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Top Nigerian FinTech Apps that are leading the competition

It is estimated that there are about 210-250 fintech operators/companies operating in the Nigerian space.

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Top Nigerian FinTech Apps that are leading the competition

Financial technology is one of the new waves of disruptions in the financial sector, that is fuelled by the internet of things and the increasing digitalisation of the world. In the last decade, the industry has grown by more than 100 times from $1.8billion in 2010 to $19billion in 2015. Recently, the size of the global FinTech industry has been valued at $127.66 billion and is expected to grow at an annual average of 24% to amount to $309.98 billion by 2022. 

Fintech refers to the ecosystem where technology companies as well as financial institutions use the innovations in technology to foster financial services and increase access to finance in the market. It an umbrella term that refers to the innovations in technology that are challenging and changing the traditional approaches in the financial service industry. 

Almost every corner of the world has been touched by FinTech in as little as 20-25 years of its existence with the likes of PayPal charging at the front by helping people make seamless money transfers across the world and facilitating online payments. In almost every mention of FinTech in Africa, the name m-Pesa is mentioned under the same breathe. Founded in 2007,  M-Pesa helps Kenyans make all money transfers and payments online even allow for deposits and withdrawals with the ease of a mobile app.

READ ALSO: Chipper Cash just raised $13.8 million Series A funding

The advent of FinTechs in Nigeria and regulations

In Nigeria, the presence of FinTech is equally notable, and like its ecosystem, there is a continuous rise in the number of FinTech startups looking to offer better services than pre-existing ones. FinTechs in Nigeria are looking to expand the tentacles of the financial sector to reach its un-banked population of 60 million people (more than a quarter of its estimated 200 million population) through mobile apps that make services.

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Also, they are looking to make an array of financial services more available to the banked population by providing seamless services like promising interests on savings and investment more than traditional banking. It is estimated that there are about 210-250 FinTech operators/companies operating in the Nigerian space, and these players brought about the valuation of the industry to $153.1 million in 2017 and are projected to rise up to $543.3 million by 2022.

Regulation of FinTech in Nigeria is overseen by the Central bank. As a measure of risk management, the CBN places a financial barrier of a minimum of $275,000 on entry into the FinTech market to help secure funds and credibility of operators.

Categories of FinTech

As earlier noted, the term FinTech is an umbrella term. It is an ecosystem with many species of habitats. These species are the different sectors in the finance industry from insurance to banking to investment to money transfers and other emerging areas like cryptocurrencies and Agritech.

This paper focuses on five categories for the Nigerian market: Agritech, Savings, and Investments (financial instruments), Crowdfunding, Mobile Payments, and Cryptocurrencies. In ranking the top players in each category, this paper will base its ranking on google play store’s data.

READ ALSO: Just In: Opay shuts down other business arms to focus mainly on fintech


Agritech: Farm Crowdy

In FinTech, agrotech is the use of internet technology to close the funding gap and infrastructural deficits plaguing the agricultural sector. They look to help farmers feed the world, cutting off middlemen and making farming more profitable. Most notably, it is a crowdfunding platform that allows investors to make short-term harvest cycle investments in agriculture and reap high interests.

As the first digital agriculture platform in Nigeria, Farm Crowdy has succeeded in keeping its first position in the industry by providing a platform that connects small-scale farmers with prospective investors who do not necessarily need to know about agriculture to invest. In allocated funds to small-scale farmers that helps them increase their output by adopting capital intensive/mechanised farming, providing them seedlings, training on crop yields, access to more farmlands, and providing insurance for agric products.

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Since its launch in 2016, Farm Crowdy has helped 25,837 farmers, provided over 16,000 acres for farming, gained nearly 70,000 farm sponsorships from investors, reared more than 2.5 million chickens, and pays investors 13-25% returns on their investment. On google play store, Farm Crowdy is ranked 3.5 stars with 265 reviews and has over 50,000 downloads. Cumulatively, it has nearly a hundred thousand active users.

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Other Agritech platforms that offer similar services include Thrive Agric, Growsel, Pork Money (which is crowdfunding for a pig farm), Requid, Agropack, Releaf, FarmNGA, Probity Farms, among many others.


Savings and Investment:

Piggyvest

Fintechs in Nigeria offers investment platforms that tend to bridge the knowledge gap in investments in financial instruments, eliminating information asymmetry,  and reducing the hassles associated with financial instruments. In the Nigerian space, the savings and investment subsector is one of the most populated by fintech firms, among which the most dominant factor in this section is the Piggyvest app.

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Piggyvest offers users the financial freedom to not only save responsibly but put their savings into use by investing them. It launched in 2016 as a savings platform – Piggybank – and later rebranded to include investments – Piggyvest. It prides itself as the first online savings and investment platform in West Africa and boasts of 350,000 active users.

Piggyvest promises users 10-13% interest rates on their savings and up to 25% on investment in financial securities. At just two years into the business, Piggybank announced that it had raised $1.1 million in seed fund, and saw a growth in savings rate by up to 3000% between 2016 and 2017. On Google play store, it records more than 500,000 downloads which are about five times more than its two closer competing savings and investment platforms like Cowerywise and i-invest (100k+ each). It also ranked 4.7 stars with 20,000 reviews. 

READ MORE: 11 money saving apps you need to download now

Wealth.ng

While the aforementioned fintech companies have gained ground in the demand for fintech services, Wealth.ng is introducing high-scale innovation into the market. Recently it entered into a partnership deed with Paga, one of the dominant names in the money transfer sector of the industry, to improve the quality and efficiency of service delivery. Among the industry, there are hardly any existing partnerships, instead, each company competes for customer acquisition and better service.

Wealth.ng sees business differently. A decade ago, many people would dismiss the thought of investing in financial securities for lack of adequate knowledge of how it works or understanding of the trends. Wealth.ng has completely bridged this gap by including consumer education as part of its services. With this, they walk potential investors through every step and provide an array of investment options for each person.

Other players in the savings and investment subsector include Afrinvest, Kudi, Investment one, Payday investor, and many others.


Mobile Payments: Interswitch

This is no doubt the busiest in the FinTech industry in Nigeria, and one of the top FinTech areas globally. According to the Central Bank, between January to December 2019, the volume of transactions via mobile monies stood at 377,265,208 which reflects a transaction value of N5 trillion. The FinTech company at the forefront of this charge is Interswitch. In 2019, it sold a 20% share of the company to Visa for $200 million which brought the company’s valuation to $1 billion (N360 billion) – a unicorn status. At this valuation, it surpasses giant financial houses like Access bank (N327 billion), and UBA (N227 billion).

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Unlike savings and investment platforms that people use for savings from time to time – hence mobile apps, mobile payment apps are used for the likes of utility bills, cash transfers, deposits, and withdrawals. Businesses use mobile payment platforms for transaction purposes. However, on play store, Interswitch still boasts of more than 100,000 downloads in its quickteller app and over 50,000 downloads in its quickteller agent app, which top other of its complementary payment apps for Nigeria and other African countries.

READ MORE: Digitization of the U.S Dollar faces U.S Senate hearing

Other major players in the payment platform in Nigeria include Flutterwave, Paystack, Remita, e-transact, Vogue Pay, among others.


Cryptocurrencies: Quidax

To many people, cryptocurrencies are still a mirage. As such, investing in any form of cryptocurrency would be considered a wasteful investment. In the Nigerian fintech ecosystem for cryptocurrencies, Quidax is helping cryptocurrency spreading the knowledge and raising awareness for cryptocurrencies, and helping enthusiasts and investors make crypto investments.

Launched in 2018, Quidax has made its platform seamless for trading different cryptocurrencies like Bitcoin, Ethereum, Ripple, Litecoin, and other cryptocurrencies using the naira. Its market approach of trading directly with naira and boycotting exchange rate variations is a major development in the crypto market. One year after it started, CEO Buchi Okoro said they saw a transaction volume of more than $110 million from users in 70 countries from 6 continents. On play store, it has over 10,000 downloads and rated a 4.1 star.


Crowdfunding: NaijaFund

As an alternative to raising funds for personal and business projects like hospital bills, school fees, and the likes, crowdfunding platforms help users source funds from a sea of ‘strangers’ willing to spare some funds to help out. On the global scale, GoFundMe leads other crowdfunding platforms by ensuring a transparent system where people seeking for financial assistance could present their ordeals and receive solidarity.

Although GoFundMe shares a strong presence in almost every country, it doesn’t deter other industry players from participating. In Nigeria, NaijaFund presents itself as one of the foremost indigenous crowdfunding platforms. Although mainly present as a web app, it has since its 2016 launch helped Nigerians bridge the funding gap for personal and business projects, in which it claims 10% of the total funds raised. 

 

2 Comments

2 Comments

  1. Williy

    November 10, 2020 at 6:24 am

    Excellent post and thanks for sharing

  2. Stephen

    November 10, 2020 at 10:44 am

    Well researched….

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Columnists

Repositioning the Nigerian Power Sector

The Nigerian power sector continues to grapple with the age-long problems that have plagued the sector even before the privatisation exercise.

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Abuja, Ikeja Discos top list in collection efficiency in Q1 2020- NERC, Estates in Lekki increase electricity tariff to N105/kWh, Eko Electric, Ikeja and 5 others to face NERC sanction for non-compliance, CBN reveals framework for financing National Mass Metering Programme (NMMP), Nigeria ranks eight African country with well-developed electricity regulatory frameworks, as Uganda tops.

A Punch newspaper report says Nigeria lost an estimated N20.5bn in 22 days (January 1 and 22, 2021) due to continued rejection of electric power by the electricity distribution companies (Discos) who in turn argue that it makes no business sense to wheel power to locations where consumers show an unwillingness to pay for the electricity they receive.

Some stakeholders have defended the discos’ actions by arguing that some of the power generated are allocated to areas with little or no revenue prospects, particularly areas where power theft is more common.

This leaves the discos with no option but to reject some of the load to avoid running into further liquidity issues. The news report further stated that a total of 1,941 megawatt-hour of electricity was restricted during the review period due to insufficient gas supply, as well as lack of distribution and transmission infrastructure.

The Nigerian power sector continues to grapple with the age-long problems that have plagued the sector even before the privatisation exercise in 2013. Insufficient gas supply, weak transmission infrastrusture, absence of cost-reflective tariffs and poor metering system have remained largely unresolved. On the demand side, the final consumers have continued illegal actions of meter bypass and in many cases have accumulated unpaid bills.

Granted, among the uncaptured consumers, there are those without access to the national power grid, particularly in rural areas, however, the wide disparity between registered consumers and estimated number of households today suggests that power theft in Nigeria is not on a small scale, and this could be contributing meaningfully to the liquidity issues gripping the power sector value chain.

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Tackling the liquidity constraints of the power sector remains at the forefront. Among suggestions to achieve this is structuring the activities in power sector as financial products for capital market transactions in a bid to facilitate the required liquidity, deepen private participation in the sector and enhance transparency in the entire value chain of electricity generation.

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Local content – A driving force for African oil and gas sector sustainability

There is a wave of change coming and COVID-19 is the first of the determinants that oil and gas investment will gradually be reducing.

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How Libya and Iran can add to Nigeria’s woes

With 2020 being a year of uncertainties in the oil and gas sector and some of the decisions, activities and market trends that took place last year, I reflect on what some of the activities pre-COVID-19 and now means for the African energy sector.

Following the reform of the African Petroleum Producers’ Organisation (APPO) Fund, I was opportune to witness the equally newly reformed Africa Energy Investment Corporation (AEICORP). The AEICORP is to provide “a Solid Capital Base and Liquidity Profile, a Preferred Creditor Status, Developmental Impact, Strong Financial Performance Returns to Investor,” for investors to participate in a low-risk pan-African growth.

With one of the objectives of APPO seeking to ensure member countries cooperate, I believe for African countries to reap the maximum benefits from oil and gas, investment in energy technology through institutions like AfDB and AEICORP will help to achieve this aim. The thought of African investments in the hydrocarbons sector takes my mind to a familiar place – de-carbonization of fossil fuels, as opposed to abandonment.
De-carbonising fossil fuels through technology developed by Africans might take a while to embrace but it is worth the long-term investment. At the moment (or for the next 20 years), Africa is not ready for zero-carbon emission energy sources. Almost all of the oil-producing countries on the African continent depend on revenues from oil and gas to fund their budgets and keep their economy moving. It cannot be denied that the energy security of Africa is highly dependent on decarbonisation.

This is because most of the African countries export their crude to countries abroad and the countries abroad are moving towards adopting the terms of the Paris climate accord which aims to see low carbon emission.
New discoveries of oil and gas are still being made daily with a large part of prospective areas still underexplored. All the countries on the continent cannot boast of 24 hours steady supply of electricity. The West is embracing decarbonisation because they have gotten to a stage where all of the basic social amenities are working, Africa isn’t there yet.

Africa looks to be one of those who will suffer climate change the most. We cannot follow the same paradigm as the advanced countries and we will take a longer time to achieve what they will achieve. The COVID-19 pandemic is a trigger for many African countries to begin to gradually embrace diversification and invest in other sectors of their economy. If African countries do not fully depend on the revenues from oil and gas, we can begin to talk carbon decarbonisation. For now, it is a gradual process and we still have a long way to go.

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The West will not come and save us. The West will save the West and Africa should save Africa. In November 2019, the European Investment Bank (EIB) announced that it will no longer grant loans for crude oil, natural gas and coals project from January 1st 2022, with a few exceptions for gas projects. Also, in October 2020, the United Nations asked world’s publicly funded development banks to bring their lending policies in line with the Paris Agreement, and a few weeks later, many of the institutions including the African Development Bank Group (AfDB) said they will reduce investment in fossil fuels related project.

This is to show that it would soon be every investor for themselves. And if China follows suit, the African market will break.

When all of these lenders stop funding fossil fuel projects in the country, most African countries will have little or no advantage when it comes to negotiations. Chinese authorities have been big players in the development of oil and gas resources in Africa and one of the biggest lenders to African countries. If by 2025 that all of the world’s publicly funded development banks would have joined the EIB in halting the disbursement of funds for fossil fuel projects, an indication that they are only willing to do embark on projects that are in line with their net- zero commitments, China will be the only option left.

Many African countries have already signed agreements that will see them forfeit important state-owned assets if they fail to meet up on their repayment plan for loans obtained from China. Let us not forget that China is also a signatory to the Paris climate accord. So if in the future, China decided to also stop funding fossil fuel projects, most of our countries in Africa who do not start planning for the unexpected now will be left with a wrecked economy and with no option than to forfeit out of the little they have to pay their debts.

French Group, Total, ‘totally’ dominates the oil and gas sector in some African countries. What happens to us when Total pulls out its resources and stops funding fossil fuel projects, because being a French company, it is one of the companies expected to fully commit to the terms of the Paris Agreement?

Is the Africa Continental Free Trade Agreement (AfCFTA) the saviour?

Yes, we do have a genuine opportunity through the AfCFTA. The AfCFTA was formed in 2018 to eliminate tariffs on intra-African trade, to make it easier for African businesses to trade within the continent and cater to and benefit from the African market. It creates a single market for goods, services, facilitated by movement of persons to deepen the economic integration of the African continent, under the Pan African Vision of an integrated, prosperous and peaceful Africa. The benefits are:

To improve the intra-African trade landscape and export structure;

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  • To create a sound global economic impact;
  • To develop better policy frameworks;
  • To foster specialisation and boosting industrialisation;
  • To strengthen regional and inter-state cooperation;
  • To increase employment and investment opportunities, as well as technological development;
  • To provide the opportunity to harness Africa’s population dividend.

In a few years, the AEICORP and AfCFTA may, alongside a few lending bodies and China, be the only creditors willing to invest in the African energy scene. The continent needs to embrace its own Funds and platform and invest in technology in the African energy scene, in preparation for the future of the oil and gas industry.

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One of the solutions to energy security is for African countries to make a case for themselves. Why is the West ignoring the gas sector, which is cheaper and safer and the least-polluting fossil fuel to a more expensive and less reliable source like renewable energy? If African forces start to condemn the decision of these lenders to stop financing fossil fuel projects, under a uniform voice and umbrella body like APPO, negotiations will take place and better resolutions that will favour all parties can be reached.

Countries with huge natural gas reserves such as Nigeria, South Africa, Tanzania, Algeria, Ghana, Equatorial Guinea, Ghana, Senegal, Cameroon etc. should follow in the footsteps of Mozambique and attract investors to invest in that sector. Equatorial Guinea also has projects lined up for its ‘Year of Investment’. Egypt has also been investing heavily in the gas sector and alongside Mozambique, it would become one of the biggest players on the continent, in a few years.

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African countries can also take advantage of the fact that an African, H.E Mohammed Barkindo is the Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC) to lead negotiations in ensuring that fossil fuel projects are still catered for by lenders.

Countries on the continent should also trade between themselves in the areas of energy. It is remarkable what the East African countries are doing together to ensure electricity supply in each other’s countries. Last year, Nigeria also announced it will be importing Niger’s surplus oil. African countries need to get from Africa what is present in Africa. This is the way by which we can help the cause of the AfCFTA, APPO, and each other to reach our full energy potentials and have adequate energy security.

There is a wave of change coming in the world and COVID-19 is the first of the determinants that oil and gas investment will gradually be reducing. African countries cannot afford to buy this change yet. We cannot afford to compare ourselves to the West as we lack what they have, and yes, we have some of the fossil fuels that they still want before their full switch to renewables. We have to take advantage of that gap and reach an agreement that favours all.

It will be great to see the terms of the Paris Climate Accord come to pass in the future. But for now, Africa needs the financing and investment in technology will help to still keep to the terms of the Accord while investing in the huge oil and gas potential here.


About the author

David R. Edet is an oil and gas expert, serving in the capacity of Business Analyst at Afric Energy Ltd, an Oil and Gas Company operating from Nigeria. Mr. Edet is a leading voice to youth involvement in African energy matters and campaigns for more involvement of local contact in the African hydrocarbons sector.

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What banks can do to improve Real Sector Lending in 2021

To navigate the nation’s economy from oil, banks will have to pay more attention to real sector lending in 2021.

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net interest income, Nigerian Banks, Fitch, Nigerian banks tremble over Cyber attack, Most Nigerian banks are very likely to fail stress tests should the economic downturn persists and deepens, What Banks can do to improve Real Sector Lending in 2021

The beginning of the financial year for Nigerian Banks has become a comparison of which bank closed with the largest balance sheet for the previous year; a simulation of which one of the tier-1 banks would outdo the others in the $1billion dollars profit pursuit, and which bank would pay the most dividends to its shareholders.

Every so often, financial analysts employ the use of important indices to decipher areas where these financial institutions need to shore up their numbers and employ their resources to align with the fiscal and monetary policies of the government. These Analysts are usually ignored. Consequently, is the poor policy implementation of the CBN and an ever-widening chasm between the fortunes of Nigerian banks and the economy in which they operate.

A major area where most analysts have faulted Nigerian banks in recent times is in lending – lending to the real sector of the economy.

READ: Nigerian LDR policy weakens banks’ balance sheets, IMF says

The expectation and the reality

On July 3rd 2019, in a letter to all banks, the CBN through its Director of Banking Supervision announced “REGULATORY MEASURES TO IMPROVE LENDING TO THE REAL SECTOR OF THE NIGERIAN ECONOMY”. A laudable directive that was to see banks maintain a Loan to Deposit Ratio (LDR) of 60%, wherein SMEs, retail, mortgage and consumer lending would be assigned a 150% weight in the computation of this LDR, and stiff sanctions of additional CRR of 50% of the lending shortfall will be levied against unyielding banks.

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This regulation fuelled the expectation of substantial gains in the real sector given the relative availability of funds. Banks jostled and made a show of dishing out these loans, but as records of CRR debits for LDR failure began to hit the news, it became apparent that most banks were still stuck in their reality of doing business in Nigeria.

READ: How digital transformation will impact Nigeria’s projected $8.79 billion economic expansion

The reality being that Nigerian Banks have managed to stay amongst the most profitable banks in Sub-Saharan Africa while largely ignoring the real sector. A review of the earnings of 10 top Nigerian Banks between 2009 and 2019 showed that a sizable portion of their profit growth came from non-client driven activities, even as income from core banking activities of these banks shrank from accounting for 85% of their profits in 2009 to 65% of their increasing profit in 2019.

Perhaps this goes a long way to explain the 2020 H1 profits posted by these banks amid a pandemic and looming recession.

READ: CBN issues framework for QR payments

A case of once-beaten?

In fairness, Nigerian banks already got their fingers burnt in the real sector oven once before, and the existence of AMCON is a constant reminder of this fact. The Banks’ attempts to adhere to the new regulation most likely contributed to a rise in the industry’s NPL in H1 2020 notwithstanding CBN’s best intentions with the loan restructuring freedom banks were given to protect themselves from the crippling effect of the pandemic. There doesn’t seem to be a way out for Nigerian banks.

READ: CBN debits N499 billion from accounts of 12 banks for failing to meet lending targets

Navigating the waters of necessity

With all the modernization around the banking process, banking at its root has remained unchanged over the centuries. It still entails receiving from areas of surplus to fix deficits. The real sector of the Nigerian economy has been in severe deficit as the nation directed its attention, and finances, to the oil sector which has been the sustenance of a potentially diverse economy like ours for far too long.

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If Nigerian banks are to navigate the nation’s economy from oil before the rest of the world completes the move, then they will have to pay more attention to real sector lending in 2021. This can be done through the following:

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  • Understanding the necessity

Real Sector lending should no longer be viewed by banks through the lens of meeting regulatory requirements only, their importance to the Banks’ balance sheet should be understood. In the near future, it is unlikely that banks will be unable to earn as much from derivatives as uncertainty caused by the pandemic continues to cause spectacular swings in some markets coupled with a wider acceptance of crypto over fiat which may shrink some markets.

Also, further ignoring the real sector market by commercial banks inadvertently means that Fintechs and their MFBs continue to ramp up the profits in these markets, and may someday be big enough to compete favorably with the commercial banks. Mergers and acquisitions will hasten this process.

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READ: Analysis: Access Bank’s valuation highlights merger blues

  • Having an action plan

As an action plan, real sector lending (not just the creation of risk assets) should be incorporated into the KPIs of relevant members of staff. Also, the banks should actively pursue sectors of the economy where they have comparative advantage by virtue of their expertise, customer base, technological advantage and/or branch network.

  • Using segmentation

Too much emphasis has been placed on “value chain” making banks feel the need to play in all aspects of a business. They practically provide funds for all aspects of the same business- from manufacturing to distributorship. Whilst an argument could be made on the need for synergy and the relative ease of monitoring value chain businesses, this type of concentration of funds puts banks at higher risk of loss when a part of the value chain defaults. However, focusing on a segment of a business could have its own benefits in limiting exposure.

READ: Understanding the deregulation of the downstream Oil and Gas sector in Nigeria

  • Revisiting VC, PPP and Loan syndication

Perhaps the next big business will not be a conventional textile mill nor will it be distributorship of FMCGs. Nigerian banks need to have a foothold in the businesses of the future by adopting VC models of investments and fundraising for these business ideas. Public-private partnership and Loan syndication should not also be limited to development of social amenities but to funding businesses in the real sector.

The real sector lending drive of the CBN has shown promise since inception, increasing the level of industry gross credit by N829b in its first few months between May and Sept 2019. The introduction of the GSI by the CBN from August 2020 is also a step in the right direction to protect banks from an increased default rate of personal loans.

Nonetheless, these policies will not upturn the Nigerian economy if Nigerian banks continue to treat real sector lending as an occupational hazard rather than the occupation itself.

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