By Jeph Ajobaju, Chief Copy Editor
Nigerian fintechs have attracted $500 million investment in the past five years, according to the Central Bank of Nigeria (CBN), ranking them atop those in South Africa and Kenya.
Another data compiled by Disrupt Africa, a website that tracks African startups, shows that fintechs are the most populated and most funded startups on the continent, raising almost $900 million in the past six years.
Quarts Africa reports that funding in the sector is growing, based on a new report by Disrupt Africa which has been tracking African fintech startups since 2015 and releasing reports every two years.
Disrupt Africa defines fintech startups as those that disrupt traditional financial services and challenge incumbent service providers, and the website focuses on startups with a fintech solution at the core of their business.
A total 277 African fintechs have raised $900 million in the past six and a half years, more than double the sum raised by startups in other sectors, and growing annually.
Fintech funding in the first half of this year (H1 2021) doubled last year’s total, largely as a result of Flutterwave in Nigeria which raised $170 million early in the year.
Nigeria, South Africa, Kenya get nearly 88% of African fintech funding
Most of the funding for African fintech startups goes to Nigeria, South Africa, and Kenya which together account for 87.9 per cent of the amount raised since 2015.
As compiled by Quarts Africa, the breakdown of funding secured by African fintech startups between 2015 and 2021 is as follows:
- 2021 – $330 million
- 2020 – $160 million
- 2019 – $107 million
- 2018 – $132 million
- 2017 – $57 million
- 2016 – $31 million
- 2015 – $55 million
Nigeria received 53.4 per cent of the funding, South Africa 24.7 per cent, and Kenya 9.8 per cent.
The three are the top funding destinations because they have the most number of fintech startups – a combined 68 per cent – and have more developed ecosystems.
“[They are] big markets, with track records, success stories, and startups that have already raised, so investors feel more confident investing in these countries than elsewhere,” Disrupt Africa co-founder Tom Jackson told Quartz Africa.
Nigeria as top fintech performer
CBN Godwin Emefiele attributed Nigeria’s performance to the confidence the investing community has in its robust payment system.
He also disclosed that after missing the launch date of October 1, e-Naira will be unveiled in a few days, per reporting by The Nation.
Emefiele, represented by CBN Deputy Director (Corporate Services Directorate) Edward Adamu, made the disclosure in Enugu at the 31st seminar for Finance Correspondents and Business Editors.
But despite Nigeria’s robust payment system, he lamented that “about 36 per cent of adult Nigerians still do not have access to financial services.”
As the world recovers from the pandemic, he said, “fintech will play a more important role towards resilient and sustainable recovery.
“A country with one of the largest millennial population in the world (an estimated 62 per cent of the Nigerian population is below 25 years of age), fast smartphone growth driven by increasing affordability, increasing mobile penetration and fast transition to 5G technology, Nigeria remains primed to be an active playground for digital transformation and cannot afford to ignore the Fintech challenge.
“Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to businesses.
“Digital revolution will be a focus for financial institutions in the months ahead therefore making Fintechs a major driver of the industry.”
Emefiele noted that digital financial services have created faster, more efficient, and typically cheaper transactions compared to traditional financial services
He said the CBN has decided to introduce a digital currency, the e-Naira, to help foster greater inclusion using digital channels, support cross border payments for businesses and firms, and provide a reliable channel for remittances inflows.
Rural dwellers can conduct financial activities in e-Naira using their feature and digital phone devices, he added.