Report from Mckinsey says the number of new start-ups in Nigeria and other African countries have hiked to 5,200 companies between 2020 and 2021. As of 2020, the number of start-ups in Nigeria was 3,300, the highest in Africa. The report states that about half of these startups are fintechs. It added that fintech had estimated revenue of between $4bn and $6bn in 2020.
The New Phase of FinTech Companies in Nigeria
The firm mentioned this in its ‘Fintech in Africa: The end of the beginning’ report.The reports says “Africa’s financial technology industry is coming of age. “In the face of political and economic challenges and a global pandemic, fintech on the continent is booming. Between 2020 and 2021, the number of tech start-ups in Africa tripled to around 5,200 companies. Just under half of these are fintechs, which are making it their business to disrupt and augment traditional financial services”.
McKinsey analysis indicates that African fintech companies have found their way into the market, with estimated revenues of around $4bn to $6bn in 2020 and average penetration levels of between three and five percent (excluding South Africa).
Expected FinTech Growth in Nigeria in 2025
However, cash is still the most used currency for about 90 percent of transactions that are cash based, which brings a huge potential growth to the fintech revenue. However, the expected estimation of the fintech revenues could be eight times their current value in 2025 similarly to the record of Kenya.
The fast growth of fintech startups in Nigeria is as a result of the increase in the use of mobile phones and the ownership of smartphones, decrease in Internet costs, and expansion of network coverage, as well as a young, fast-growing, and rapid increase in urban population.
Effect of COVID 19 on Technology
In addition, The COVID-19 pandemic has heightened the trends toward digitalisation and created a friendly environment for new technology innovation. The growth of fintech startups is more concentrated in African countries like Nigeria, Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, Morocco, Senegal, South Africa, Tanzania, and Uganda, which collectively account for 70 percent of Africa’s GDP and half of its population.