Nigeria Fintech Ecosystem and regulation
Nigeria´s Fintech activity has expanded in recent years and is now one of the African countries with the most advances in the Fintech sector, only behind South Africa and Kenya in the African continent. (Findexable, 2020).
Between 2011 and 2018, the investments in Fintech exceeded 200 million dollars and in the last 3 years, Nigerian Fintech investments grew by 197%, mainly due to foreign investors. Furthermore, between 2014 and 2019, the Fintech ecosystem raised more than 600 million funds and in 2019 alone, it collected 25 percent ($ 122 million) of the $ 491.6 million raised by African tech startups (Mckinsey, 2020)
This growth in the Fintech sector is due to various factors, with one of them being the level of internet penetration which reaches 51%, which is above the African average, which is 34%. Likewise, there is a clear level of dissatisfaction with traditional banking due to the cost and difficulties in accessing loans, which leads them to opt for Fintechs, which offer a similar but more accessible and cheaper service (Mckinsey, 2020).
Regulation
In terms of lending, if a company wants to provide marketplace lending, they will have to register as a bank or Other Financial Institution with the Central Bank of Nigeria (CBN) pursuant to the banks and other financial institution Act 2020. This companies are licensed and supervised by the CBN (ICLG, 2021).
Moreover, іn ассоrdаnсе tо Money Lenders Lаw of the ѕtаtеs in Nigeria, thеrе аrе restrictions on the intеrеѕt rates that lenders саn сhаrgе. And it is important for a fintech company seeking to engage in money lending transactions to obtain applicable money lending license from the state it intends to operate (Resolution Law firm, 2021).
National Collateral Registry Act (Secured Transactions in Moveable Assets Act) (2017) permits borrowers (individuals and firms) to put up moveable assets as collateral for loans, provided the asset is registered and assigned a unique registration number in the National Collateral Registry (Part IV).
In terms of Crowdfunding, Currently, there are no regulations for reward and dоnаtiоn bаѕеd on Crowdfunding in Nigeria yet.
Micro Finance – Lending
FINCA is a microfinance institution that promotes financial inclusion by offering a suite of products to enable low income entrepreneurs access financial services. One of their main products is loans, which are tailored to the needs of entrepreneurs seeking to start, maintain and grow their businesses.
FINCA, a leading global microfinance network with operations in 24 countries and since 2014 they started operations in Nigeria. They serve more than 2 million clients among five continents.
Lending Fintech in Nigeria
There are more than 200 Fintechs in Nigeria and 80% of the Fintech market is made up of Digital Retail Payment (36%), Lending (25%) and Payment Infrastructure (19%) firms. Among the list of Lending Fintech in Nigeria we can find Lidya, which offers collateral-free business loans to people in Nigeria. Companies can get financing through Lidya without having to go to the bank while also avoiding hidden fees.
Another lending Fintech is Carbon, a Fintech that started out as a digital lender in Nigeria but has since transitioned into a digital bank that you can pay bills with, transfer money as well as access instant loans from. Also, we can find Fint which is Nigeria’s pioneer loan marketplace and connects borrowers to individual and corporate leaders who are seeking to earn returns from low-risk investments in Nigeria.
