Technology/Science
Nigeria’s Fintech Scene Booms Despite Economic Woes By Alex Irwin-Hunt
THE COVID-19 PANDEMIC, oil price slump and civil unrest have hammered Nigeria’s economy this year, but the tech start-up scene in Africa’s most populous country has continued to thrive. Yabacon Valley, an area of Lagos which took its nickname from the US tech hub, hosts hundreds of banks, IT companies and start-ups. The number of internet users in the country is surging, hitting 140 million people in June. Nigerian start-ups are capitalising on this shift, raising $747m last year, according to Partech African. Leading the way are fintech firms, as entrepreneurs look to serve the 40% of Nigerians that are remain unbanked and meet gaps in the market that have not been met by incumbent providers. Tunde Kehinde, chief executive and co-founder of Lidya, a Nigerian start-up providing loans to small and medium-sized enterprises, said at a recent TechCrunch event that “fintech is really top of mind right now”. It’s a really exciting time for tech start-ups, Mr. 68
January-February 2021
Kehinde added, as they can “operate with a blank slate”, developing products and services for African consumers without being held back by “legacy infrastructure” or technology. Since being founded in 2016, Lidya has expanded to offer its services in four countries outside Nigeria. Other Nigerian fintechs that have drawn investors’ attention, include mobile money service Opay, payment app Palmpay and challenger bank Kuda, which have all raised large sums of money since November 2019. Most notably, Lagos-based Interswitch received $200m of funding from US payments group Visa to value it at more than $1bn and become Nigeria’s first home-grown unicorn, while another start-up, Paystack, was acquired for a reported $200m by Silicon Valley-based payments giant Stripe.
Africa’s springboard Aaron Fu, the head of growth at Catalyst Fund, a fintech-focused venture capital (VC) firm and incubator, says that companies can become “incredibly large and successful by only being in Nigeria”, making it the go-to market to expand operations for start-ups founded in other African countries and internationally. “Nigeria is increasingly becoming the gateway into the African start-up world for most landing into the continent for the first time,” he adds. The opportunity afforded in the financial services sector is also reflected in foreign direct investment DAWN www.africabusinessassociation.org
