Nigerian Fintechs Pursue Massive Funding Overseas

Local newspapers have uncovered the trend of seeking foreign funding by Nigerian fintech startups. In this article, we explore how the fintech sector is attracting foreign investments, and how you can be part of the system.

The saying that “tech is the new oil” has been proved true in recent times. Nigerian fintech companies have been successful in seeking funding over the last couple of years, and the most interesting part is that they have not had to rely on input from the Nigerian capital market.

In Nigeria, fintech startups are taking on banks and disrupting the finance industry by offering products and services that exist in function in digital formats. The largest share of startup investment in the country has gone into the fintech sector. Investors have spent the last five years pouring cash into dozens of Nigerian fintech startups.

The worth of the Nigeria Exchange Limited (NGX) is estimated to be more than N20 trillion, but Nigerian fintech startups have mainly set their sights on foreign shores as far as investment is concerned, opting instead to seek funding from venture capitalists in countries such as United States, United Kingdom, Switzerland and Belgium.

According to a report released by McKinsey, Nigerian fintech companies raised about $600 million in funding between 2014 and 2020, attracting 25 per cent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone. Statistics have also confirmed that Nigerian startups raised $276.5 million in the first seven months of 2021.

In 2019, Interswitch achieved a valuation of $1 billion based on a $200 million investment from VISA. In 2020, Stripe, a US-based financial services company, agreed to buy Paystack in a $200 million deal. On March 10, 2021, Flutterwave, the payment solutions company co-founded in 2016 by Iyinoluwa Aboyeji and Olugbenga Agboola, announced that it had raised its valuation to $1billion, making it only the fourth fintech unicorn in Africa. It is estimated that Nigeria’s FinTech revenues will reach $543 million by 2022, driven by increasing smartphone penetration and the unbanked population.

Nigerians have been looking for better ways to save their money, and in recent times, fintech companies have provided viable alternatives. The fact that technology is more readily available in today’s world has occasioned a shift from traditional banking services to more user-friendly mobile platforms. With low fees, flexible rates, efficient services and frequent supply of investment tips, these platforms are slowly but gradually disrupting the Nigerian finance sphere.

The expansion of fintech companies in Nigeria has been enabled by several factors, which include:

–          Payment Structures: Payments continue to be a major focus area for investors with demand driven by favourable policies promoting financial inclusion, and growth in infrastructure supporting mobile payments. Nigeria is increasingly becoming a cashless economy largely due to the regulatory drive for financial inclusion promoting growth in digital payments. The functionality of payment solutions like Paga perfectly illustrates this.

–          Credit Facilities: Digital lending remains a thriving fintech sub-sector driven largely by retail lending. Many fintech companies are leveraging payments data to create unique credit scoring models to enable retail lending.

–          Flexible Savings and Investment Platforms: Savings, investments and crowdfunding are growth opportunity areas. Fintech companies offer an attractive bouquet of products with better interest rates and returns on investment compared to traditional banks. There is a reason people are attracted to the likes of Piggyvest and Cowryrise.

There’s no better time to tap into the wealth of resources that have been made available by fintech companies. One way to go about it is by signing up to the unique Paga experience. With Paga, users can pay utility bills, purchase prepaid airtime, pay for subscription services as well as internet bundles, and make payments to retailers. The platform also enables its users to receive money from outside the country via its e-wallet system.

Here is how Paga makes life possible for you…

1. Digitise your payments: With respect to paying bills, Paga allows you to set up recurring payments. This means that you can set up your account in a manner that it will be debited a specific amount at a specified time of the month for a particular service.

A recurring payment is designed to take away the burden of initiating a regular payment while ensuring you do not miss the payment. It is simple to set up. To do this:

–          Log into your Paga account

–          Select “recurring payments” from the list of services

–          Create a new recurring payment

–          Select the service you want to create a recurring payment for

–          Fill out the details of the recipient/beneficiary

–          Set up the schedule and fill all required fields

–          Review the details and confirm the transaction.

2. Investing with Wealth.ng: You can try out the Wealth.ng marketplace on Paga. Wealth.ng is an investment marketplace that makes it easy for you to invest money in treasury bills, stocks, mutual funds, and real estate. With Wealth.ng, you can grow wealth by investing in any of the treasury bills, stocks and other securities listed on the platform. You can monitor your investments in real time and see how much interest accrues to you when your investment matures.

Wealth.ng holds your hand through the investment process and guides your hand each step of the way. You have total control over your investments, and you can make changes to your personal profile settings at any time.

Investing with Wealth.ng comes with multiple benefits: These include:

• Access to a bouquet of valuable investment products.
• Expert advice pertaining to investment and wealth creation from seasoned experts.
• Competitive returns on investment.
• Unlimited access to a personal wealth advisor.

You can trade on Wealth.ng via Paga by simply taking the following steps:

–          Log into your wallet.

–          Go to “manage investments” on the side navigation.

–          Select the product you want to invest in, and click “Buy” to add to your cart.

–          Go to your cart and checkout.

–          To sell a product you already own, go to the “my portfolio” tab, scroll down to see your transaction statement and click on the product to view its detail page. Click on the “sell” button and the funds will be credited into your Paga wallet.

3. Earn From Paga: This means that you will be operating Paga as a business where you make use of a POS machine to process financial transactions for customers. Agent sign-up fee is N20,000. As a Paga agent, you will receive a commission for every transaction you perform, plus bonuses and other incentives which Paga rolls out at intervals. To get started, simply send an email to agents@mypaga.com.

How To Open A Paga Account

Opening a Paga account is easy. To get started, click here to download the Paga app on your device, then click on ‘Sign Up’, and follow the instructions from there.