New report details how Nigerian fintech companies are expanding their business scopes

A new report on the Nigerian fintech space, which was sponsored by MasterCard and MTN Group, has revealed how Nigerian fintech companies are steadily exploring new opportunities. Some of the new areas they are venturing into include micro-investment, insurance (insur-tech), peer-to-peer transfers, and even wealth management.

The report specifically mentioned companies like Cowrywise and Farmcrowdy as two prime examples of fintechs that have developed wealth management platforms. Cowrywise, on one hand, targets Nigeria’s middle class with online investment products, while Farmcrowdy makes it possible for investors to co-own farms by providing the needful capital for farmers.

Other fintech companies are offering digital insurance coverages that encompass auto, education, health, and funeral costs. The prices for the services are said to be as low as $0.50 per month. The report, however, noted that the growth of insur-tech services in Nigeria are quite slow when compared to what obtains in other African countries such as Kenya and Ghana. According to a senior manager at GSMA Intelligence (Kenechi Okeleke) who was also quoted in the report, the reason for the slow pace in Nigeria is due to the country’s lack of enthusiasm for insurance in general. He said:

“Insurance has always been a small sector in financial services in Nigeria. Individuals tend not to do insurance. For big players, their main market has been the corporate sector.”

The 20-paged report titled— State of play: Fintech in Nigeria —was unveiled yesterday during a webinar that was organised by The Economist Intelligence Unit, an arm of The Economist which carried out the research. Nairametrics participated in the webinar.

Presenting the report, a Senior Editor of The Economist Intelligence Unit, Melanie Noronha, disclosed that payments and remittances remain the two most developed subsectors in the Nigerian fintech space. However, the fintech firms are playing heavily in the loan business. They have a wide range of digital lending products targeted at SMEs and individuals. 

“There’s a new wave of start-ups in the lending space which are lending to both consumers and small businesses. The payment services have built up data that allow these start-ups to develop models of creditworthiness, for either people or companies, in a continent where there is very little data about people’s credit ratings because they never had formal access to the financial sector,” said Khaled Ben, a senior partner at Lagos-based AfricInvest

In the meantime, traditional banks are said to be increasingly jumping aboard the digital train, as they quickly adapt by offering digital products focused on loans. In the same vein, telecom companies are also playing a huge role in the Nigerian fintech ecosystem.

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