Nigeria’s fintech ecosystem attracted over $2 billion in investments in the year 2024.
This is according to the 2024 Economic Report by the Office of the Special Adviser to Nigeria’s President on Economic Affairs (in the Office of the Vice President), dated November 2024 and obtained by Nairametrics.
The report was launched on Friday at the Banquet Hall in Abuja.
It listed Telecommunications and ICT, especially fintech, as one of the key sectors that drove the nation’s economic growth in 2024, with the potential to replicate or double the same feat in 2025.
“Nigeria’s telecommunications and ICT sector is one of the fastest-growing in Africa, contributing approximately 18.9% to GDP in 2024.
“Nigeria’s fintech ecosystem, which attracted over $2 billion in investments in 2024, will continue to flourish in 2025, as digital financial services such as mobile banking, digital lending, and e-commerce expand,” the report added, highlighting fintech as a key driver of economic growth for 2025.
Significant Investments
The report also mentioned that with the rollout of 5G networks and the expansion of internet penetration, the telecommunications and ICT sector is expected to grow by 8-10% in 2025.
- It further stated that Nigeria’s technology startup ecosystem is projected to continue attracting significant foreign investment, surpassing $3 billion by 2025.
- The report forecasts that the sector will be pivotal in creating high-paying jobs for Nigerians and driving innovation.
“Telecommunications and ICT, a major growth driver, contributed approximately 19.78% to GDP at this time in 2024, up from 19.54% recorded in the same period in 2023 and higher than in the first quarter of 2024 at 17.89%,” the report added.
The report, which featured contributions from the federal government, the Nigerian Economic Summit Group (NESG), and Global Analytics Consulting, stated that with projections indicating continued growth, ICT’s contribution to GDP could reach 22% by 2025.
However, the report also highlighted some challenges facing fintech and communication systems in Nigeria.
These include infrastructure constraints, regulatory issues, purchasing power limitations, and a constrained industry.
What You Should Know
Nigeria, which was for years the leading destination for startup funding in Africa, lost its top position to Kenya in 2023.
- Kenyan startups attracted approximately $800 million, the largest amount on the continent, while Nigerian startups secured $410 million.
- In the first half of 2024, African startups raised $780 million in funding.
- Of this, Kenyan startups garnered the largest amount, $244 million, representing 32% of the total funding raised, while Nigeria received approximately $172 million. Egypt took a share of $101 million, and South Africa secured $85 million.
Despite the progress made by fintech systems, the Economic and Financial Crimes Commission (EFCC) recently raised concerns about increasing fraudulent activities in Nigeria’s financial sector, particularly within the unbanked, underserved, and middle-class populations.
- The EFCC attributed this trend to negligence by some fintech companies in implementing robust Know Your Customer (KYC) protocols.
- Olukoyede noted that many fintech firms fail to adhere to strict KYC guidelines, particularly when onboarding customers for tier-one accounts.
He highlighted that this negligence creates vulnerabilities that fraudsters exploit.