Editorial: Are there really too many fintech companies in Nigeria?

Omoleye Omoruyi
… the fintech companies typically focus on solving problems that banks are unable to solve

We are experiencing a surge of Fintechs in Nigeria. And, the Fintech space has seen a continuous increase in funding and the funding seems to be an inspiration to other individuals with finance-oriented solutions to just do it.

Questions are being asked and the debate is unending. Do we really need this many fintech startups?

How many Fintechs companies does Nigeria have?

Statista reports that, in 2021, 144 fintech startups existed in Nigeria. The country has, in fact, some of the highest amounts of fintech startups in Africa.

In another report by The Fintech Times, the number is estimated to be 200+.

Fintechs in Nigeria
Screenshot from The Fintech Times

In terms of funding, between 2014 and 2019, Nigeria’s fintech space raised more than $600 million. This amounts to 25 per cent ($122 million) of the total amount raised by African tech startups in 2019 alone ($491.6 million), second only to Kenya, which has attracted $149 million.

According to BusinessDay. 102 Nigerian startups raised $1.09 billion, and 73.5 per cent went to startups in the Financial Services space. The closest industry to Financial Services was eCommerce (marketplace) with 13.8 per cent.

More than 300 investors participated in the funding rounds of over 100 Nigerian tech startups in 2021.

Here is a breakdown of the top gainers: Opay raised $400 million, Flutterwave raised $170 million, Chipper Cash – $250 million, Kuda’s $55 million Series B round after raising $25 million earlier in the year, FairMoney raised $42 million, etc.

The funding drive is projected to reach a total of $543 million this year (2022), a significant growth from the $178.3 million raised in 2018 and $153.1 million raised in 2017. 

What is driving the growth?

One of the most attractive sectors in the country is the banking sector, largely due to its $9 billion in value pools. But, consumers are significantly underserved and the question of financial inclusion remains a big one.

The growth of fintech in MEA is nonetheless a consequence of the economic development that has happened from the top and wider digital transformation, even in a post-pandemic world, will take play this year and beyond in the region.

Richie Santosdiaz, Head of MEA at The Fintech Times

This is the opportunity Fintech platforms are taking advantage of, and many of them, over the years, have developed enhanced propositions (wallets, MSME lending, wealth management, etc) across the value chain to address finance-oriented problems – payments, savings, quick loans, etc.

What is driving the growth of Fintechs?

The challenge of financial inclusion still exists even with many acclaimed solutions that have been announced from time to time. In informal conversations, analysts say that the reason for the persistent problem is the structures of traditional banking in Nigeria.

And, the principle behind having Fintech startups is to take advantage of the loopholes that the traditional banks have created..

Fintech companies typically focus on solving problems that banks are unable to solve. And, until we run out of problems with banking services, there will always be someone who has a better, faster and simpler way of doing things.

The Fintech service landscape of Nigeria

The rapid penetration of the internet and smartphones, an influential demographic of millennials, and strategic collaborations between fintech firms and banks are changing the traditional landscape.

The fast-growing young population (33.6 million people between 15 and 35), the exponential growth of mobile phone lines (estimated at 199.2 million as of March 2022) and huge financial inclusion potential (less than 50 million people with bank accounts in a population of 206 million people, based on Bank Verification Number [BVN] data) and relatively strong talent pool (buoyed by Nigerians in diaspora) are pertinent indicators of the FinTech opportunity

Boye Ademola, Partner, KPMG US.
The services Fintechs offer
PHOTO: Santander Group

An EFInA study suggests that affordability is one major reason many Nigerians avoid using traditional banks. Beyond that, there are other major reasons fintech is gaining appeal.


The payments sub-sector is the most prominent sub-sector of the fintech sector in Nigeria. Following the release of the Payments Systems Vision 2020 (“PSV 2020”) of the Central Bank of Nigeria (“CBN’) in 2007, Nigeria has witnessed an increase in the number of mobile and electronic payment solutions. One of the recommendations of the PSV 2020 was to encourage electronic payment and processing methods.

In January 2020, the volume of mobile payments reached 5,081,286,395 transactions as of August 2020, up from 724,803 in January 2019. This was accelerated by the COVID-19 pandemic and the attendant lockdowns.

Focused on digitising and easing banking for Nigeria’s unbanked population, mobile money operators use agents to provide payment services in different locations, particularly rural areas and urban areas where banks are not close by.


Lending has always been a phenomenon in Nigeria, but the pandemic made it more prominent.

Branch app grants speedy access to investments at 20% returns, free unlimited money transfers and low-interest loans

And, the ability to provide loans through a digitised lending process has made it even more attractive. These days, you do not need your father’s land in the village or your car to stand in as collateral nor do you need the CEO of a company to stand in for you.

Now, small businesses can get loans in almost an instant. Low and middle-income earners can also access loans, without the hassles of going into the bank and filling a whole journal for loans.

So, the target for the mobile lenders is usually MSMEs, young Nigerians who are either low/middle-income earners or traders in marketplaces. The lending platform only has to do an analysis, determine lending risk, tick all the Know Your Customer (KYC) boxes and the loan is in the hands of the customer.

Personal finance:

With side-by-side payments, these fintech startups offer personal savings solutions available on mobile phones. You could understand your spending habits and cash flow. It can also be introduced to investment opportunities on these platforms.

But, there is a deep distrust of digital platforms in Nigeria, so the savings and investment culture is almost non-existent. Many Nigerians today live below the poverty line because they lack a savings and investments culture and the high cost of living in the country is also a factor. Besides that, there is a high propensity to consume but a low propensity to save. 

However, fintech companies like Cowrywise and Piggyvest are changing this narrative and giving people opportunities to invest in different markets. The target for this one is young people in order for them to take full advantage of the financial ecosystem.

How far have so far?

To give a picture of what is, I will share some related figures for your consideration:

  • The Fintech space in Nigeria has become quite a competitive subsector with about 250 companies. However, only about 80 are registered with the Central Bank of Nigeria (CBN).
  • Data from Nigeria Inter-Bank Settlement System (NIBSS) shows that the transaction value of instant payments hit ₦241.7 trillion between January and November 2021, compared to the ₦137.9 trillion processed within the same period of the preceding year.
  • According to a EFInA report, 35.9% or 38.1 million Nigerians are financially excluded. EFInA notes that the actual number of financially excluded adults increased from 36.6 million in 2018 to 38.1 million in 2020.
  • Another EFInA February 2022 report indicates that “just above half of the adults (50.5% of adults, or 53.6 million adults) now use formal financial services”.
Screenshot from EFInA

The National Population Council (NPC) estimates Nigeria’s population to be 206 million in 2020, a number projected to have reached 210 million this year. Of that number, 57.9% are bankable – 115,800,000 Nigerians. And, the EFInA notes that only 50.5% have been banked, leaving over 58,479,000 in the cold.

This means that the country still has a long way to go.

Are there too many Fintech companies?

The United Nations World Population Prospects (WPP) estimates that Nigeria’s population will hit 400 million by 2050.

This means that the number of the unbanked will also increase significantly unless the CBN accelerates its financial inclusion drive and as well as put in policies that will encourage private sector participation- like increasing the number of Fintechs- both in books and in reality.

Because the reality shows that we need much more Fintech players as is evident in the USA.

According to the CNBC, “Fintech has racked up some notable wins against the Wall Street incumbents, whether it’s in payments, trading or lending.”

There are examples of fintech companies whose valuations have skyrocketed as they’ve demonstrated their ability to reduce the time and cost associated with financial transactions during the pandemic. 

Oracle NetSuite

This motivated investors to pour $17.8 billion into private U.S. fintech companies in 2020, via 681 transactions, up from $14.8 billion and 539 transactions in 2019. That is a 20% jump from 2019 to 2020.

The number keeps increasing – notwithstanding inflation. With a population of 330 million people and 105 Fintech unicorns (45% of the world’s fintech unicorns), it is the global leader on that front.

As of November 2021, there were 10,755 fintech startups in America, making it the region with the most startups globally according to Statista’s 2021 research

The leading fintech unicorns in the US ecosystem come primarily from sub-sectors like Wealthtech, Payments and Challenger Banks. The region is seeing an increased appetite for digital financial services as nearly nine in ten Americans now use some kind of fintech app to manage their financial lives, according to Fortune.


That means that more Americans now use fintech than they do video-streaming subscriptions (78%) and social media (72%).

According to CFTE, “the growing appetite for digital payments has also been fueled by discontent for traditional banking systems and whetted by the pandemic.

Consumers aren’t happy with their banks. Transparency with pricing and fees is one of the big problems keeping consumers unhappy. They want more clarity about fees, and they want to be able to avoid paying outrageous fees.

Ian Martin

In fact, a study conducted by BlueWeave Consulting revealed that the United States fintech market is estimated to grow at a compound annual growth rate (CAGR) of 10.1% during the forecast period of 2021-2027.

Although some analysts have argued that a direct comparison between a developed economy like the US and Nigeria is totally out of the way because of disparate per capita income of citizens and the spending power of the population.

But, the big question is do we have just enough for our ready-to-be-banked population. The answer is no.

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