The President of the Nigerian Fintech Association (FintechNGR), Dr. Stanley Jacob, has advised fintech companies in the country to stop offering services for free to achieve business sustainability.
Jacob, who stated this during an interview on an Arise TV program, said Nigerian fintechs must now focus on profitability if they want to survive the current economic condition.
According to him, a lot of fintechs in the country are currently not prioritizing profitability, which is why they continue to offer some services for free. This, he said, is unsustainable as every service comes at a cost to the providers.
“We think that fintechs should prioritize profitability without compromising social good.
“Some of them continue to offer everything free, there is a cost to service and this could in the long term adversely impact the sustainability of the businesses,” he said.
Impacts of the economy on fintechs
Speaking on the impact of the economy, especially the volatility of the Nigerian currency, the FintechNGR President said many fintechs who have secured funding in forex are struggling to meet their obligations.
“We have a good number of fintechs being funded via FX from venture capital and the rest, this exposure remains there, especially for fintechs that are earning their revenues in Naira.
“So you always have this mismatch in currency. That in itself is a huge risk and the fintechs are battling with it at this point in time,” he said.
- Providing an outlook of the fintech industry for next year, Jacob said there would be a lot of back and forth in terms of regulation.
- He added that the macroeconomic issues the fintechs are facing now would continue to impact their businesses, especially those with forex exposures.
- He, however, noted that the resilience of the fintech players would continue to drive the industry amid the challenges.
What you should know
The FintechNGR President’s sentiment on the need for profitability resonates with the recent declaration by the founder/Group CEO of Interswitch, Mr. Mitchell Elegbe, that most fintech businesses in Nigeria may never become profitable because they started on the wrong footing by providing some services for free.
Highlighting the peculiarities of running a business in Nigeria during his keynote presentation at the 2024 edition of the Doing Business in Nigeria Conference, the Interswitch MD said getting to profitability should be the most important thing for every business.
According to him, the idea of using free services to win market share will be the bane of many fintechs because they would not be able to monetize the same services later.
