Fintech is the leading sub-sector of the Nigerian startup space, both in terms of levels of activity and amounts of funding secured, according to the Nigerian Startup Ecosystem Report 2022, released by startup-focused news and research company Disrupt Africa, which utilises Disrupt Africa’s datasets, expertise and networks to document what startups are doing in the country, who is making investments, and who is providing ecosystem support.
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It is released in partnership with Quona Capital, a venture firm focused on fintech that can expand access for underserved customers and small businesses in emerging markets; Sabi, Africa’s leading provider of commercial infrastructure for the distribution of goods and services; and MAX, which is building Africa’s largest mobility-tech platform. Other partners are Talking Drum Communications, Newtown Partners, Kwik, and LipaLater.
The publication takes as its starting point a list of 481 Nigerian tech startups for which enough data was available. A grand total of 173 of those startups – 36 per cent – are fintech ventures, almost three times more than its nearest challenger – e-commerce and retail-tech.
In terms of sub-sectors, activity is diverse, though payments and remittances (46 startups, 26.6 per cent of Nigerian fintech ventures) and lending and financing (34 startups, 19.7 per cent of Nigerian fintech ventures) are clear leaders. There is also significant activity within the blockchain, investtech, personal finance and business administration verticals.
This breakdown is broadly reflective of the major trends across Africa, with payments and remittances the “original” fintech space, by which we mean it is the longest-standing and busiest of all fintech sub-sectors. The lending and financing space is consistently and increasingly popular among startups, given the opportunity presented by the fact that African consumers struggle to access traditional credit-based services. Nigeria has relatively high activity compared to its peers across the continent in areas such as blockchain, investtech, and open banking, yet is underserved when it comes to insurtech.
The Nigerian fintech space is by far the biggest employer within the country’s broader startup ecosystem, accounting for 8,653 jobs, an average of 50 per startup. Six of the biggest 10 employers in the Nigerian startup ecosystem are fintech companies – RenMoney (892), Cowrywise (570), Flutterwave (541), TeamApt (460), FairMoney (385), and Kuda (356).
Fintech is also the most popular sector when it comes to Nigerian startup funding, as it is across the rest of the continent. This trend is only becoming more pronounced. So far in 2022, the space has already attracted US$507 million – accounting for 67.8 per cent of Nigeria’s total funding for the year to date. The growth in the amount of investment going to Nigeria’s fintech sector is also astonishing, particularly so in the past couple of years when the total amount of fintech funding has begun to top the half billion dollar mark.