Last Updated on August 9, 2024
All eyes tend to focus upon Nigeria when discussing the financial health of Sub-Saharan Africa and even the entire continent. This is only logical when we remember that Nigeria currently boasts the largest economy. One of the reasons behind this seemingly meteoric rise involves the growing presence of financial technology (FinTech) throughout the domestic marketplace.
What advantages can modern approaches to FinTech offer? Are there any potential pitfalls to highlight? How might the future of Nigerian FinTech continue to evolve? In order to appreciate where this nation is headed, all facets of this equation must be analysed to a greater extent.
Undeniable Benefits
Nigeria is currently witnessing what some have termed a “golden age” in relation to financial technology (FinTech) and its widespread applications. With a focus on inclusivity and accessibility, these advancements are not only democratizing financial services for the traditionally unbanked populations but also fostering a robust ecosystem for digital entrepreneurship. In the ensuing discussion, we will delve into two illustrative examples that epitomize this transformative phase, showcasing how Nigeria is harnessing FinTech to forge new pathways in economic and social development.
Mobile Access
While there is still room for improvement when discussing Nigerian infrastructure and the digital community, more individuals and businesses are accessing the virtual domain than ever before. From the ability to execute a trade online in a matter of seconds, to monitor the value of one’s portfolio or to track the latest cryptocurrency price movements, opportunities abound. These observations should become even more relevant as access to wireless services continues to broaden throughout Nigeria.
Digital Inclusion
This concept is generally defined as the ability for an individual or a business to become proactively involved with the online financial ecosystem. In the past, such inclusion would have been nearly impossible to embrace on a large scale. Times have indeed changed. We are witnessing several revolutionary FinTech advancements across Nigeria such as:
- Digital banking
- Electronic payment solutions
- E-commerce platforms
- Alternative lending schemes and digital credit
- Crypto-powered credit cards and point-of-sale systems
As these systems continue to make their presence known, even more consumers should begin to take advantage of the associated advantages.
Potential Challenges to Address
It is just as important to take a balanced approach when discussing the rise of FinTech within the Nigerian marketplace. To be clear, experts have pointed out a handful of stumbling blocks that will inevitably need to be addressed.
Regulatory Concerns
One practical concern involves the lack of centralized FinTech regulation across Nigeria. At the moment, this sector is overseen by several governing bodies including (but not limited to):
- The NDIC (The Nigerian Deposit Insurance Corporation)
- The NCC (The Nigerian Communications Commission)
- The FCCPC (The Federal Competition and Consumer Protection Commission)
The issue here is that without some type of singular governing body, FinTech transparency may be called into question. This may also cause a great deal of confusion in the event that a consumer has a question or wishes to file a complaint. The government will therefore have to either create a separate regulatory organization or clearly define the exact roles that each existing entity is meant to play.
Business and Consumer Protection
As hinted at in the previous section, protecting consumers and businesses is just as relevant. This can involve two primary issues. The first is associated with exposure to external elements such as foreign exchange rates and how these may impact the value of the naira (a very real concern in regard to soaring inflation rates). The second is more practical in nature and involves stop-gap measures that are put in place in order to address issues such as privacy and security.
These are some of the same reasons why a growing number of Nigerian consumers and businesses are choosing to install third-party trading apps that have already been vetted within the international community. While such options are indeed viable, it is likely that Nigeria will still have to enact regulatory changes in order to attract these very same consumers to domestic investment platforms.
The Future of FinTech in Nigeria (and Beyond)
In many ways, the situation within Nigeria can be easily extrapolated to the entire Sub-Saharan African community. The region and the continent itself is now being exposed to FinTech opportunities that would have been considered the stuff of fiction only a handful of years ago.
This represents a double-edge sword. While there are plenty of possibilities for growth. a level and transparent “playing field” is essential in order for Nigeria to remain competitive and to ensure a stable financial ecosystem. The government will therefore have to play an active role while simultaneously encouraging outside investment. The good news is that Nigeria seems to appreciate the benefits as well as the challenges previously highlighted. It will be interesting to see what steps are taken from both a short- and long-term perspective.