Fintechs Account for 36% of Tech Startups in Nigeria—PwC

By Aduragbemi Omiyale

The financial technology (fintech) sub-sector has been described as the leader of the tech space in Nigeria, with the e-commerce ecosystem following.

A leading audit company, PwC, in a recent report, said the “fintech sub-sector has the biggest share of the number of Nigerian tech startups at 36 per cent, with payments and consumer lending being the focus of almost half of the sub-sector.”

It attributed this to the gaps identified by entrepreneurs in the space, like insufficient banking services (particularly in rural areas), a young population, increasing smartphone usage and regulatory efforts to increase financial inclusion.

According to the firm, “Fintechs have jumped at the chance to provide improved propositions across the value chain to address problems with affordable payments, quick loans, and flexible savings and investments, among others.

Fintechs are companies offering financial services, which are normally offered by traditional banks, to customers through technology. In some cases, they partner with banks to make financial services seamless like Verve, Mastercard and others.

In a note titled Growing the Nigerian Technology Ecosystem through the Capital Markets, PwC said the sector would flourish like their peers in the United States and others when they eventually list their stocks on the Nigerian Exchange (NGX) Limited, as this would open doors to cheap funding and others.

Recall that last December, the Securities and Exchange Commission (SEC) approved the NGX Rules for listing on the Technology Board.

The bourse intends to use the platform to attract technology companies to the capital market with less stringent listing requirements and provide issuers, sponsors, investors and advisors with important information about admissions, listing standards, disclosures and notification requirements for the Technology Board.

In the report obtained by Business Post, PwC said under the Nigerian fintech space, payment/remittances dominate with 26.6 per cent, as lending/financing accounts for 19.7 per cent, and blockchain takes 11.0 per cent, investtech contributes 10.4 per cent, and personal finance at 8.1 per cent.

In the tech ecosystem, e-health startups are in third at 9.4 per cent, recruitment/HR occupies fourth with 9.1 per cent, and mobility/logistics took the fifth spot at 7.3 per cent.