There is no doubt that the development of the Fintech industry in Nigeria has significantly impacted the nation’s economy. Home to over 200 fintechs, Nigeria is among the continent’s fintech leaders with a vibrant number of startups and a growing array of digital offerings from mainstream banks.
Between 2014 and 2019, Nigeria’s Fintech sector raised more than $600 million in funding, attracting 25 percent ($122 million of $491.6 million) raised by African tech startups in 2019.
In 2021, the Fintech sector raised around $800 million in 2021, which was 120% higher than what Fintechs raised in the last three years. The country has undoubtedly witnessed an increase in smartphone penetration among the youth, which has spurred the development of several Fintech services to increase financial inclusion and cashless payments.
Registration for Tekedia Mini-MBA issue 9 (12 September – 3 December 2022) has started. Register here. The cost is N60,000 or $140 for the 12-week programme.
Despite the significant rise of Fintechs in Nigeria, experts reveal that the sector only serves about 35 percent of the Nigerian population. The Chief Product Officer, Mr. Brian Manuwike, recently revealed that financial technology companies can only serve about 35 percent of the Nigerian population.
He further stated that the country’s smartphone penetration is at 35 percent, which suggests that the market value of financial technology companies is the same. Mr. Manuwike cited lack of infrastructure as one of the major factors slowing down financial inclusion in Nigeria.
See what he said; “Access to digital payments is driving the adoption of digital financial services. When consumers use the service for the first time and have a good experience, they will always come back for convenience. The problem with inclusion in Nigeria is not only a lack of infrastructure but also a relatively low smartphone penetration.
“Currently it is about 35 percent, which means that at best most Fintech products are limited to 35 percent of the population. These barriers continue to drive the economy’s reliance on cash, with 9/10 of transactions in Nigeria still settled in physical currency.
“Nigeria needs more investment in the offline infrastructure where consumers can access financial products/services with cash and without a smartphone. Offline distribution will drastically really drive financial inclusion”.
Despite the low penetration of smartphone users in the country, it is estimated that smartphone and internet usage in Nigeria will continue to grow in the coming years as the percentage of smartphone users in the country continues to increase with each passing year.
However, this low smartphone penetration has meant that people in Nigeria still rely on cash transactions. Despite wallets and mobile money being the future of payments, there is a need for more investment in offline infrastructure where consumers can access goods/services and trade with cash without necessarily needing a smartphone.
A case study is the Safaricom M-PESA services where consumers can use the platform without the need for a smartphone. With zero data, customers can use the M-PESA service to send and receive money. It also gives them ease of use and convenience.
With data and mobile phones being sold at high speed, which makes it difficult for those living in rural areas and low-income earners to be financially included, it is therefore relevant that Fintech companies also roll out products that do not necessarily require data needs. or smartphones. Doing this will increase the percentage of people in the country who will be financially included.
With the entry of telecommunications firms into the Fintech sector, such as MTN and Airtel, it is a positive move for the Fintech ecosystem as it will ensure that players already in the space create new innovative offline products. Creating offline products will see a significant increase in the number of the Nigerian population that will have access to Fintech.
