As a way of bridging financial inclusion gaps in the country, Nigerian financial technology companies has been tasked to address shortcomings in the ecosystem.
The Economist Intelligence Unit disclosed this in a report, titled ‘State of play: Fintech in Nigeria’, which was sponsored by Mastercard and MTN Group.
Ebehijie Momoh, the senior vice president/general manager for West Africa, at Mastercard, said the report examined the key trends in Nigeria’s fintech sector and assessed both industry drivers and impediments to further growth.
“Nigerian fintechs are branching out from payments into lending, micro-investment, wealth management, peer-to-peer transfers and insurance. Payments and remittances are the most developed subsector to date,” the report said.
It said the country had seen a surge of new and simplified apps to help merchants, businesses and consumers.
“Mainstream banks, initially slow to react to the digital era, have quickly adapted to offer apps and tools in areas like loans, while non-traditional players – including telecom companies and retailers such as supermarkets – are entering the finance space,” it added.
According to the report, Nigeria’s regulatory environment balanced innovation and consumer protection but must continually evolve to respond to market dynamics.
It noted that the Central Bank of Nigeria had passed laws and regulations to promote digital payments and allowed more actors to enter the space, boosting competitiveness and consumer choice.
“But it is balancing these with consumer protections through its cybersecurity framework and data protection regulation,” it said.
The report added that recent reforms, such as easing entry of start-ups into the capital markets and the creation of a fintech sandbox, could also lead to an enrichment of the ecosystem.
It said while there was no fintech-specific law as yet, a sector roadmap provided overarching direction to the industry.
The report said a legal framework might prove necessary to manage the emergence of new types of fintech and accelerate fintech solutions for “insurtech” and wealth management.
It said, “To develop and flourish, Nigerian fintech needs to address shortcomings in the broader ecosystem. While venture capital investment is forthcoming, the majority comes from abroad with Nigerian investors currently playing a small role.
“As the sector matures, skills gaps are emerging outside of product development in areas such as business management and marketing.”