Rewane: Nigeria’s fintech fund inflow to shrink over US banks crisis
Nigeria’s fintech sector could be in for a major meltdown and cut in capital as the collapse of SVB and Signature Bank in the US could limit funding to the sector in Nigeria in 2023, the renowned economist and CEO, Financial Derivatives recently revealed. Company Limited (FDC), Mr. Bismarck Rewane, said the country’s fintech industry should expect a further contraction in the total value of start-up funding, venture capital from $507 million achieved in 2022 this year. According to him, the total value of fintech startup funding from venture capital jumped to $536.7 million in 2021 from $20.9 million in 2015, before falling to $507 million in 2022. Rewane, who made this known at the Lagos Business School ( LBS) Presentation in April 2023 in Lagos stated that SVB was a major financier of technology start-ups and venture capital in the US.
He said with their collapse, coupled with Signature Bank, Nigeria’s fintech space is likely to come under pressure in venture capital funding in 2023. He said top fintechs in Nigeria, including Flutterwave, Interswitch, Chippers, Paystack, Kuda, Paga, and others, should prepare for difficult times during the year as the collapse of SVB, closure of Signature Bank, near collapse of First Republic Bank, emergency takeover of Credit Suisse would undoubtedly have major implications for Nigeria’s economy, especially the financial and fintech space this year .
The guest speaker at the LBS April lecture explained that global financial turmoil started with the collapse of SVB and Signature Bank, adding that the affected institutions had pre-existing conditions. He pointed out, however, that the spread of the contagion was limited due to a quick and coordinated response from regulators and top banks. While talking about the spillover, the renowned economist stated that the Federal Reserve was taking immediate steps to improve confidence in the banking system. In addition, the UK arm of SVB was bailed out by HSBC while First Citizen Bank entered into an agreement with the FDIC to buy part of SVB’s $72 billion worth of FDIC deposits and loans to cover the $20 billion loss from SVB’s deposit failure. – insurance fund. Credit Suisse was immediately taken over by UBS before the collapse.
He alluded to the fact that the Bank of England stated that European banks were safe and liquid enough to withstand headwinds, while Deutsche Bank, Germany’s largest bank, dodged the bullet due to massive liquidity and a strong capital base. Rewane, while quoting global financial experts on the financial turmoil, said JP Morgan CEO Jamie Dimon noted that the banking crisis was not over yet. “We don’t expect it to be like 2008. But we don’t know when it will end.” The chairman of the Saudi National Bank, who failed to increase his stake in Credit Suisse, Ammar al-Khudairy, also falls on his sword.
