The journey hasn't been too long but the results are quite impressive thus far. When Paystack and Flutterwave launched in 2016, it was a massive game-changer for Nigeria’s financial sector, enabling thousands of other businesses to receive payments for their services.
Since then, each year has presented an interesting trend as people look to plug different perceived gaps in Nigeria’s financial sector.
Both companies have invested in many Nigerian fintechs, most notably Paystack and Flutterwave, and seemingly took their battle for market share to Africa’s shores.
Significant progress
Since then, each year has presented an interesting trend as people look to plug different perceived gaps in Nigeria’s financial sector.
Between January and September 2021, African fintechs raised about $1.4billion, signalling an increasing investor appetite for Africa’s growing fintech space, and Nigeria has taken centre stage.
According to data gathered by Intelligence by Techpoint, Nigerian fintech startups raised almost $800 million in 2021. This was 120% higher than what fintechs raised in the last three years combined ($360.7 million). As usual, it took the lion’s share of funding across sectors.
Looking back at 2021, Techpoint touch on some notable points, and, once again, had the honour of discussing the space with Adedeji Olowe, Trustee of Open Banking Nigeria.
According to data gathered by Intelligence by Techpoint, Nigerian fintech startups raised almost $800 million in 2021. This was 120% higher than what fintechs raised in the last three years combined ($360.7 million). As usual, it took the lion’s share of funding across sectors.
Looking back at 2021, Techpoint touch on some notable points, and, once again, had the honour of discussing the space with Adedeji Olowe, Trustee of Open Banking Nigeria.
Flash back to 2019, VISA invested $200 million in Interswitch, making one of Nigeria’s oldest fintech companies a full-fledged Unicorn. That investment brought several conversations about Visa’s play for the Nigerian market, and that of its biggest competition, Mastercard.
Both companies have invested in many Nigerian fintechs, most notably Paystack and Flutterwave, and seemingly took their battle for market share to Africa’s shores.
The quest for transfer without charges:
One of the biggest selling points Digital banks like Kuda have used to take the market by storm is free transfers. Unfortunately, no major bank took up the gauntlet to implement free bank transfers in 2021.
According to Olowe, giving free transfers for transactions below a certain amount would greatly aid Nigeria’s drive for a cashless society. This, he says, would bring in several people performing low-value transactions daily.
Olowe believes that once a cap is set, it would be very helpful and will not be abused.
Its launch in Brazil met with stiff opposition, and regulatory parties all but quelled any traction it plans to gain. However, the team at Meta-owned WhatsApp is not deterred, and it announced a relaunch in Brazil and followed by testing in the United States.
Olowe believes they’re not out yet, stating that future developments would most likely tie in with Meta’s recent crypto play.
Imagine being able to make transactions from a crypto wallet in your WhatsApp account. That would be something, don’t you think?"
According to Olowe, giving free transfers for transactions below a certain amount would greatly aid Nigeria’s drive for a cashless society. This, he says, would bring in several people performing low-value transactions daily.
“I think it’s something the CBN should push for. Over 20 years ago, a SIM card cost ₦20,000, but now it’s completely free. Today, some people don’t mind buying ₦50 recharge cards ten times in a day, but tell them to load ₦500 at once".
Olowe believes that once a cap is set, it would be very helpful and will not be abused.
WhatsApp To Make A Payment Play:
All it would have taken was a virtual account attached to every WhatsApp number, and that would have been a game-changer, Olowe opined in January 2021. However, WhatsApp payment struggled to lift off during the year.Its launch in Brazil met with stiff opposition, and regulatory parties all but quelled any traction it plans to gain. However, the team at Meta-owned WhatsApp is not deterred, and it announced a relaunch in Brazil and followed by testing in the United States.
Olowe believes they’re not out yet, stating that future developments would most likely tie in with Meta’s recent crypto play.
Imagine being able to make transactions from a crypto wallet in your WhatsApp account. That would be something, don’t you think?"
Significant progress
The growth and relevance of agency banking:
Agency banking burst onto the scene in 2020 with the reported successes of OPay and TeamApt. In 2021, it grew to unprecedented levels as more players like Kudi and Paga began to show immense growth in Agency banking services.
Olowe predicted that Agency banking locations would surpass one million. Though we tried collating data from different players, this could amount to double-counting as most agents are company agnostic. So we’ll try to lay our hands on official data.
He argued that if KYC issues were resolved, most agents would be able to perform services such as offering loans, customer KYC verification, e-commerce deliveries, and other non-cash transactions.
This idea has not been fully realised, but some of the players in the space have made some significant profits.
In August 2021, it revealed a partnership with Aella App and Reliance HMO to allow customers access loans and health insurance through their network of agents.
You see, mobile money providers do not have the licence to provide loans or insurance, but that’s where Aella comes in to provide loans to customers, and Reliance comes in for health insurance.
According to Nifemi Akinwamide, Head of Marketing at Kudi, the goal is to bring millions of Nigerians who are offline into the financial market, and such a partnership would help Aella and Reliance reach thousands of people who do not have smartphones.
Olowe predicted that Agency banking locations would surpass one million. Though we tried collating data from different players, this could amount to double-counting as most agents are company agnostic. So we’ll try to lay our hands on official data.
He argued that if KYC issues were resolved, most agents would be able to perform services such as offering loans, customer KYC verification, e-commerce deliveries, and other non-cash transactions.
This idea has not been fully realised, but some of the players in the space have made some significant profits.
TeamApt, OPay, and Paga, for example, offer bill payments and other social services, but a little talked about company, Kudi, has struck some interesting initiatives.
You see, mobile money providers do not have the licence to provide loans or insurance, but that’s where Aella comes in to provide loans to customers, and Reliance comes in for health insurance.
According to Nifemi Akinwamide, Head of Marketing at Kudi, the goal is to bring millions of Nigerians who are offline into the financial market, and such a partnership would help Aella and Reliance reach thousands of people who do not have smartphones.
This deserves a closer look, and its success might help make this fast growing sub-sector get a more favourable outcome in 2022. Let's watch out if regulators will allow more of those with the right skill sets to immediately apply.
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