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With the growth and acceptance of mobile money, digital payment platforms and wallets, as well as the policy of cashless economy of the government, the Nigerian fintech industry has the potential to reach the unreached and the unbanked segments of the economy, however, this digital transformation has not been without its challenges. But opening up immense opportunities for businesses, entrepreneurs and individuals are some of the benefits of digitization.
By Anthony Isibor
NIGERIA has experienced remarkable growth in its digital market with the rise of technology and connectivity revolutionizing the country’s economy and society in recent years.
The digital journey in Nigeria began to gain momentum in the early 2000s with the introduction of mobile technology and the internet with the number of Internet users experiencing a slight increase between 2018 and 2022, going from around 26 per cent to over 38 per cent, according to the Nigerian Communications Commission, NCC.
As of 2022, the estimated number of internet users in the country was more than 83 million, while the share of the Nigerian population using the internet is expected to grow to about 48 per cent by 2027.
According to reports, nearly half of Nigeria’s adult population used digital financial services in 2023, up from 34% in 2020.
As stated by the Nigeria Inter-Bank Settlement System NIBSS, total PoS transactions in 2023 rose from 40.69% and N807.16 billion in January 2023, to 45.41% and N39.58 trillion year-on-year.
A 2022 IFC Nigerian SME Finance Market also estimates the country’s digital market to be around N13 trillion, accounting to about one third of Africa’s fintech market.
With the Digital Investment market projected to be the largest market in 2024, Nigeria Fintech companies have seen a surge in Fintech companies and startups taking advantage of this projected market offering various range of products, including invoice financing services, supply chain finance solutions, inventory management systems, data analytics tools, digital capital investment, digital assets, neo banking, and digital accounting and bookkeeping with each tool tailored to meet the needs of their teeming consumers.
The CBN’s integration of non-bank service providers into its financial inclusion strategy has also largely aided the rapid expansion of digital payment systems with the rise of agent banks, Point of Service, POS operators have also skyrocketed the volume of financial transactions.
The Financial Technology, fintech industry has grown exponentially such that it can no longer be ignored as it presently contributes approximately 13 to 18% of the nation’s GDP and contributed about 16.6% of GDP in Q4 2023 even as it recorded about $5.49 billion in revenue in 2019.
The Financial Technology, fintech industry has grown exponentially such that it can no longer be ignored as it presently contributes approximately 13 to 18% of the nation’s GDP and contributed about 16.6% of GDP in Q4 2023 even as it recorded about $5.49 billion in revenue in 2019.
“For those who follow the growth and trajectory of our economy in Nigeria, you should probably know that the ICT sector contributes about 13 to 18% of GDP. In Q4 2023, the sector contributed about 16.6% of GDP according to Bosun Tijani, Minister of Communications and Digital Economy.
The minister also revealed that the country’s digital economy is capable of revolutionizing the nation’s economy as it has been projected to generate $18.3 billion by 2026.
According to him, Nigeria has unicorn companies like Flutterwave, Jumia, Andela, and Interswitch, which have demonstrated that the digital economy is strong and can lift the country to where it should be.
As of 2022, Nigeria had over 109 million internet users, making it Africa’s largest social media audience, however, challenges persist, including inadequate infrastructure and low digital literacy. Jumoke Onigbogi noted in April 2023, that “limited infrastructure and security concerns” hinder further growth. Despite these obstacles, initiatives like the Digital Nigeria Initiative support the sector’s development, highlighting the potential for businesses to thrive in this evolving landscape.
This rapid expansion has not been without challenges. One of the major obstacles facing Nigeria’s digital market is the issue of cyber security. A report by the Global Cyber Security Index, GCI, highlighted Nigeria’s vulnerability to cyber attacks, citing the need for stronger measures to protect digital infrastructure and data.
In addition, there are concerns about the digital divide, as rural areas and underserved communities still lack access to reliable internet and digital services. This gap in connectivity poses a barrier to inclusivity and equal opportunities in the digital economy.
Speaking on these challenges, Adeolu Akinyemi, a tech entrepreneur, stated: “Nigeria’s digital market has tremendous potential, but we need to address issues such as cyber security and digital literacy to ensure sustainable growth and inclusivity for all Nigerians.
“Despite these challenges, the future of Nigeria’s digital market holds great promise. The government has taken steps to promote digital innovation and entrepreneurship through initiatives such as the National Digital Economy Policy and Strategy. These efforts aim to foster a conducive environment for digital growth, attract investment and create job opportunities in the tech sector.”
Also, experts have projected that Nigeria’s digital market will continue to expand, driven by advancements in mobile technology, artificial intelligence, and fintech. With the right strategies and investments in place, Nigeria has the potential to become a leading digital hub in Africa, driving economic growth and enhancing the lives of its citizens through technology.
For example, Ikechukwu Nnamani, the Chief Executive Officer of Digital Realty, formerly Medallion Data Centres Limited in his presentation on the ‘Myths and Realities of Nigerian Digital Economy’ at the ‘50 Most Valuable Personalities in Nigeria’s Digital Economy Conference & Award in Lagos, mentioned disruption in labour market, cyber security and massive investment in ICT infrastructure as three key areas of challenges in Nigeria’s digital economy.
Nnamani also noted that while the digital economy will create jobs in so many areas, it will also disrupt the existing job structure in Africa. He therefore called for training and retraining to adapt to the current realities that come with the digital economy.
“As Nigeria and Africa continue to progress in digital economy adoption, so is cybersecurity and its attendance impacts, which present both a risk and an opportunity for the country. So, for Nigeria to reap the benefits of the digital economy, there must be a follow-up massive investment in ICT infrastructure to build a secure and trusted digital space, attracting more investment and innovation, which we need for a thriving digital future,” he said.
A.I
Aug. 24, 2024
Tags: Adeolu Akinyemi CBN Ikechukwu Nnamani NCC
