A new report from KPMG, a global network of professional firms providing tax, audit, and advisory services, has revealed that investment in Nigerian FinTech companies over the last two years has exceeded more than $200 million.
The report, "FinTech in Nigeria – Understanding the Value Proposition" [PDF], states that the past three years have been formative for the sector in Nigeria, which has seen the emergence of many startups, incubators, and investments.
While putting the report together, KPMG engaged with 56 FinTech companies and seven incubators and accelerators in the country. Of the top three countries in Africa receiving investments over the last two years, these included Nigeria, Egypt, and South Africa.
According to Boye Ademola, Partner and Head of Financial Services Technology at KPMG in Nigeria, he believes that financial technology opportunities could change in the country over the next five years.
The fast growing young population, exponential growth of mobile phone lines, huge financial inclusion potential, and relatively strong talent pool are pertinent indicators of the FinTech opportunity.
The Growth of the FinTech Sector
Innovation and new technology is changing the face of the financial services industry.
This can be witnessed through the enormous financial investment in startups in 2015. Last year there were 1,162 deals amounting to a total value of $19 billion. This is compared to only 457 in 2011, valuing $2 billion.
According to KPMG, this is set to increase further by 2020 with a boom of $45 billion expected, growing at a compounded annual growth rate of 7.1 percent.
Still Behind Global Competition
However, while Nigeria is transitioning into a dynamic ecosystem offering FinTech startups a platform to succeed and potentially produce multi-million dollar businesses, it does so at a slower rate compared to other countries.
In a recent Deloitte and All Street Research report, it found that London is still leading the way as the global FinTech hub followed by Singapore, New York, Silicon Valley, and Hong Kong.
And yet, despite this, Nigeria is proving to become quite a contender in the FinTech race if it continues to push the sector.
Nigeria has witnessed increasing deal activity over the last few years, with about 14 deals reported as at September 2016 compared to just two deals in 2010.
Of course, if FinTech startups are to maintain their momentum in Nigeria, they need to demonstrate to regulatory bodies that they can benefit the society by putting forth ample evidence that they can be regulated and monitored sustainably.
Moving Up the Ladder
Nigeria is, however, moving up the FinTech ladder.
This is being driven by the fact that several players are increasingly supportive of providing funds and building technological and entrepreneurial skills in the country.
The next few years will certainly test the country to produce results, but so far it is demonstrating that it has the skills and determination to become a competitive FinTech country.
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