With the current trend of clamping down of FinTechs in Nigeria by the Federal Government and Central Bank of Nigeria, raising more unicorn FinTech, after Interswitch and Flutterwave, looks bleak.
Read more about FinTech
To start with, FinTechs who are described as unicorns are those that are valued at $1billion. So far, 4 countries (USA, China, UK, and India in descending order) are ahead in producing unicorn FinTechs. Nigeria ranks number 15. Despite the future potentials the FinTech industry holds across the globe, there seems to be a growing misunderstanding between the Nigerian government and FinTechs in Nigeria which can, in many ways, discourage the rise of more unicorn FinTech in the country. The two FinTech –
Interswitch and
Flutterwave – with unicorn status in Nigeria got to that level on different circumstances altogether. They had their financial backing from foreign investors.
Despite the seeming potentials and innovations within the industry, four FinTech (Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, and Trove Technologies Limited) had their accounts frozen by the Government in August of this year.
Furthermore, the government went on to ban banks from carrying out any transactions through the use of cryptocurrency. Reasons for these conflicts of interest cannot be heaped on the government, but on all stakeholders who must also look into how the Nigerian ecosystem can accommodate and give room for more unicorn FinTechs to emerge.
In this article, I have set out to explore how Nigeria can create more unicorn FinTechs as seen in other climes.
According to various studies, there are majorly four criteria that come to play when a nation wants to upscale the growth of unicorns in the FinTech industry.
-
Talent Availability And Retention
The reason why the US, UK, China and, India seemed to be ahead of the rest of the world is because of the surplus talents available in those climes. The ability to attract, develop and retain talents in the fields of technology, finance and, entrepreneurship is very pivotal in creating an ecosystem and important to a FinTech industry’s global competitiveness. The Nigeria educational system does not provide for the learning of modern-day skills such as programming, cybersecurity, digital marketing, etc. The best path for the government is to overhaul the educational curriculum and adopt and partner with private organizations that create more talents within the country.
Sign up to the Connect Nigeria daily newsletter
-
Access To Capital
Capital availability to FinTech startups can lead to rising of unicorns. Many FinTech in Nigeria faces the challenge of capital. Many Nigerian-owned FinTechs have their headquarters offshore, especially in the US and EU. In the past, most seed funding for Nigerian FinTechs were sourced abroad. There are several talented Nigerians who wish to start up a FinTech company, but poor access to capital has discouraged them. According to Deloitte, FinTech startups navigate to climes where they can access seed and scale capital to grow their business, whether it comes from public or private funding.
-
Rapid Adoption
Several people have believed that one of the challenges that hamper the rise of future unicorns will be the slow rate of adoption. Cryptocurrency remains one of the most challenging niches in the FinTech industry. First, the intricacies and the dynamics are known by few. People are yet to understand how it works. Second, the government continuous clampdown on several FinTechs and its ban on crypto transactions may militate against the rise of unicorns. Furthermore, people do not feel safe transacting with FinTechs and would rather go through the traditional banking system. In countries where there is widespread direct customers (B2C) and businesses (B2B) adoption of FinTech transactions, unicorns tend to rise.
-
Balancing Regulations
Studies have shown that balanced policies and regulations contribute to a country’s FinTech thriving unicorn ecosystem. In the case of Nigeria, there seems to be a lack of sound education on how FinTech works, and as such is clamped down by the government and the CBN with several unhealthy regulations and laws. Government and regulatory agencies need to put in place regulations for a thriving fintech ecosystem that will first protect consumers, stimulate innovations, and healthy competition.
Featured Image Source: Tellimer
Got a suggestion? Contact us: editor@connectnigeria.com
Related
You might also like:
This article was first published on 20th October 2021
nnaemeka-emmanuel
Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.
Comments (1)
“Freeki is an E-commerce company located in Nigeria with a secure online platform for the buying and selling of consumer goods ranging from cars, clothes, electronics e.t.c directly from the UK and like wise the selling of Nigerian made items from Nigeria and sending down to the UK. At freeki, we offer more than just logistics, it has a secured platform that allows every seller to showcase it products internationally online and customer from a different geographical location can shop for the product. They also offer freighting of goods to and from the United Kingdom to Nigeria at affordable cost. Freeki has “ORDER ASSIST”, that allows you to shop on other websites, whilst we take care of the logistics. Visit our website for more information.” freeki.com