What number of fintech startups do now we have in Nigeria?

There are no less than 150 fintech startups in Nigeria, relying on who you ask. Statista studies that there have been 144 fintech startups as of 2021 and a 2020 McKinsey report places the variety of standalone fintech startups at over 200. Ongoing analysis by our knowledge arm, Intelligence by Techpoint, reveals there are no less than 270 energetic startups in Nigeria. 

In line with the McKinsey report, most of those startups are targeted on funds and lending. Consequently, it’s not uncommon to listen to feedback on the proliferation of fintech startups within the nation, which begs the query, are there too many fintech startups in Nigeria?

A standard criticism within the fintech dialog is that too many startups are fixing the identical drawback and barely transferring the needle. The worth proposition for a lot of startups revolves round banking the unbanked and offering higher (learn quicker) monetary providers. 

Nevertheless, even with all this, one might argue that monetary providers have solely marginally improved, with most fintech providers unable to supply superior providers to conventional monetary establishments.

For instance, lending apps in Nigeria supply loans in minutes with out requiring collateral for customers. As spectacular as that is, startups nonetheless need to cope with debt restoration. Whereas a number of startups report compensation charges within the ninetieth percentile, there are widespread studies of lending startups resorting to determined measures to get their loans again. 

Customer support is one other facet that fintech startups don’t appear to have utterly found out. In a take a look at performed by the workforce, we found that conventional monetary establishments didn’t fare badly in customer support in comparison with fintech startups. In truth, in some metrics, they fared higher than fintech startups.

The mission to financial institution the unbanked, which is incessantly bandied about, can be transferring slowly, and solely 54.6 million Nigerians have a BVN, an important requirement for opening a checking account in Nigeria.

Admittedly, folks can solely register for his or her BVN at banks. Due to this fact, there’s solely a lot fintech startups can do on this regard. Nonetheless, one should surprise if most startups haven’t opted to construct replicas of present options quite than going after new frontiers. 

Too many fintech startups?

Trying on the numbers alone will counsel that there are too many fintech startups, so let’s take a look at how Nigeria compares to different nations. 

With 1.4 billion folks, India is barely second to China in inhabitants. Additionally it is residence to six,636 fintech startups. The biggest nation in South America, Brazil, has 1,446 fintech startups for its 215 million inhabitants. 

In america and the UK, now we have two world’s largest economies. Whereas america has 8,775 fintech startups for its 334.6 million folks, the UK has 1,600 fintech startups serving 68.5 million folks.

Under is the ratio of fintech startups to the inhabitants of every nation:

  • India – 1 fintech for 210,970 folks 
  • Brazil – 1 fintech for 148,686 folks 
  • United States – 1 fintech for 38,131 folks 
  • United Kingdom – 1 fintech for 27,200 folks 
  • Nigeria –1 fintech for 740,740 folks 

On this proof, there aren’t too many startups in Nigeria. Trying on the numbers, one might say that we want no less than 1,000 extra fintech startups within the nation. 

Whereas the main target is usually on how nicely they’ve improved monetary providers within the nation — a good metric for evaluation — maybe we must always take a look at different metrics like what number of jobs they’ve created and the industries or providers they energy. 

To carry monetary providers nearer to the final mile, fintech startups have used an company banking mannequin that not directly supplies jobs for these brokers. OPay, TeamApt, Paga, and CrowdForce are a few of the startups with essentially the most brokers; between them, they’ve no less than 434,000 brokers. 

If you add the 770,000 and 120,000 brokers from MoMo and First Cell, respectively, it’s clear that fintech startups are creating worth. 

Fintech startups additionally energy different industries. A well-known instance is PiggyVest, launched in 2016 to assist customers digitise their financial savings. A vital a part of their success was launching after Paystack did. If that they had launched earlier, customers would have had restricted choices to deposit cash, which can have shut the enterprise down. 

eCommerce startups additionally profit from fintech startups with a variety of cost choices offered for retailers, which might have been unattainable only a few years in the past.

To the moon

Whatever the progress made by fintech startups, one factor is certain; far more could be executed. Whereas the inhabitants of Nigerians with a checking account has steadily grown, a 2021 EFInA report reveals that solely 45% of Nigerians are banked. 

Equally, it states that lower than 30% of grownup Nigerians have or use monetary providers from non-banking establishments. With most energetic fintech startups targeted on funds and lending, there’s nonetheless room for innovation in insurance coverage, the place 97% of Nigerians would not have medical health insurance, investments/wealth administration, and cross border funds.

With a rising inhabitants, extra gamers are wanted to do the exhausting work of offering monetary providers to rural dwellers or enhancing the providers at present obtainable to city dwellers. Both method, as a smart man as soon as mentioned, “it’s day one.”

Chimgozirim Nwokoma

Unintentional author, protecting Africa’s startup panorama and its heroes.


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