Only 35% Of The Nigerian Population Have Access To Fintech

There is no disputing the fact that the development of the Fintech industry in Nigeria has significantly impacted the nation’s economy. Nigeria, which is home to over 200 fintechs, is among the continent’s fintech leaders with a lively crop of startups and a growing suite of digital offerings from mainstream banks.

Between 2014 and 2019, Nigeria’s Fintech sector raised more than $600 million in funding, attracting 25 percent ($122 million of the $491.6 million) raised by African tech startups in 2019.

In 2021, the Fintech sector raised about $800 million in 2021, which was 120% higher than what Fintechs raised in the last three years combined. The country has no doubt witnessed an increase in the penetration of smartphones among the youths, which has spurred the development of more Fintech services to increase financial inclusion and cashless payments.

Despite the significant increase of Fintechs in Nigeria, experts disclose that the sector only serves about 35 percent of the Nigerian population. Chief Product Officer, Mr. Brian Manuwike, recently disclosed that financial technology companies can only serve about 35 percent of the Nigerian population.

He further stated that the nation’s smartphone penetration is at 35 percent, suggesting that the market cap for financial technology companies is the same. Mr. Manuwike cited a lack of infrastructure as one of the major factors slowing down financial inclusion in Nigeria.

See what he said; “Access to digital payments drives the adoption of digital financial services. Once consumers use the service for the first time and have a good experience, they will always return to convenience. The problem with inclusion in Nigeria is not just a lack of infrastructure, but also a relatively low smartphone penetration.

“Currently, it is about 35 percent, which means that, at best, most Fintech products are capped at 35 percent of the population. These barriers continue to drive the economy’s reliance on cash, with 9/10 of transactions in Nigeria still settled in physical currency.

”Nigeria needs more investments in the offline infrastructure where consumers can access financial products/services with cash and without a smartphone. Offline distribution will drastically really drive financial inclusion”. 

Despite the low penetration of smartphone users in the country, it is estimated that smartphone and internet usage in Nigeria will continue to grow in the coming years, as the percentage of Smartphone users in the country continues to increase with each passing year.

However, this low smartphone penetration has made the people in Nigeria to still rely on cash transactions. Despite the fact that wallets and mobile money are the future of payments, there is a need for more investments in offline infrastructure where consumers can access goods/services and transact with cash without necessarily needing a smartphone.

A case study is the Safaricom M-PESA services where consumers can use the platform without the need for a smartphone. With zero data, customers can use the M-PESA service to send and receive money. It also provides them with ease of use and convenience.

With data and mobile phones sold at a high rate, which makes it difficult for those in rural areas and low-income earners to be financially included, it is therefore pertinent that Fintech Companies also roll out products that do not necessarily require the need for data or smartphones. Doing this will increase the percentage of people in the country that will be financially included.

With the entry of telecommunications firms into the Fintech sector, the likes of MTN and Airtel, it is a positive move for the Fintech ecosystem as it would ensure that players already in the space create new innovative offline products. Creating offline products will see a significant increase in the number of the Nigerian population that will have access to Fintech.