Nigeria’s fintech sector is attracting more attention from investors and customers, as the country’s mobile banking adoption grows rapidly. Computer Warehouse Group (CWG), one of the leading technology companies in Nigeria, has seen its share price soar by more than 300% in the past year, as it leverages its fintech solutions to tap into the lucrative market.
CWG’s Fintech Solutions Drive Growth
CWG, which was founded in 1992 as a computer hardware and software provider, has diversified its portfolio to include fintech solutions, such as cloud-based banking platforms, mobile money services, and agency banking networks. The company’s flagship product, Finacle, is a core banking solution that powers more than 100 financial institutions in 35 African countries, including Nigeria’s largest banks.
CWG also offers a mobile money service called CWG Smart Utility, which enables customers to pay for utilities, such as electricity, water, and cable TV, using their mobile phones. The service has over 3 million subscribers and processes more than 10 million transactions monthly.
Another fintech solution that CWG provides is its agency banking network, which allows customers to access financial services through agents, such as retailers, kiosks, and petrol stations. The network, which is powered by CWG’s Prime platform, has over 15,000 agents across Nigeria and serves more than 5 million customers.
Nigeria’s Mobile Banking Adoption Surges
Nigeria, Africa’s most populous country and largest economy, has a huge potential for mobile banking, as more than half of its 200 million population are unbanked or underbanked. According to the World Bank, only 39% of Nigerian adults had a bank account in 2018, compared to the global average of 69%.
However, the mobile phone penetration rate in Nigeria is much higher, at 84% in 2020, according to Statista. This means that there are more than 160 million mobile phone users in Nigeria, who can access financial services through their devices.
The COVID-19 pandemic has also accelerated the adoption of mobile banking in Nigeria, as people sought safer and more convenient ways to make payments and transfers. According to the Nigeria Inter-Bank Settlement System (NIBSS), the transaction value of instant payments in Nigeria increased by 75% from NGN 137.9 trillion in 2020 to NGN 241.7 trillion in 2021.
The Central Bank of Nigeria (CBN) has also introduced several initiatives to promote mobile banking in the country, such as the Payment Service Banks (PSBs) framework, which allows non-bank entities, such as telecom operators and fintech companies, to offer basic financial services to customers. The CBN has also issued a regulatory framework for open banking, which allows third-party providers to access customer data and offer financial services through APIs.
Nigerian Fintechs Attract Funding and Valuation
The booming mobile banking market in Nigeria has attracted many fintech startups, who are offering innovative and affordable solutions to customers. According to Disrupt Africa, Nigerian fintech startups raised a total of USD 536.7 million in 2021, accounting for 59% of the total funding secured by all Nigerian startups and 42% of the total funding secured by all African startups.
Some of the notable Nigerian fintech startups that raised funding in 2021 include Flutterwave, which raised USD 170 million in a Series C round and became the first African fintech unicorn with a valuation of USD 1 billion; OPay, which raised USD 400 million in a Series C round and became the second African fintech unicorn with a valuation of USD 2 billion; and Kuda, which raised USD 55 million in a Series B round and became the first African digital bank with a valuation of over USD 500 million.
Other Nigerian fintech startups that received funding in 2021 include Paystack, which was acquired by Stripe for USD 200 million; Paga, which raised USD 15 million in a Series B round; and TeamApt, which raised USD 5.5 million in a Series A round.
Nigerian Fintechs Face Challenges and Opportunities
Despite the impressive growth and funding of the Nigerian fintech sector, there are still some challenges and opportunities that the sector faces. One of the challenges is the regulatory uncertainty and inconsistency, as the CBN and other authorities often issue conflicting or unclear directives that affect the operations and profitability of fintech startups.
For instance, in 2020, the CBN banned the use of cryptocurrencies in Nigeria, which affected the activities of crypto exchanges and platforms, such as Luno, Binance, and Bundle. In 2021, the CBN also imposed a limit of NGN 100,000 on the monthly transactions of unregistered mobile money customers, which affected the growth and inclusion of mobile money services.
Another challenge is the infrastructure gap and security risk, as Nigeria still lacks adequate and reliable power supply, internet connectivity, and cybersecurity measures, which are essential for the smooth and safe operation of fintech solutions.
However, there are also many opportunities for the Nigerian fintech sector, as the demand for financial services continues to grow and diversify in the country. One of the opportunities is the cross-border and regional expansion, as Nigerian fintech startups can leverage their expertise and experience to enter and serve other African markets, such as Ghana, Kenya, and South Africa.
Another opportunity is the product and service innovation, as Nigerian fintech startups can develop and offer new and tailored solutions that cater to the specific needs and preferences of different customer segments, such as women, youths, farmers, and traders.
