What Is Causing The Fintech And Banking Tsunami In Nigeria?

According to estimates, 42 million Nigerians live in places where they cannot access basic banking services. However, Nigeria is outpacing every other African country in the Fintech and Neobanking sectors. Understanding how reform and the desire of the private sector to close this gap in the most populous country in Africa have come together in a few images by connecting these two realities is made easier.

The National Financial Inclusion Strategy, a document released by the Nigerian government in 2011, set a lofty goal of integrating 80% of Nigerians into the financial system by 2020. Despite heroic efforts in some locations, the figure by that year was still just about 64%. The efforts of the governmental and commercial sectors to change the goalposts are hampered by a variety of issues, including the economic slump, deteriorating security in some regions of the nation (particularly the north), low literacy rates, and historical mistrust of financial institutions.

What about the good news, then?

In the private banking industry, entry-level account alternatives are increasingly popular. Customers can open an account the same day with just a passport photo and a registration number. In order to support the enormous number of unregistered SMEs, microfinance has also exploded. Vulnerable women who work in treet trading can now access low-interest loans and credit. Entrepreneurial Nigerians transferring money inside, into, and beyond the country are vying for their attention with startups from Lagos' thriving digital economy.

Competition is what drives these quick actions. Online and offline banks, as well as online and offline offerings, are in competition. Since the epidemic, banking and finance have been rapidly becoming digital, with Lagos' lawmakers setting the bar high by, among other things, launching the historic e-naira.

Because unbanked, underbanked, and low-income people may have limited access to or knowledge of connected devices and make little use of social media on a daily basis, finding a solution digitally is not as simple as setting up a storefront online and waiting for users to take advantage. The simple text message has permeated enough of society in Africa to serve as a reliable basis for contracts, demonstrating the continent's inventiveness in this area. Unstructured Supplementary Service Data (USSD) codes that can be typed into a phone even without a live internet connection are now being used by some banks to open accounts, send money, pay bills, and even apply for loans. Some startups are devising strategies to produce and market affordable portable POS equipment.

Another crucial aspect of China's CBDC is its inclusiveness of a digital banking tool that functions even without live internet. The fact that Nigeria has already implemented a working toolkit to compete with China's tells you a lot about the scope of the problem and the inventiveness of the locals in coming up with solutions.