Report: Nigeria’s FinTech Industry Rakes in $293.2m in H1 2021

Nosa Alekhuogie

The first quarter (H1) of the Nigerian FinTech industry has generated $293.2 million with over 70 per cent being realised from foreign direct investment.

According to reports 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.

As the industry continues to mature and grow, there is a lot of potential for people to come on board.

From the survey of about 290 startups conducted by Ernst & Young in collaboration with FinTech Association of Nigeria (FintechNGR), 57 per cent of FinTech startups (165) in Nigeria reportedly generated yearly revenue of over $5 million.

Since the beginning of 2021 there has been significant regulatory and legal developments in the framework for FinTechs in Nigeria as it has been an active year for the FinTech industry because the country embraced technology solutions following the COVID-19 lockdown. Regulators have been proactive in engaging with the FinTech ecosystem and have released several circulars, guidelines, and regulations, the report said.

Data from the National Bureau of Statistics (NBS) showed a 61 per cent year-on-year decline in foreign money flowing in Nigeria

This means fewer international customers for Nigerian businesses, and fewer investment capital for Nigerian companies.

The report further said international businesses and investors spent $2.8 billion in Nigeria in the first half of 2021 and in the first half of 2020, it was $7.2 billion.

Of these figures, Foreign Direct Investment (FDI) fell 36 per cent year on year. The World Bank has also estimated that foreign investment in Nigeria is down 80 per cent in recent times, the report said.

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.