Since the start of the tech boom in Africa, the financial sector has recorded significant growth which has led to the launch of Fintech companies across different African nations, with Nigeria leading in the region with the highest number of fintech companies.
In a 2021 Fintech Times report, Nigeria’s fintech landscape was reported to consist of 210 to 250 fintech companies, with the country taking most of the slice in funding.
Nigeria has assumed a market-leading position when it comes to activity it has long held in the area of fintech investment. Of the about $3.64 billion in funding secured by African fintech ventures in the last 8.5 years, about $1.51 billion or 41.6 percent went into Nigeria-based companies.
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In terms of fintech unicorns, Nigeria is home to five of the seven African unicorns on the continent, which include Interswitch, Jumia, Flutterwave, Opay, and Andela.
As more fintechs continue to launch in Nigeria, there are arguments that the country’s fintech space is almost saturated.
Recently, the Chief Executive Officer of Aladdin Digital, Mr. Darlington Onyeagoro said that Nigeria’s fintech space is almost saturated as there are now many players doing the same thing.
He described the fintech space in Nigeria as a “Red Ocean”, stating that any newcomer into the market must either come with something unique and disruptive or with a lot of funds to drive visibility in the market.
In his words,
“The fintech space in Nigeria is almost saturated. There are so many players. For loan apps alone, the last time I checked there are over 300 or 400 lending companies via apps on Play Store. That is Play Store alone, I’m not talking about loS.
“So, today for you to compete you need a lot of money unless the idea you’re bringing is quite disruptive, unless you are bringing something that nobody has done. I mean that thing is very new and very disruptive and then you will now depend on word of mouth to help you sell because today to even become visible in this saturated market, you need a lot of marketing and you need a lot of funds to do that”.
In as much as the Nigerian Fintech space might look almost saturated, Financial inclusion rates in the country have gradually improved, but still fall short of the targets adopted in Nigeria’s 2012 financial inclusion strategy.
This implies that the narrative of Nigeria having too many fintechs is somewhat not valid, as the launch of more fintechs will help to drive the nation’s financial inclusion rate and ensure that a significant amount of the unbanked population has access to financial products and services.
According to data from the Central Bank of Nigeria and EfinA, in 2020, about 36 percent of the Nigerian population was unbanked, and in 2022, the World Bank listed Nigeria among the countries with a huge unbanked population, comprising about 64 million people.
This shows that despite the hype, Fintech in Nigeria has not scratched the surface in addressing financial inclusion challenges and the unbanked population.
The challenge of financial inclusion in the country is still rife with a great deal of innovation and technology needed to ensure that more citizens have access to financial services that can drive economic growth.
It is worth noting that Fintech can support Nigeria’s human capital development by driving financial inclusion and it is undoubtedly fascinating to see how Fintech has improved and is creating strategies for improving financial inclusion in Nigeria.
Unfortunately, one widely held misconception is that most of these fintech platforms are all about payments which isn’t entirely true.
Interestingly, Fintech companies in Nigeria have diversified their offerings to cater to different financial needs, which include mobile payments, peer-to-peer lending, digital banking, and wealth management.
In data published by EY last year, payment, mobile money, and digital banking share 38% of the Nigerian fintech market, 23% deals with lending, 15% with savings investment and crowdfunding, 13% with business services and infrastructure, 8% with cryptocurrency and 3% on Insurtech, which suggests a widely spread ecosystem.
With the growing population and increasing mobile and internet penetration in the country, it is imperative for more fintechs to emerge, to cater to their needs, bringing financial products and services to the unbanked.
Additionally, it is important to note that while the fintech sector may be approaching saturation, there is still room for innovation and growth. New opportunities and startups with unique offerings will emerge as technology evolves and consumer needs change.
Also, collaboration between fintech companies and traditional financial institutions can lead to new synergies and disruptive developments in the Nigerian financial services industry.