A new report has ranked Kenya and South Africa in the top fifty cities in the world with thriving fintech ecosystems, ahead of Nigeria which has the highest number of startups in the segment.
Nigeria does not only have the highest number of fintech startups, but it has also produced the first unicorn – Interswitch- in space. The country currently hosts three unicorns, Interswitch, Flutterwave, and OPay.
But, curiously, the Fintech Country Rankings 2021 by Findexable powered by Mambu ranks Nigeria at 57th, twenty-six points below Kenya, and thirteen points below South Africa.
While South Africa is yet to register a fintech unicorn, Kenya on the other hand debuted in May 2021 with Chipper Cash which closed a $100 million Series C round led by SVB Capital, a US-based venture capital (VC) firm.
But if unicorns were the best indications that fintech companies in a country are thriving, Nigeria would be first in Africa, and Egypt which also hosts a unicorn would not be ranked 72 on the globe.
Nigeria was also recently ranked lower than five countries on the continent by a report on African Tech Ecosystems of the Future compiled by fDi Intelligence in collaboration with Briter Bridges. Nigeria came behind South Africa, Kenya, Egypt, Ghana, and Tunisia.
The internet censorship in Nigeria, including a proposed hate speech bill, ban on Twitter may have played a big role in the country’s unflattering ranking in the world.
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“We apply a discount for countries with high levels of internet censorship. Justified or not, this adds an extra obstacle on the road to building successful, fintech businesses. We also look at the presence of large-scale fintech gatherings, accelerator, and innovation programmes, and other events. However challenging the pandemic, local fintech ecosystems have shown ingenuity and energy to find ways to connect, gather and exchange ideas remotely,” the Findexable report read.
To determine what makes one country’s ecosystem thrive over the other, the Findxable ranking powered by Mambu said a large population certainly helps as it provides domestic companies the opportunity to scale before needing to consider foreign markets. In this measurement, Nigeria which is the most populated on the continent would easily power ahead of its peers. The population of the country has long been an attraction for many investors and has often determined the volume of funding coming to startups operating within the country.
But it is not the only criteria. While Nigeria’s successful market structure shares similarities with other emerging markets which allow for the exchange of fintech models between continents and countries, there have also been structures in Nigeria that have not thrived. For instance, most of the super apps launched by tech companies like OPay and Jumia were trimmed back to their original sizes.
“A robust fintech ecosystem is not just about innovating businesses. It also needs supporting organisations providing facilities to help the flow of connections and capital across the marketplace. We therefore also include specific fintech co-working spaces, accelerators, industry events, and meetups (for cities, but not countries) in the count,” the report read.
Although Nigeria has an impressive list of incubators and accelerators, the ease of doing in the country is not improving at the rate expected. Nigeria is ranked 131 in the world and 13th in Africa.
In the Findexable rankings, Nigeria’s 57th position is a decline as the country dropped five places in 2021. The country was however ranked 5th in the Middle East and Africa (MEA) region behind Israel, UAE, Kenya, and South Africa. Nairobi was the only African city in the top fifty fintech cities in the world. In fact, Lagos was ranked 93 in the world above Cape Town (97), and Johannesburg (99).
