Concentration of fintechs in Lagos slows fintech development in Nigeria —CBN
The Central Bank of Nigeria (CBN) said the concentration of fintech companies in Lagos State is slowing the development of fintech across the country, especially inland.
The Apex Bank identified this as a major challenge to financial inclusion in the country and is failing to align with the National Fintech Strategy prepared by the National Financial Inclusion Steering Committee.
Note that the strategy, among others, was designed to drive a wider spread of fintech across the country, and help achieve the country’s 95% financial inclusion target by 2024.
Why Lagos is attractive: Explaining why fintechs are concentrated in Lagos, the CBN noted that apart from the sheer size of the market, the state also has a higher GDP per capita than Nigeria. While the country’s GDP per capita is set at US$2,229.9 (as of 2019), for Lagos it was set at US$6,238.
- “Many Fintech companies are focused on Lagos due to the size of the market; Lagos is the commercial capital of Nigeria with over 20 million inhabitants and a higher GDP/capita of US$6,238. However, this has slowed down Fintech development in the interior“, CBN said.
Need for fintech strategy: In his foreword to the strategy document, the CBN Governor, Godwin Emefiele, who is also the chairman of the National Financial Inclusion Steering Committee, said the committee believes that fintech has the potential to facilitate inclusive growth in the Nigerian economy. He said:
- “In light of this, the National Financial Inclusion Stakeholders developed a strategy to harness fintech for inclusive growth and development while enabling the Nigerian FinTech ecosystem for global competitiveness. The strategy seeks to achieve these objectives through the implementation of some key initiatives to catalyzing the Fintech ecosystem It highlights demand-side and supply-side imperatives for leveraging and retaining the talent pool in the FinTech space and mainstreaming fintech in the financial sector.
- “Furthermore, the document seeks to address issues that have militated against the growth of fintech in Nigeria and will serve as a collaborative tool to maximize the benefits of FinTechs while mitigating risks.”
According to the CBN Governor, the National Fintech Strategy is an important component of the Payment Systems Vision 2025 (PSV2025). He added that the strategy would enable the achievement of the objectives of the Nigerian Startup Act, 2022, especially in the financial sector.
