The Fintech Ecosystem in Nigeria: Present Condition and Future Outlook

The Fintech Ecosystem in Nigeria: Present Condition and Future Outlook

2020 was a rough year for Nigeria. Like the rest of the world, Nigeria was preoccupied with dealing with the COVID-19 virus spread. Many industries suffered due to the restrictions and general atmosphere. However, fintech in Nigeria was rising more than ever. It was an important development that met the varied needs of people and provided ease and convenience in pandemic situations.

The traditional financial methods were difficult to be implemented in these times. With Nigeria’s growth in fintech, apart from meeting these challenges, it also rose to become one of the leading nations in fintech development in Africa.

The Regulations

Nigeria now has an impressive number of over 3000 tech companies. The primary reason why fintech is growing at such a rapid rate in Nigeria is mainly due to the regulations. The regulators have succeeded in creating an environment where innovation in financial services is risked and welcomed while maintaining the complete integrity of the existing financial system.

The Fintech Ecosystem in Nigeria: Present Condition and Future Outlook

The Central Bank of Nigeria (CBN) is one of the many important bodies that regulate fintech. Last year, the CBN came up with the ‘Guidelines for Licensing and Regulation of Payment Service Banks (PSBs)’. The PSBs now have to include the rural areas within their operation and provide them with the ease and convenience of technology.

Many farmers are also relieved from having to travel long distances for their financial obligations. This inclusivity is an absolute necessity to meet the various poverty challenges in Nigeria. Hence, there is generally an open attitude prevailing, which is even being seen in foreign trade.

In order to deal with the various risks and provide a safe technology experience to people, the CBN also came up with the ‘Guidelines on Nigerian Payments System Risk and Information Security Management Framework’. Hence, we see a strong regulatory drive and positive trends towards cashless payments in resolve the issues that plague traditional banks.

However, the regulation can still be improved considerably. For instance, new startups find it quite difficult to enter the sector by securing the mobile money license from the CBN as the requirement is for the startup to have at least 2 billion nairas in the shareholders’ fund.

Fintech Startups

Nigeria is the most populated country in the African content. It has a huge youth population. The youth are pretty entrepreneurial in spirit, intelligent and hardworking. There is even an association called the Young Entrepreneurs of Nigeria (YEN) to support this growth. Hence, in the future, we can surely see a rise in foreign investment in Nigerian startups.

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We now have many well-performing fintech companies in Nigeria providing quality financial services to consumers. This has become possible due to the advent of new technologies like Artificial Intelligence (A.I), Machine Learning (M.L.), blockchains, cloud computing and more. Transferring money, making deposits, availing loans and credits and raising funds has become very easy processes.

The Fintech Ecosystem in Nigeria: Present Condition and Future Outlook

The most well-performing fintech companies in Nigeria right now are Flutterwave, Interswitch, Paystack, Remita, Carbon, VoguePay, OPay and more. The presence of these companies has helped create more accessibility, and many SMEs, government agencies, education institutions etc., have tremendously benefited from this. Hence, both consumers and businesses are being benefited by the fintech services.

Consumer Attitudes

It is essential to keep in mind that there still exists a considerable percentage of the population that actually doesn’t even have a bank account. Many Nigerians are gradually opening up to this development and still find it quite hard to fully place their trust in the various financial solutions created by the new platforms.

They still don’t trust these companies with their confidential information and are quite wary. Those from the millennial and Gen Z generation have been the quickest to adapt to the fintech trend in the market as they are quite tech-savvy and trustful of technology when compared to older generations.

The future is nonetheless very bright as there is a significant increase in smartphone penetration and Internet connectivity. For instance, many Nigerians now enjoy online gaming, especially gambling and find themselves on and other popular online casino websites.

The youth prefer the fast-paced and convenient nature of online payment methods. The popularity of these new methods is also spreading through referrals. There is a positive trend of a considerable number of women being very open to fintech solutions. Hence, the payments sector has benefited the most after the consumer lending sector. We even see a rise in cross-border transactions.

In Conclusion

Although foreign investment hasn’t been so good in recent times because of the COVID-19 pandemic that affected many economies and sectors in the world, the future of Nigeria is very bright and full of hope. With the increase in education and the growth of a strong digital infrastructure, this trend seems to be inevitable. Nigeria is sure to emerge and remain as one of the leading nations in Africa for fintech.