The recent data from the Nigeria Inter-Bank Settlement System (NIBSS) has shown solid growth across the various e-payment channels in the first 4 months of 2021 (January-April). NIBSS Instant Payment (NIP) transactions recorded a sturdy 107.9% y/y and 110.8% y/y growth in transaction value and volume to N79.5tn and 999.2m, respectively. For POS transactions, total transaction value and volume rose 56.0% y/y and 66.8% y/y to N2.0tn and 301.1m, respectively. Transactions from Mobile Interscheme transfers category recorded the most impressive growth as both transaction value and volume increased by 185.8% y/y and 112.4% y/y to N1.8tn and 67.0m, respectively.
The country's favourable demographics, increasing mobile and internet penetration coupled with the need to achieve financial inclusion has brought significant opportunities in the fintech space. This has also forced traditional banks to be part of the change in driving new transformations in the financial system. From major funding announcements to new policy directions and strategic partnerships shows the fintech space is proving to be the frontier of the next decade. Nevertheless, we believe the sector still requires more investments and novel ideas to make it competitive with the players in developed climes. Recently, the NIBSS announced the launch of the NQR payment solution designed for merchants and customers to receive and make payments for goods and services.
Despite the increasing payment channels available to Nigerian consumers, the digital payments industry remains significantly under tapped and is poised for significant growth over the next few years. Payment for goods & services are mainly done with cash. Nevertheless, we highlight that the volume of non-cash transactions in Nigeria has showed some improvement over time. Nigeria's fintech landscape consists of 210 - 250 fintech companies, key stakeholders (banks, telecom companies, and the government), enablers and funding partners (i.e., universities and research institutions, investors, incubators, technology, and consumers). According to Frost and Sullivan, the country's fintech revenue is expected to reach US$543.3m in 2022 from US$153.1m in 2017.