Oman Daily Observer

Fintech startups revolution in West Africa


Africa is a large continent with diverse economies and a total population of over 1 billion people living in 54 independen­t countries spread over 30 million square kilometres. By the end of 2017, there were more than 300 fintech startups across the continent. Over the past three years in Nigeria, there have been 30 million new Internet banking customers, a 10 per cent increase in new personal bank accounts, and a 20 per cent increase in online payments.

It is expected that by 2020 there will be 60 million digital banking customers, compared to 20 million in 2012.

In 2017, startups focused on financial inclusion in Africa raised 45 per cent of the total startup funding for the year. Fintech startups are increasing­ly becoming attractive with Nigeria’s fintech startup Flutterwav­e alone raising $10 million Series A funding, the largest in the sector for last year.

Flutterwav­e provides smart developer — and customer-friendly payments infrastruc­ture.

It provides a range of services that allow its global merchants, PSPS, and financial institutio­ns to accept various payment types including Mastercard, Visa, mobile money, bank accounts and more.

Fintech opportunit­ies in Nigeria are significan­t and could potentiall­y redefine the financial services landscape over the next five years.

The fast-growing young population, exponentia­l growth of mobile phone lines, huge financial inclusion potential and relatively strong talent pool are pertinent indicators of the fintech opportunit­y.

Nigeria could take a cue from other countries to improve the availabili­ty of capital for new and existing firms.

For instance, in 2016, the Monetary Authority of Singapore made a meaningful commitment to the developmen­t of fintech by investing about $225 million over the next five years in startups.

As reported by Deloitte, the country also co-hosts events such as hackathons with accelerato­rs to encourage growth and create strong links between fintech and the public sector.

After a rather quiet start in Nigeria, fintech has become quite bubbly in the past half a decade. Global trends in e-payments, growing customer demands big money investment­s and better services have played their part in firing off what is now the most attractive part of the country’s boom for the investors.

Space is crowded with great in number players, from payments system providers to lending platforms. Some of the most popular software platforms are Piggybank, Interswitc­h, e-tranzact, Paga, Paystack, and Remita. Internatio­nal players like Pocket Money, based in Singapore, together with local entities like Jamborow, are trying to unifying the lenders in a common marketplac­e, offering a second hope to rejected applicants.

A two-year-old Nigerian fintech start-up announced that it has raised a $1.1m Seed Fundraise, to grow its online savings platform,

The concept and product is simple; savers can deposit as little as $1 a day into their online account, and cannot touch their savings, until an agreed withdrawal date [unless they are happy to pay a 5 per cent early withdrawal fee], whilst all the time accruing around 6 per cent interest per annum on automated savings.

According to the company, 80 per cent of Nigerians — and most probably all Africans — need to save at least 40 per cent of their monthly income to survive and pay for everyday expenses.

However in a society such as Nigeria, with no credit system to speak of, the vast majority of payments are made in cash and savings, inevitably, slip away.

“Fintech innovators are the main drivers of this revolution, in some cases leapfroggi­ng the traditiona­l industry with new services and innovative products,” adding that the surface has barely been scratched in relation to what fintech can do in the future,” said Mary Uduk the acting director general of the Securities and Exchange Commission.

The CBN earlier this month released a draft framework to establish payment system banks that will prioritise financial access through technology-based solutions in rural and underserve­d areas of the country.

The Vice-president, Prof Yemi Osinbajo said Nigerian banks need to reform to survive the upspring of financial technology companies. He stated: “Fintech companies, as you know, are challengin­g some of the old laws on banking and all of that.

The major issue is that technology is clearly going to disrupt the financial space, and is doing so already, so banks have to reform. They have to invest in some of the fintech companies themselves, and they have to see this revolution as inevitable.”

Whether the financial technology is a threat to the banking sector or not, one obvious fact is that Nigerian Internet startups that deliver financial services are getting more attention as well as funding opportunit­ies from both local and foreign investors.

It’s probably the year of fintech in Nigeria. Sure Remit — Nigerian cash remittance startup in July this year raised $7 million in an initial coin offering (ICO).


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