Foreign investors see Nigerian fintechs as profitable
By Jeph Ajobaju, Chief Copy Editor
Foreign investors have injected $15.7 billion into Nigerian banks in the past five years, a sign the sector is one the most attractive as it guarantees easy and quick returns, unlike manufacturing bogged down by a plethora of obstacles.
Central Bank of Nigeria (CBN) data shows that banks received 22.8 per cent of the total $68.87 billion foreign inflows between 2017 and 2021, second to the equities market which led sectoral allocations.
Banks are growing rapidly on the crest of multiple tech startups that have raised huge sums since launch, with some acquiring unicorn status of value above $1 billion.
Fintechs competing for market share – while disrupting conventional banking ways – have increased financial activities and investors see them as profitable.
Gross Domestic Product (GDP) trajectory shows that the financial sector has also expanded all through the years. It grew 10.53 per cent in 2020, lower than the 13.34 per cent in 2019.
The growth of banking GDP in three years outweighs the negatives – 2019 (2.4 per cent), 2018 (1.41 per cent), and 2017 (1.92 per cent.
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Fintechs with significant fundraise
Nairametrics tracker, which collates deals struck by companies across sectors, shows fintech fundraise as follows:
Opay – $400m
Opay raised $400 million in August 2021, led by SoftBank Vision Fund 2. It valued Opay at $2 billion. The fund came after the $120 million series B raised in 2019.
Flutterwave – $170m
Flutterwave received $170 million in Series C round earlier in 2021. That raised its valuation to $1 billion and saw it attain unicorn status.
FairMoney – $42m
FairMoney garnered $42 million from a Series B round in 2021, led by US hedge funds and Investment firm, Tiger Global.
Other fintechs
The list of other fintechs that raised significant sums from foreign companies and investors between 2017 and 2021 include Chipper Cash, Mono, Joovlin, Sendbox, and TeamApt
Sectors with highest foreign inflow
Nigeria received $68.87 billion capital inflows – Foreign Direct Investment, Foreign Portfolio Investment, and loans – between 2017 and 2021.
The shares sector got the largest chunk with $23.37 billion, 33.9per cent of the total.
This is not surprising, given that foreign investors often invest in the Nigerian equities market and other mutual funds.
NGX domestic and foreign portfolio investment report for February 2022 said foreign investments in the local equities market accounted for 24.75 per cent of total transactions, with N38.96 billion as foreign inflows between January and February 2022.
This was followed by banking ($15.74 billion), financing ($11.09 billion), and manufacturing ($4.52 billion).
Other sectors
- Servicing – $3.37 billion
- Hotels – $3.36 billion
- Telecommunications – $2.69 billion
- Trade – $1.59 billion
- Agriculture – $1.36 billion
- Oil & gas – $668.7 million