirement for businesses to provide a certificate of incorporation and a corporate bank account. It will now allow “starter businesses” to use its platform by verifying business owners’ phone numbers with Truecaller’s crowd-sourced verification system thanks to a new partnership between the two companies.

In addition, Paystack will also require merchants to provide verified personal bank details and a national ID.

VoguePay, a payments company founded in 2012, also allows unregistered businesses with verified bank details, national IDs and utility bills operate on its platform. Small businesses on the platform are able to safely make and receive payments in all major currencies, regardless of location.

Startups Simplifying Agribusiness

Last year, Farmcrowdy an agritech startup that is revolutionizing the local agriculture sector raised $1 million in seed funding. The startup which was launched just over a year ago, connects small scale farmers with sponsors, who invest in farm cycles which can be anything from poultry that runs between three to five months to cassava which takes up to nine months.

The farmers receive on-the-ground advice and training from agriculture experts in better agricultural practices, different type of crops and production methods. Farmers and sponsors all receive a percentage of the profits on harvest.

Expanding e-Payment Frontiers 

Whilst discussing the role fintechs have played in the Nigerian financial industry, Central Bank of Nigeria (CBN) Director Banking and Payment System ‘Dipo Fatokun noted that fintech companies and startups cannot be ignored. According to him, their innovations have facilitated the expansion of electronic payments and helped in providing financial services to underserved or previously unreached groups.

Paystack’s head of growth, Emmanuel Quartey, recounting the successes of the fintechs in the country noted that the number of monthly transactions its platform processed rose from about 8,000 in early 2016 to more than 900,000 as of June 2018. “In early 2016 we were processing about $3,000 a month.

Today, we process well over $11 million every single month. As an ecosystem of developers had emerged around Paystack, creating software to integrate the platform into websites. “We have seen a growth in that community and they have carried us along,” Quartey said.

How They Are Creating Jobs For The Economy

To Innovation Lead, Microsoft 4Afrika, Djiba Diallo, startups provide employment and purpose for an individual or small group which often ripples into broader employment as the startup grows. Noting that the ability for a startup to scale up is critical as it plays a pivotal role in providing employment opportunities and subsequently enhancing economic growth, he said “the employment potential created through this is enormous.

“In the United States in 2015, for example, startup firms created 2.5 million new jobs. In Africa’s emerging markets, the 2017 Venture Finance in Africa report found that the average number of jobs per new company was seven. Multiplied by thousands of startups, across the continent, this is a significant source of meaningful income and employment. In fact, small and medium enterprises (SMEs) account for 80 per cent of Africa’s employment.

“Startups with a fintech focus also transform an economy by removing barriers for economic participation and competing with established financial firms and banks. Several of the startups we are working with like Popote and Mookh in Kenya, Nigeria’s Riby and Flutterwave & Senegal’s Hotel.Online to name a few are all startups promoting financial inclusion and participation through their digital payment services.

Oligarchies keep wealth concentrated in the hands of the few, but thriving startups can disrupt established industries prompting innovation and ultimately benefitting consumers” said Diallo. 

Funding, Enabling Environment

However, more is needed to be done in ensuring that innovative companies and startups not only reach their potentials but also provide solutions to everyday life challenges. Chief executive officer, eMaginations Limited, an integrated e-payment media adjunct, Mr. Sola Fanawapo stressed the need for government to be at the forefront of innovation in the country.

According to him, there is need for government to not only provide funding but also encourage corporates as well as big innovative companies to invest in innovative technology in the country. Saying there is need for government to institutionalise innovation, he said “there is need to have innovation fund so that our young innovators and entrepreneurs do not go looking for money all the time they need to grow their business.

“The government equally needs to encourage entrepreneurs to put money in innovations, because in other countries, those who have money put money in innovation” he said explaining that companies who invest in innovation and startup can be encouraged through tax rebates and other measures” Fanawopo said.

Asides funding he stressed the need for government to give direction such that innovative technology is focused on areas of need of the country that can become an area of specialisation. “As a country we need to have a core area of specialization. What do we want to use innovation for, is it for agric, for entertainment? We need to determine what we want to use innovation to drive.

“Do we want to use innovation to drive financial services so that that will help us to specialize and become the best in that area? We need to ask ourselves, do we want to be the best in financial technology? Do we want to be the best in education technology?  Today we cannot educate all our people, we can use that technology and everyone can access education through it. When the whole country is focused, we know what we are doing then we can encourage our youths to be innovative in that area.”

Mr. Segun Akano, CEO of Upperlink Limited, a Central Bank of Nigeria (CBN) said Nigeria needs enabling environment for our youths to be exposed and coached. “I foresee that in the next five years, Nigeria will have a pool of talents that can migrate to other parts of Africa and form a formidable force to bring up software development in all these countries.

“The solution is in developing our own capability to measure up and offer it at a low price, so that a reasonable economic person will ask him/herself ‘if I can get these things for N10 million in Nigeria why am I paying $1 million for it from India.’ This is why we have to invest in our own processes.”

Mainstreaming Regulation

CEO of SystemSpecs, John Obaro said “The kind of skills that most people need is just to help them be comfortable with technology; to be able to use it. However, there are people in the core tech areas, who have to develop the tools that will aid technology enhancement. There are also people in the political class that need to be ICT friendly for us to be able to have a proper ecosystem. If the legislative framework cannot put in place a structure for the development of ICT, the professionals will find it difficult to stand on their own.”

On his part, CBN director, payment systems, ‘Dipo Fatokun said it has become imperative the need for guidance and effective supervision of fintechs. “While various elements have helped incubate the growth of financial innovation, a critical factor to its continued growth, development and acceptance is regulation and the ability of financial regulation and regulators to evolve, adapt to new and rapidly developing financial innovations that often challenge traditional regulatory norms, concepts and approaches.

“Hence the need to stay engaged, to keep up with the accelerating pace of financial innovation and change, or risk getting leap-frogged by countries that understand and act on grabbing opportunities presented by the proliferation of financial innovations” said Fatokun.

As young Nigerians keep lighting the touch with their individual efforts, the tech innovation community expects the Ministry of Science and Technology, Ministry of Communications, Nigerian Information Technology Development Agency (NITDA), National Office for Technology Acquisition and Promotion (NOTAP), Nigerian Communications Commission (NCC), CBN and industry association Institute of Software Practitioners of Nigeria (ISPON) and other stakeholders to come together.

They need to look at what they can do to catapult those who are struggling in the industry by propping them up to remain afoot as well as structured funding to accelerate innovation. For Nigeria to be an innovation bastion just like Silicon Valley in USA, Bangalore in India and Guangzhou in China, what it requires is a lot of discipline, commitment and funding.





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