By TBY | Nigeria | May 03, 2018
Consistent progress in fintech, huge FDI inflows, tech hubs, and strategic objectives carry Nigeria into the ICT-driven future.
According to the Nigerian Communications Commission (NCC), investment in the ICT sector of Nigeria reached USD70 billion in 2017, up from USD50 million in 2001. Although the vast majority of investment has flowed into the country in the form of FDI, local companies are leading a push to boost digital transformation strategies, including the use of fintech and the creation of tech hubs.
Numerous Nigerian fintech start-ups have gained international recognition for their ability to harness local market potential and get ahead of the curve when it comes to serving Nigeria’s unbanked population. The launch of KiaKia’s alternative credit-scoring bot, Amplify’s social banking and e-wallet payment system, Nairabox’s ticket sales application, and Advancio’s branchless banking model are just a few examples of success stories in 2017.
In the electronic payments space, Amplify helps businesses automate the payment process through an electronic solution. “When we launched, our target segment was majorly internet or technology businesses,” Segun Adeyemi, Co-founder and CEO of Amplify, told TBY, “Now, many of our clients are finance houses and credit companies. These include micro-finance institutions, consumer loan companies, insurance companies, asset management companies, and mortgage firms.” By 2018, Amplify expects to be processing over 80% of all transactions happening in the non-bank financial industry, which could help stimulate the cashless economy.
High-tech financial services provider PAGA targets the underbanked through mobile and online innovation coupled with a network of countrywide agents. There are currently 12,500 agents working for PAGA in Nigeria, with 2,500 more due to join the company by the end of 2017. “We are very excited about the opportunity as our agent network gives us the needed distribution to reach the mass market,” Tayo Oviosu, Founder and CEO of PAGA, told TBY. “In four years of trading, PAGA now has 6.8 million users on its platform, and a significant chunk of that growth has been over the last two years.”
Meanwhile, the Nairabox application allows users to make payments for event tickets, services such as buying mobile airtime, and paying bills such as television, utilities, and road tolls. As the only aggregator for major cinemas and events across Nigeria, Nairabox is the preferred choice for promoters. “Customers can show up at an event with their phone or just their phone number and redeem their digital ticket,” Ugochukwu Jay Chikezie, Co-founder and COO of Nairabox said.
Nigeria is making leaps and bounds in the fintech industry, and many financial innovations are being introduced to the country at a rate that outpaces the Nigerian regulatory bodies. “This creates a gap between recent fintech innovations and regulatory policies,” Amplify’s Adeyemi explained. Therefore, it is hoped that the government reevaluates the existing regulatory policies for fintech in 2018.
Lagos remains Africa’s most valuable tech start-up ecosystem. However, the tech hub movement that started in the suburb of Yaba—dubbed “Yabacon Valley” by media outlets and locals—is now gradually expanding to other places across the country. Enspire Hub, CoLab, nHub, Blue Hub, the Technology Development for Poverty Alleviation Initiative (TD4PAI), and StartPreneurs are a few of the notable areas attracting new developers and contributing to tech entrepreneur incubation. The local start-up industry is valued at USD2 billion.
Nigeria’s fledgling tech hubs are supporting the ICT sector in developing employee technical skills and harmonizing the tech ecosystem, becoming centralized points where developers, stakeholders, investors, and businesspeople can collaborate. “Collaboration is the way to grow the tech industry in Nigeria, by creating a meeting point for people to learn, share experiences and ideas. I believe tech hubs are influencing the tech sector positively,” Adeyemi emphasized.
Cisco has set the standard for joining forces in the ICT sector through its Networking Academy, which has trained over 56,000 students since its foundation. The company works with many universities in the country and plays a huge role in providing an enabling environment for tech hubs to thrive.