Lagos, once the capital of Nigeria is the largest city in the African continent. It is also the most populated in Africa, has the biggest port in the continent, and the third largest film industry in the world. Its one of the fastest growing cities in the world, yet Nigeria and Lagos haven’t produced the Fintech stories that Kenya, for instance, has produced.
However, things are changing for the better. Recently Paystack, Nigeria’s version of Stripe received an investment of $8 Million from Stripe, Visa, Y Combinator and Tencent. This is by no means a one-off success, but an indication of the maturity that the Fintech and innovation ecosystem has achieved in Nigeria.
Over the last three years, Fintechs in the country have received funding, and that has increased steadily. Including Flutterwave’s $10 Million there was roughly $100 Million deployed into Fintechs.
Its hard to keep remittance use cases quiet in Africa – especially when they are Blockchain based. SureRemit, another Fintech raised $7 Million in an ICO this year. Over the last couple of years, more Nigerian Fintechs are being chosen for Y Combinator.
All this activity and traction is also suitably backed by ecosystem players, policy makers and regulators. The Fintech Nigeria Association are pretty active in bringing together startups, policy makers, regulators and of course the industry. Their focus is to support indigenous innovation by facilitating funding and lobbying for favourable tax and regulatory policies.
The Paystack founders are highly technical, fanatically customer oriented, and unrelentingly impatient
– Patrick Collison, CEO, Stripe
After all the recent traction, the investment into Paystack from across the world just goes to show that Nigeria’s potential to create value has been spotted globally. It also adds credibility to the local Fintech ecosystem. This shouldn’t take away any brownie points from Paystack as they now process 15% of all online payments in Nigeria. They have signed up thousands of businesses to their payments solution.
The rationale behind the investment from the Visa, Stripe and Tencent into Paystack is to help their expansion within Nigeria, and also across the continent. Clearly, these Fintech giants see this as an opportunity to not just convert legacy FS users to new age technology, but also to be part of a potential leap frog moment. And that is to help bring financial services to people who have so far been denied the opportunity.
Success stories like Flutterwave, SureRemit and Paystack are set to inspire more Fintechs in the region. With the market that is open to disruption, this could only go one way. Onward and upward.
Arunkumar Krishnakumar is a VC investor focusing on Impact investments, a writer and a speaker.
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