The Nigeria Fintech Census 2020 research shows that the Nigerian FinTech industry is nascent compared to FinTech ecosystems globally. It was in 2019, that Nigeria officially recognized its first FinTech unicorn, with Interswitch achieving a valuation of $1billion based on a $200million investment from VISA, however, its growth is at an exponential pace – reflected in the profile of the firms, the breadth of coverage, the increasing level of global connection and rising levels of profitability. Confidence in the industry is rising, and this is underpinned by some flagship success stories recorded in recent time. It is estimated that Nigerian FinTechs raised $439 million in 2020 alone, equivalent to 20% of the amount raised by all African tech startups1.

The research is designed to gather key insights directly from FinTechs and the incumbent major players, charting key areas of growth, as well as potential challenges. Data was gathered on the specific areas of talent, capital, demand and policy & regulation.

The study shows that the burgeoning success of the industry is determined by

Capital: Access to capital both domestic and international remains essential to the growth and success of  FinTech businesses.  A FinTech’s ability to raise funds is fundamental to its growth, and growing organically is a battle against time. In 2019, the Nigeria FinTech sector attracted $122m in investment, representing an annual increase of 28% in FinTech investment activity from 2018 at $95m. These investments accounted for 25% of Africa’s FinTech investment in 2019. This findings suggest that foreign investors are more involved in the FinTech space than their local  counterparts, with a higher percentage (57%) of FinTech funding coming from overseas. There is also a funding skew to the more established players, with higher percentage of post-revenue FinTechs receiving more funding.

Demand: In Nigeria, demand for FinTech services is largely driven by financial literacy, a youthful, digitally savvy population and increasing smartphone penetration which stood at 50% (100 million unique subscribers) at the end of 2019. There has been a swift adoption of FinTech services particularly with the emergence of Covid-19, which increased the demand for technology enabled financial products and services. Consumption of FinTech services within the Nigerian ecosystem continues to grow and evolve at pace, with a number of FinTechs positioning themselves by offering credible B2B and B2C options across consumer parallels. Usage of FinTech services by incumbents also continues to rise, as notable banks continue to partner with FinTechs to cover the key customer segments.

Talent: Availability of technical, financial services and entrepreneurial talent is a determinant of success of the industry. Attraction and retention of talent emerged as a major top tier challenge for Nigerian FinTech organisations. Nigerian FinTechs thrive on recruiting onshore talent within the domestic market. Skills such as data analytics, cybersecurity and software engineering are among the most difficult to find to a greater degree, presenting barriers to growth for FinTechs, and an area where many believe more support is required.

Policy and regulation: This includes all government directives and initiatives including the presence of digital public infrastructure to facilitate financial services inclusion and innovation.  More than 50% of the FinTechs interviewed say there is a need to amend regulations in certain areas such as capital, KYC and reporting requirements. Niche players also say their prevailing concern is around the lack of clarity and certainty on the regulation of emerging segments such as cryptocurrency, digital ledger technology and some others.  In contrast, the Nigerian regulatory bodies posit themselves to be highly supportive of innovation. A notable update is the presidential assent in November 2020 to the Banks and Other Financial Institutions Act 2020, which provides regulatory guidance for financial services businesses that are conducted digitally, virtually, or electronically only. A large proportion of FinTechs say the financial industry in Nigeria is overregulated, and may stifle innovation and global competitive advantage.

The Nigeria FinTech industry is maturing and continues to grow. There remains a high degree of optimism, however the industry is facing some scale-up challenges. Two fundamental foundations for continued success will include level of effective collaboration with major players and the level of government support – the regulations support should be improved.

Also, Improved Talent should be a future focus: The market for FinTech talent is competitive hence talent policy must be shaped to deliberately develop local talent through initiatives such as Development of a national skills and talent strategy to increase and diversify the supply of talent within financial services and FinTech and Working with education policymakers and providers to consider how school curricula can best support young people to develop sought-after STEM capabilities and create a ‘digitally minded’ pipeline of talent. and strengthen its access to domestic and international talent. This will improve access to talent as well as increase confidence in the local talent pool.

And the industry will have to increase its Growth and Expansion: The COVID-19 pandemic presented unique opportunities for FinTechs to accelerate  innovation and transformation across financial services and beyond, with emergent cross-boarder considerations such as increasing digital adoption due to heightened physical restrictions, potential changes to work habits with remote working as the new norm, opportunity for collaborative partnership between FinTechs and incumbents to deliver enhanced digital value to customers.


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