Nigeria, Africa’s largest country, ranks high among the continent’s fintech leaders. Data shows that Nigerian fintech startups raised almost $800 million in 2021. This was 120 percent higher than what was raised in the last three years combined at $360.7 million.
Despite this laudable achievement, experts at the ongoing Nigeria investors’ webinar series organised by Stanbic IBTC, say more work needs to be done including building a regulatory framework that continues to spur innovation in the financial landscape, digital identity, develop central credit infrastructure, accelerate digital infrastructure, and grow talent pipeline.
With all these put in place, Usoro Usoro, CEO, Yello Digital Financial Services, MTN Nigeria, said Nigeria’s fintech industry is strategically positioned as a key enabler of human development, to drive financial inclusion for the 45-50 percent Nigerians that are underserved in terms of products and services.
Wole Abu, CEO, Liquid Intelligent Technologies, identified five areas to unlock Nigeria’s fintech penetration to make it better. “Whatever we see now is us still scratching the surface,” he said.
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Connectivity- Technology is sitting on communication infrastructure which at the base of that is connectivity. Companies like Google and Equiano bringing more subsea cables to Nigeria, as well as the number of data centres spring up. However, the middle and last mile to connect to the consumers has a $36 billion gap because of the shortage of fibre, and towers. There are some states in the country that you cannot connect to the internet easily, although with 2G you can access mobile money, it creates a limited way of interaction with the end user.
Policies- Abu explained that things like the critical national infrastructure policy that has been in existence for years to enable people deploy distributed digital infrastructure to any part of the country without the fear of vandalisation and no recompense to its owners but the opposite is happening. There are fibre cuts, some of the outages experienced are not caused by the operators’ negligence but by environmental issues that are not helped by the policies that are put in place. The thoughts of these infrastructures being owned by private business men and a target for revenue collectors making all kinds of people go after them without thinking of the wider implication.
Right of way- To lay fibre in Nigeria, Isa Ali Pantami, Minister of Communication and Digital Economy said that the right of way is one of the requirements and it is issued by the state governors. About seven states agreed to implement the National broadband plan the way it is designed to drive broadband penetration. “When you drive broadband penetration, every other factor sits on that,” Abu said.
Power supply- Power is 50 percent of the capital expenditure of digital infrastructure and with the situation of the diesel market, Abu explained that the country is left with very few options in terms of cost optimisation and making businesses profitable.
Capital attraction- Investors look at the risks associated with the country, the ease of doing business and make decisions. “Despite the $800 million the fintech industry got in 2021, when compared to what Kenya’s small market is attracting, we are not punching at our weight and most of these issues have to do with the way investors perceive the risks in the market and these things have to be fixed so that we can go faster,” Abu said.
To take advantage of the global technology trends like blockchain, Internet of Things, cybersecurity, cloud, and Artificial Intelligence, experts say the underpinning issues in Nigeria’s digital infrastructure space need to be fixed.
