As COVID-19 has raged over the last two years, one sector that has seen increased patronage due to the global crisis is fintech (financial technology). As many businesses were forced to operate remotely, the fintech sector capitalised on the situation to provide solutions in the financial market subsector.
In 2021 alone, fintech got $131 billion in capital investment globally, up from $44 billion in 2020. Alex Lazarow, a Forbes contributor and Adjunct Professor at the Middlebury Institute of International Studies at Monterey, Canada, described 2021 as “a transformative year” for fintech and added that the $131b represented 20% of all capital invested last year.
In Nigeria, the fintech sector saw remarkable growth in 2021, taking 34.25% of the total $4billion the sector raised across Africa, according to a statement by the president of FinTech Association of Nigeria or FinTechNGR, Ade Bajomo.
“In the year under review, Nigerian fintech start-ups raised a whopping $1.37B, out of $4B total raised by African start-ups, despite the effects of the pandemic. Nigeria raised the largest chunk, followed by other key fintech hubs – South Africa ($838 million), Egypt ($588 million) and Kenya ($375 million),” Bajomo said.
Outside the big four mentioned, Bamojo said other active markets were Senegal and Tanzania, whose start-ups raised $222 million and $96 million, respectively. He said one of the biggest success stories was Chipper Cash, a Ghanaian fintech that raised $250m in 2021, adding that without Chipper Cash, Ghana would have managed $48 million.
The emergence of three more Nigerian unicorns – Flutterwave, OPay and Andela – joining Interswitch and Jumia as five out of the seven unicorns on the continent helped the Nigerian fintech ecosystem maintain its growth trajectory within Africa, he said.
Regulators in Nigeria are also catching up with innovation. Last year, Nigeria’s central bank launched eNaira as the digital version of the Naira, the local currency here, to drive financial inclusion.
That move shows that regulators are taking advantage of the next digital wave to open up more opportunities for entrepreneurs to innovate, Bajomo said. He adds that resilience and abundant talents available to the fintech industry in Nigeria contributed to its growth last year and positions Nigeria to continue to stand out in the fintech industry in the continent.
However, to sustain the growth, he said there is a: “dire need [for FintechNGR] to galvanise our ecosystem, to respond positively and creatively to the sometimes gloomy global economic outlook, support the growth of the businesses of our members, and assist regulators and the government in creating an enabling environment for innovation, economic growth and employment.”
About what to expect in 2022, Lazarow, who is also a venture capitalist with Cathay Innovation, a global venture capital fund, predicted that, globally, the sector would continue to have a vast market opportunity to drive financial inclusion and impact consumers’ day to day lives.
And in Africa, “We will finally have a way of moving money around Africa that is as ubiquitous, and as fast as WhatsApp and almost as cheap,” said Sid Mofya, executive director of Draper Venture Network, in a response sent to Lazarow about what to expect in 2022.