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Nigeria fintech to gain as funding rise in 2023

Fintechs, financial inclusion and regulatory challenges

With the Nigerian government renewed focus on promoting and funding startups, fintech is set to record the highest amount of funding in 2023, according to a report by CSL stockbrokers limited.

Nigeria has raised a $618 million fund aimed at supporting tech and creative sectors for young investors to spur the growth of innovation in the continent.

The $618 million fund was launched under the Investment in Digital and Creative Enterprises (iDICE), with the African Development Bank Group as the largest funder of iDICE, providing $170 million. The French government, through the Agence Française de Développement, will contribute €100 million (US$116 million), and the Islamic Development Bank – pending approval from its board – is expected to provide $70 million in co-financing.

The Nigerian government, through its executing agency, the Bank of Industry, will provide $45 million in counterpart funding through loans for qualifying startups. Meanwhile, other institutional and private sector investors are expected to provide around $270 million in additional funding for the implementation of the strategic initiative.

“It is now imperative to commence a coordinated approach towards innovation on the continent, bringing together all stakeholders to coordinate efforts at scaling up investments and building programs that provide the right enabling environment and produce talent pipelines that support the growth of innovation on the continent,” Nigeria’s Vice President Yemi Osinbajo said.

“But we must do more. The government must provide more support for startups and small businesses, and investors must provide more funding. This is why the Investment in Digital and Creative Enterprises Program is important,” he added.

Read also: Flutterwave backs Africa fintech summit

A report by Intelligence by Techpoint shows that In January 2023, 23 African startups raised a little over $70 million across 24 funding rounds. In February, there was a significant improvement, as 44 startups raised more than $675 million in 48 funding rounds. In terms of distribution, South Africa and Kenya had 10 startups represented, Nigeria had nine startups, and Egypt had six startups represented.

“No other sector has raised more capital than fintech in the past five years, and February 2023 was no exception. Startups in the financial services industry raised $572.9 million and made up 84 percent of the funding received throughout the month,” it reports.

The CSL report further disclosed that Nigeria’s fintech landscape consists of over 250 fintech companies, key stakeholders (banks, telecom companies, and the government), enablers and funding partners (i.e., universities and research institutions, investors, incubators, technology, and consumers),

Over the years, fintech funding in Nigeria sees slowed down, according to a Partech Africa tech Venture Capital Report, Nigeria recorded $798 million in 2022 from $1.3 billion recorded in 2021.

Based on data from CB Insights, global fintech funding reached $75.2 billion in 2022, 46 percent down when compared to 2021, but up 52 percent when compared to 2020. Deal volume was also down 8 percent year-on-year.

Funding and deals declined gradually throughout 2022, in the fourth quarter of 2022, seeing $10.7 billion in funding, the lowest level since 2018. Africa-based fintech however saw a record 227 deals in 2022, a 25 percent increase year-on-year.