Nigerian Tech Startups raised $2,068,709,445 between 2015 and 2022, the most of any country, with Fintech leading the Nigerian tech start-up space, a report has revealed.
According to the Nigerian Communications Commission (NCC), there are around 210 to 250 licensed FinTech companies operating in Nigeria as of January 2023, who collectively attracted investments worth around $1.2 billion, the highest on the African continent.
The Fintech Industry is arguably the most significant sub-sector of the Nigerian Startup scene, both in terms of activity and investments.The Fintech ecosystem largely comprises businesses focused in Mobile Payments, Merchant Solutions, Digital Banking, Personal Finance, Investments/Wealthtech and Lending.
The report titled: ‘The Nigerian Fintech Industry Report, 2023,’ revealed that these FinTech players rapidly increased the industry’s valuation from $153.1 million in 2017 to at least $543.3 million as of Q3 2022, an increase of 25 per cent. The report also disclosed that not less than N33.2trillion value of transactions was performed electronically in August 2022.
It averred that the key drivers of growth in the Nigerian Fintech industry include increasing mobile phone penetration; underbanked population; Internet growth; e-commerce growth; Nigerian growing population; money transfer and venture capital funding.
Explaining further, the report revealed that mobile phone penetration has been steadily increasing in Nigeria, with over 80 per cent of the population having access to a mobile phone.
“This has created opportunities for Fintech companies to provide financial services through mobile applications, which are accessible to a large number of people. There are around 170 million mobile subscriptions in Nigeria,” it added.
On underbanked population, the report averred that , Nigeria has a large underbanked population, with
many people lacking access to traditional banking services.
“For instance, the NIBSS reported in 2022 that the country’s banked population increased by 15.6 percentage points to 45.3 percent in 2021, the highest in 10 years from 29.7 per cent in 2011,” it said.
The growth of the internet has also contributed to the development of the Fintech industry in Nigeria, the report disclosed, adding that, with more people having access to the internet, Fintech companies are able to offer online financial services, such as digital banking, mobile payments, and online lending.
The rise of e-commerce in Nigeria has boosted fintech activities in the country, as well; with over 109 million active internet users, there is a growing demand for online shopping and electronic transactions, which has created an opportunity for fintech companies to develop innovative solutions to meet this demand, it further revealed.
Meanwhile, the report listed challenges affecting the sector as politics and economic instability; cyber attack; lack of foreign investors and loss of talent due to brain drain.
