Investments in FinTech (Financial Technology is the collection of computer programs and other technology used to support or enable banking and financial services) in Nigeria and other parts of Africa have moved from about $198 million (
N78 Billion) in 2014, to about 800 million Dollars currently. Though global investments in FinTech (Financial Technology) were put at $19 billion in 2015, indications have shown that investors are increasingly attracted to the industry’s prospect to tap Africa’s huge underserved population.
KPMG a professional service company and one of the Big Four auditors, along with Deloitte, Ernst & Young and PricewaterhouseCoopers, claimed the deals were driven by growing accessibility and adoption of innovative FinTech (Financial Technology) solutions.
The report, which was made available to The Guardian, observed that investments in Nigeria and Africa as a whole were primarily focused on payment solutions, as other FinTech (Financial Technology) segments such as lending, wealth management, and a host of others are in a fairly nascent stage.
How Investment in Financial Technology Hit 800 Million Dollars in Nigeria
Coincidentally, it was uncovered that the Nigerian economy, which is mainly cash driven has been responding well to the FinTech (Financial Technology) opportunity, partially due to the exponential progress in mobile money transactions from the average monthly transactions of $5 million in 2011 to $142.8 million in 2016. This FinTech (Financial Technology) penetration has also seen a rise due to the surge in e-commerce (Electronic commerce) and smartphone penetration.
KPMG observed that the last three years have been formative for the Nigerian FinTech (Financial Technology) sector and have seen the emergence of numerous FinTech (Financial Technology) start-ups, incubators and investments.
The firm informed that investment in Nigerian FinTech (Financial Technology) over the last two years exceeded the $200 million mark. Nigeria, Egypt and South Africa were the very best three recipients of FinTech (Financial Technology) assets in Africa during the last two years.
This is even while start-ups are accounting for a substantial part of FinTech (Financial Technology) investments, accounting for 30% of the full total funding raised by African technology businesses in 2015.
Similarly, the company said reported investments in Start-ups in Nigeria have risen to $49 million in 2015 in comparison to $16 million in 2014. The write-up observed that Opportunity Capitalist/Angel investors were early stage investors in FinTech (Financial Technology) businesses in Nigeria in line with global trends. It however said Nigerian banks, which had previously invested in FinTech (Financial Technology) start-ups such as Interswitch and Valucard are now predominantly consumers.
Fintech Growth in Nigeria:
The professional service company posited that the development of start-ups is very important for an effective FinTech (Financial Technology) ecosystem, stressing that the flourishing effect of FinTech (Financial Technology) start-ups has been catalysed by a growing demand for digital financial products by consumers, a rampant surge of interconnected devices and support of venture capitalists.
Relating to KPMG, while start-ups are redesigning the financial services procedures & functions using high-end technological competence, incumbent players are also following suit and making serious investments in creating of their own products. It stressed that the trend is increasingly shifting from start-ups seen majorly as disrupters to also being enablers of change, “hence, there is greater collaboration being seen and expected between different players of the ecosystem with start-ups.
However, for FinTech (Financial Technology) start-ups to keep up their momentum, they have to show regulatory bodies that they can benefit the society by placing forth ample indications that they can be controlled and supervised sustainably.