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At a time when technology is disrupting the global financial services industry, Nigeria has not been left out of the change. Although a cash-based economy, Nigeria’s financial system has been receptive to the new transformations in the financial system, especially the introduction of technology.

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, Nigeria’s fintech revenue is expected to reach US$543.3 million in 2022 from US$153.1 million in 2017.

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Nigeria’s fintech industry continues to evolve on the back of technological advancement and demographic support as 50% of the population is expected to be less than 25 years of age by the end of 2020. Besides, the prevailing financial exclusion has resulted in low access to complex financial products for the masses.

For instance, insurance penetration in Nigeria is estimated at a mere 0.3%. In Nigeria, transactions are increasingly shifting towards mobile with the growing popularity of mobile technology among the population, especially the unbanked. The number of mobile money transactions increased c.14x to 217.8 million as at 9M 2019 from 15.9 million in 2013. Nigeria’s expanding fintech space should be further supported by Nigeria’s remittance market, one of the leading remittance markets in Africa due to the blossoming diaspora in the US, UK, Canada and Europe.

Nigeria’s significantly under-tapped digital payments industry is poised for significant growth over the next 5 years. A myriad of factors across industry fundamentals, positive country demographics and regulatory support have formed the base of expected accelerated growth for the fintech industry in Nigeria. This expectation has received significant attention from investors which has led to significant investments as existing players look to position for future growth.

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Nigeria’s fintech industry saw funding rounds from various global investors in 2019, with Interswitch, a payment platform infrastructure service obtaining equity funds worth US$200m from Visa and Branch receiving funds of US$170m from foundation capital and Visa. Overall, Application Program Interface (API) technology-enabled fintech companies control the funding scenario, reflecting investor confidence in such technology.

In this report, for the sake of convenience and ease of understanding, we divide the Nigerian Fintech market into two categories; Payments processing and Banking services (lending and savings).

Despite the increasing payment channels available to Nigerian consumers, the digital payments industry remains significantly under-tapped. Payment for goods & services is mainly done with cash. According to the Enterprise Development Centre (EDC) of the Pan African University, cash payment accounted for 95.3% of transaction volumes at the end of 2018.

This compares less favourably with SSA figures of 88.5% cash payments. Nevertheless, we highlight that the volume of non-cash transactions in Nigeria showed a significant improvement from what obtained in 2013 where EDC puts Nigeria’s cash payment at 99.6% of total transaction volume.


Nigeria is poised to lead the growth in non-cash transaction volume. According to the EDC, % of non-cash transaction volume is forecast to grow at a CAGR of c.39.0% over 2018 – 2023e faster than the c.21.0% forecast for Sub-Saharan Africa and global forecast of c.9.0%. Non-cash transaction is expected to reach 17.8% of total transaction volume in 2023 from 4.7% at the end of 2018.

Increasing mobile and internet penetration has continued to climb in Nigeria presenting further opportunity to support online payments. Data from the Nigerian Communications Commission (NCC) puts broadband penetration in Nigeria at 35.1% as at August 2019 (2018 – 31.5%). This is forecasted to climb to 55.0% by 2025 according to Jumia’s mobile market report for 2019.

The rapidly growing fintech industry is also offering key support to the financial services industry as Nigeria presents a huge market for digitised unsecured loans and Nigeria’s low credit penetration presents significant opportunities. Nigeria’s domestic credit to the private sector (as a percentage of GDP) was 10.9% as per 2018 data, compared to SSA peers like South Africa at 138.8% while World average stands at 129.7% according to data from World Bank.

Nigeria's fintech industry 2020: The growth frontier of the new decade

We believe Nigeria’s fintech industry can tap the population yet to be financially included. The National Financial Inclusion Strategy (NFIS) of 2012 set targets of 80% (formal and informal) financial inclusion and 70% formal financial inclusion by 2020. As at 2018, only 63.2% of Nigeria’s 99.6 million adult population had access to financial services according to the NFIS strategy document.

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In addition, bank account and mobile money account penetration also remain significantly low though the latter is growing at a fast pace. Mobile money account penetration in Nigeria stood at c.6.0% in 2018 which compares less favourably to SSA average and Kenya with c.21.0% and 73.0% penetration levels respectively. We believe local fintechs exploring the Nigerian unsecured lending business would see strong growth in coming years while new players also come into the industry to tap into the fast-growing sector.



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