Nigerian FinTechs Raised $439m in 2020

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Tuesday, May 04, 2021 / 11:35 PM / by EY and FintechNGR/ Header Image Credit: EY and FintechNGR


Executive Summary

The research in this report shows that the Nigerian FinTech industry is nascent compared to FinTech ecosystems globally. However, it is maturing at an exponential pace. This is reflected in the profile of the firms, the breadth of coverage, the increasing level of global connection and rising levels of profitability. Confidence in the industry is rising, and this is underpinned by some flagship success stories recorded in recent time. It is estimated that Nigerian FinTechs raised $439 million in 2020 alone, equivalent to 20% of the amount raised by all African tech startups.


A key theme in this maiden edition of the Nigeria FinTech Census 2020 is that it was designed to gather key insights directly from FinTechs and the incumbent major players, charting key areas of growth, as well as potential challenges. Data was gathered on the specific areas of talent, capital, demand and policy & regulation.


We have explored in detail the dynamics around these four pillars that underpin the burgeoning success of the industry.

Talent (the availability of technical, financial services and entrepreneurial talent)... Attraction and retention of talent emerged as a major top tier challenge for Nigerian FinTech organisations. Nigerian FinTechs thrive on recruiting onshore talent within the domestic market. Skills such as data analytics, cybersecurity and software engineering are among the most difficult to find to a greater degree, presenting barriers to growth for FinTechs, and an area where many believe more support is required.

Capital (the availability of financial resources for start-ups and scale-ups)... A FinTech's ability to raise funds is fundamental to its growth, and growing organically is a battle against time. Our findings suggest that foreign investors are more involved in the FinTech space than their local counterparts, with a higher percentage (57%) of FinTech funding coming from overseas. There is also a funding skew to the more established players, with higher percentage of post-revenue FinTechs receiving more funding.

Demand (end client demand for FinTech services across consumers, corporates, FIs and government)... Consumption of FinTech services within the Nigerian ecosystem continues to grow and evolve at pace, with a number of FinTechs positioning themselves by offering credible B2B and B2C options across consumer parallels. Usage of FinTech services by incumbents also continues to rise, as notable banks continue to partner with FinTechs to cover the key customer segments.

Policy and regulation (all government directives and initiatives including the presence of digital public infrastructure to facilitate financial services inclusion and innovation)... More than 50% of the FinTechs interviewed say there is a need to amend regulations in certain areas such as capital, KYC and reporting requirements. Niche players also say their prevailing concern is around the lack of clarity and certainty on the regulation of emerging segments such as cryptocurrency, digital ledger technology, etc. In contrast, the Nigerian regulatory bodies posit themselves to be highly supportive of innovation. A notable update is the presidential assent in November 2020 to the Banks and Other Financial Institutions Act 2020, which provides regulatory guidance for financial services businesses that are conducted digitally, virtually, or electronically only. A large proportion of FinTechs say the financial industry in Nigeria is overregulated, and may stifle innovation and global competitive advantage.


The Nigeria FinTech industry is maturing and continues to grow. There remains a high degree of optimism, however the industry is facing some scale-up challenges. Two fundamental foundations for continued success will include the level of effective collaboration with major players and the level of government support.


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