Nigeria is rated as investors’ preferred destination when it comes to fintech, attracting half of the total technology funding in Africa and over 50 deals in 2020, a report from Tellimer Research shows.
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The strong growth opportunity for financial technology (fintech) companies in Nigeria is owing to limited access to credit, low technological sophistication, as well as a diversified ecosystem
An extensive research based on intelligence by Techpoint, the data and research arm of Techpoint Africa, it is estimated that Nigeria’s FinTech revenue will reach $543 million by 2022.
The report also showed that in 2018, Nigerian startups raised $178.3 million with 87 per cent of it being from foreign investors.
According to the report, in 2019, $377.4 million was realised and 94.8 per cent of it was also from foreign investors, while in 2020, $120.6 million with 71.2 per cent was raised from foreign investors.
Reports curated from McKinsey & Company noted that the full potential of FinTechs in Nigeria remains untapped. It said FinTechs could create impact in three broad dimensions, through stimulating economic activity, by creating a multiplier effect, and by driving progress towards development goals.
“Economic impact will primarily come from expanding revenue pools and attracting foreign direct investment to the country. The sector can unlock economic benefit by driving increased productivity, capital, and labour hours through digitisation of financial services. Increased FinTechs activity could also indirectly grow the digital economy by, for example, providing business-to-consumer (B2C) marketplace tools such as payment integration on social media platforms, and further enabling the Nigerian e-commerce industry,” the McKinsey report said.
The report urged FinTechs to support Nigeria’s human capital development by driving financial inclusion and literacy through the provision of accessible and affordable financial products that are innovative and cater to the needs of unbanked and underserved segments of the population across culture, gender, and geography.