Headquartered in Lagos, the company works with banks, fintechs and other lenders to acquire and manage non-performing retail and SME loans. 

The latest round drew support from several African private equity and venture capital firms, including AfricInvest through its Financial Inclusion Vehicle fund, as well as Algebra Ventures, which made its first investment in a Nigeria-headquartered business through the deal.

Existing investors, including Capria Ventures, VestedWorld, Axian CVC, Angaza Capital, 4Di Capital and DotExe Ventures, also returned for the round.

BFREE said the new investment will help it pursue larger acquisitions of bad debt portfolios while strengthening long-term agreements with financial institutions that regularly offload non-performing accounts.

Having raised $3 million in funding in 2024, the company started as a technology-driven debt collection business before shifting into direct acquisitions of distressed unsecured loans, ranging from nano credit to SME facilities. 

Since launch, BFREE has completed more than 35 transactions and now manages over 11 million borrower accounts across several African countries.

Chief Executive Officer Julian Flosbach said the company now plans to operate at a larger scale.

“The market opportunity is significantly larger than the infrastructure historically available to address it. This round puts us in a position to pursue substantially larger portfolio acquisitions, engage a broader range of institutional partners, and do so with the speed and certainty of execution that serious counterparties demand,” he said.

Rather than handling one-off recoveries, BFREE works through forward flow arrangements. Under those deals, lenders agree to sell newly non-performing loans to the company on a recurring basis.

BFREE said its collection model avoids intimidation and public shaming, practices that have long attracted objection in parts of Africa’s digital lending sector. Instead, it focuses on repayment structures that borrowers can realistically manage.

Patrick Herrmann, partner at AfricInvest, said the company is filling an important gap in Africa’s fast-growing digital credit market.

“BFREE’s approach to credit management, based on a unique set of proprietary data and a technology-enabled collection platform, closes an essential gap in the digital lending value chain. 

“High-velocity digital lending has become a core product across markets, with financial institutions, banks and fintechs alike requiring effective ways to manage small-ticket non-performing loans. 

“BFREE’s execution-driven team has brought the platform to an inflexion point, which will enable them to purchase larger portfolios and become a prime partner for banks and fintechs across African markets,” he said.

For Omar Khashaba, general partner at Algebra Ventures, the investment shows encouraging interest in Africa’s distressed debt market, where lenders still struggle to resolve billions of dollars in unpaid retail and SME loans every year.

“Billions of dollars in African retail and SME credit go unresolved every year because the institutional infrastructure to clear them simply does not exist. Healthy credit markets need a disciplined buyer for distressed debt. 

“The founders Julian, Moses and Chukwudi have built a platform that combines rigorous portfolio pricing, risk management, and deep data infrastructure to clear distressed retail and SME debt at scale. We are backing BFREE together with AfricInvest to scale them across Africa and beyond,” he said.

BFREE did not disclose the size of the investment round. However, the company said the capital will support expansion in both existing and new African markets where demand for distressed debt solutions continues to grow.

This follows a decline in inflation, which has fallen for 11 consecutive months to 15.1% in January, according to CBN Governor Yemi Cardoso.

The MPR sets the benchmark for borrowing costs in the economy. Lowering it could reduce funding expenses for digital lenders, who rely on borrowed capital rather than customer deposits.

“Digital lenders and members of the Money Lenders Association usually borrow at interest rates linked to MPR, so any change in such MPR will have a significant impact on our cost of lending to customers,” Gbemi Adelekan, president of the Money Lenders Association, said in a report.

Unlike commercial banks, which fund loans largely with customer deposits, most digital lenders depend on wholesale funding, private capital, or institutional borrowing.

This makes them highly sensitive to changes in benchmark rates. High MPR levels over the past year have forced many lenders to either raise loan rates or absorb thinner margins.

Currently, commercial banks charge annual interest rates exceeding 30% in some cases, while digital loan apps charge between 5% and 15% monthly.

Experts caution that borrowers should not expect immediate relief.

“Everyone benchmarks around MPR and their cost of borrowing,” said Babatunde Akin-Moses, co-founder of digital lending app Sycamore. “Rates should come down as the cost of funds becomes cheaper, but it may not happen immediately since some loans are already in effect, and may not have agreed variable rates with customers.”

Adeshina Adewumi, CEO of Trade Lenda, a digital bank for small businesses, also anticipates only modest changes. “I do not envisage any significant impact,” he said.

“However, a lower MPR means lower cost of funds to digital lenders, and we can afford to relax our numbers slightly.” Adelekan expects loan app interest rates to stay largely within the current range for now.

The digital lending sector in Nigeria has grown even as households seek short-term credit to manage living costs and limited access to traditional bank loans.

As of February 2026, the Federal Competition and Consumer Protection Commission had authorised 469 digital lenders. Consumer credit reached ₦3.11 trillion ($2.31 billion) in Q3 2025, with personal loans accounting for more than two-thirds of activity.

High interest rates have prompted lenders to move away from small nano loans, usually under ₦10,000, toward larger loans for customers with verifiable income.

“High MPR rates led to a tightening of credit by our members,” Adelekan said. “Lately, most of our digital lenders are shifting away from high-risk, small-ticket nano loans (under ₦10,000) toward quality and customers with verifiable income to reduce our non-performing loans.”

The sector is now prioritising portfolio quality over rapid user growth, showing a prudent recalibration as borrowing conditions gradually respond to monetary policy easing.

Built on a maturing instant payments backbone, electronic transactions are increasing, regulators are asserting closer oversight, and accessibility to credit is getting stronger.

The Nigerian fintech space is projected to contribute around $6 billion to the nation’s GDP by the end of 2026, which will be largely driven by payments processing and expanding digital credit access.

In February 2026, the Central Bank of Nigeria (CBN) unveiled an 18-month fintech roadmap focused on implementing open banking, strengthening supervision, and enabling secure cross-border interoperability.

The plan is widely seen as a defining moment for the next phase of growth in the sector.

Regulatory scrutiny is also intensifying. The Federal Competition and Consumer Protection Commission (FCCPC) set a January 2026 compliance deadline for digital lenders, granting a final grace period until April for registration. Platforms that fail to meet the requirements risk delisting.

The move is aimed at curbing predatory practices while preserving innovation in a market that disbursed an estimated $865 million in digital loans in 2025.

On the infrastructure side, the Nigeria Inter-Bank Settlement System (NIBSS) Instant Payments platform maintained top maturity ratings across Africa in late 2025 and continues to process billions of naira in real-time transfers each year.

Meanwhile, deployed POS terminals crossed the 8 million mark in early 2025, with first-quarter transaction values exceeding ₦10.5 trillion.

Taken together, these developments reflect how far Nigeria’s fintech ecosystem has come in the past decade, especially in expanding financial services to underserved and unbanked communities.

Below are ten trends expected to shape payments and digital lending in 2026.

1. Phased Rollout of Open Banking

The CBN’s open banking framework is set to begin limited commercial operations this year. Licensed participants will be able to share customer-consented data securely through standardised APIs.

Early applications are expected to focus on payment initiation and improved credit scoring for small and medium-sized enterprises (SMEs), as well as individuals in the informal sector.

With better access to verified financial data, lenders are likely to refine underwriting models and develop more tailored products.

2. Continued Growth in Real-Time Payments

Instant transfers are at the heart of Nigeria’s electronic payments system. Real-time rails are already dominant for salary payments, merchant settlements, person-to-person transfers and bill payments.

With transaction volumes increasing, operators are expected to prioritise infrastructure resilience, especially during peak periods, to minimise service disruptions.

3. Shift Toward a More Cash-Lite Economy

Cash usage in everyday transactions has been declining steadily over the past few years. Analysts expect the trend to continue, supported by mobile wallets, expanding POS networks and government-backed cashless policies.

Digital channels are now playing a bigger role in e-commerce, informal retail and rural-urban remittances, gradually reshaping payment behaviour.

4. Faster and Cheaper Cross-Border Payments

Cross-border remittances and trade payments are becoming more efficient, helped by fintech partnerships and improving foreign exchange liquidity. Some platforms are exploring blockchain-based corridors and stablecoin settlements, while traditional remittance channels benefit from better interoperability.

These changes could support diaspora inflows and small-scale trade transactions under the African Continental Free Trade Area framework.

5. Consolidation in Digital Lending

Following the FCCPC’s enforcement actions, the digital lending market is expected to shrink in number but strengthen in structure. Non-compliant operators may exit or restructure to meet standards on pricing transparency, debt collection and data privacy.

Industry watchers expect surviving players to focus more on sustainable underwriting and long-term customer relationships rather than short-term loan cycles.

6. Expansion of Buy Now, Pay Later (BNPL)

Africa’s Buy Now, Pay Later market is projected to reach $6.5 billion in gross merchandise value in 2026, with Nigeria ranking among the leading contributors alongside Kenya, South Africa and Egypt.

Integration with major e-commerce platforms and offline retail chains is likely to deepen adoption. At the same time, regulators are paying closer attention to affordability checks and credit risk management.

7. Greater Use of Alternative Data in Credit Scoring

The push for e-invoicing and digital transaction records is opening up new data sources for lenders. Verified tax filings, payment histories and utility records are increasingly being used to assess creditworthiness.

For informal-sector operators without traditional credit histories, this could mean broader access to formal finance.

8. Evolution of POS and Agent Banking

While POS deployment continues in both urban and rural areas, growth is slowing in major cities where the market is nearing saturation.

Attention is shifting toward agent profitability and the introduction of value-added services such as micro-loans, savings products and bill payments through agent networks.

9. Extension of the Global Standing Instruction (GSI)

The CBN has signalled plans to extend the Global Standing Instruction framework to fintech lenders and microfinance banks.

If implemented broadly, the move could strengthen loan recovery mechanisms, reduce default rates and promote more responsible lending practices across the digital credit space.

10. Rise of Embedded Finance and Super-Apps

Financial services are increasingly being built into non-financial platforms, including ride-hailing apps, online marketplaces and utility payment systems.

Payments, wallets, micro-insurance and small-ticket loans are now integrated into everyday digital platforms. As competition intensifies, companies are racing to offer seamless, all-in-one experiences while keeping up with regulatory demands.

Final Analysis

Nigeria’s digital financial services ecosystem is moving into a more mature phase. Payments infrastructure is largely in place, shifting the focus toward scale, stability and cross-border integration.

At the same time, digital lending is entering a period of tighter regulation and consolidation.

The projected $6 billion contribution from fintech to GDP in 2026 underlines the sector’s growing economic weight.

How effectively these trends translate into deeper financial inclusion and long-term stability will depend on continued coordination between regulators, operators and infrastructure providers in a policy environment that is still evolving.

The collateral impossible. Then one day, his phone buzzes with an offer: a microloan from a digital lending platform. No collateral. No queues. Just data.

The app analyzed his mobile money transactions and online orders and within hours, the funds landed in his wallet.

With that single loan, Chijioke’s business began to grow. Across Nigeria, thousands of small and medium-sized enterprises (SMEs) are experiencing this same quiet revolution. I believe digital lending is changing how entrepreneurs access credit and, in the process, rewriting the rules of small business growth.

SMEs are the lifeblood of Nigeria’s economy, making up over 90% of businesses and contributing nearly half of national GDP.

Yet, they remain chronically underfunded, facing an estimated $158 billion credit gap, according to the IFC. Traditional banks have struggled to lend to SMEs.

The reasons are familiar lack of collateral, insufficient documentation, and the high cost of serving small borrowers. As a result, millions of business owners operate in the shadows, productive but invisible to the formal financial system.

Fintech innovators are changing that equation. Digital lenders use mobile data, transaction histories, and AI-powered algorithms to assess risk in real time without a single form filled or a branch visit required. Platforms like FairMoney, Carbon, and Branch are offering instant, collateral-free loans that reach small business owners in minutes. For many, this is their first taste of formal credit.

As a software developer with experience in building frontend web applications, I have seen firsthand how the real innovation here isn’t speed it’s inclusion.

These platforms are expanding the definition of creditworthiness, rewarding digital footprints instead of paper trails. Still, the ecosystem faces real challenges. Many SME owners lack digital literacy or still distrust online platforms. Loan defaults can spike without proper credit frameworks.

For digital lending to scale sustainably, Nigeria’s regulators and innovators must work together: promoting transparency, enforcing fair lending, and integrating alternative data into national credit systems.

Digital lending isn’t just a fintech story it’s a growth story. When credit becomes data-driven, inclusive, and accessible, small businesses don’t just survive; they thrive.

If Nigeria harnesses this momentum responsibly, digital lending could unlock billions in dormant capital and power millions of small enterprises the real engine of Africa’s economic future. For entrepreneurs like Chijioke, that future has already begun one mobile loan at a time.

*Author: Ikechukwu Madubuike is a frontend developer with over 4 years of experience building scalable digital products.

The funding round was led by global impact investment manager BlueOrchard and Dutch entrepreneurial development bank FMO, with $20 million injected as equity. 

This capital infusion will help in achieving Fido’s mission to empower individuals and entrepreneurs across Africa by providing swift and accessible financial services through its innovative digital platform.

Founded in 2015 by Nadav Topolski, Tomer Edry, and Nir Zepkowitz, Fido initially focused on offering loans via mobile phones. Over time, the fintech has diversified its product offerings, incorporating savings, bill payments, and smartphone financing. 

These additions have bolstered Fido’s revenue streams and strengthened its ability to compete in the African digital lending space, where it stands alongside other major players like Branch and Tala. 

Unlike traditional banks that require collateral and lengthy paperwork, Fido leverages mobile technology and alternative data sources to provide instant micro-loans to individuals and small businesses, particularly those overlooked by conventional financial institutions.

CEO Alon Eitan highlighted the important role that small businesses play in driving economies in sub-Saharan Africa, yet they often lack access to essential financial tools. 

Fido’s platform addresses this gap by offering loans ranging from $20 to $500 to individuals, with higher amounts available to businesses based on their needs and credit scores. 

These loans, which come with embedded insurance, are repayable within six months at interest rates between 7% and 12%. Fido’s default rate remains below 4%, thanks to its strong credit scoring system.

Fido is making an impact which goes beyond providing credit, it also encourages smart financial habits through its Fido Score, helping users build a digital financial identity. The fintech has served over a million customers across Ghana and Uganda, distributing more than $500 million in loans. 

Fido aims to surpass $1 billion in total disbursements by early next year, further expanding its reach and deepening its impact on African entrepreneurs and individuals striving to improve their financial well-being.

The digital lending platform market is anticipated to record sizeable growth over 2032. Digital lending and digital mortgage have emerged as prominent concepts in the field of online banking.

Over the past few years, the financial sector has undergone rapid digitization with the emergence of novel banking needs.

Digital mortgage is rapidly replacing traditional loan processing systems as it provides a holistic experience to lenders as well as borrowers.

Lenders are increasingly implementing modern digital mortgage strategies across targeted marketing, auditing, loan closing, and lead generation activities.

Owing to the ease and level of sophistication, a combination of hyper-automated tools, big data analytics, and real-time digital mortgage applications are gaining demand among businesses

Navi Technologies, an Indian financial service provider, unveiled its cloud-based real-time co-lending platform, called Navi Lending Cloud (NLC). The platform aims to support direct assignment collaboration and digital management co-lending with banks and NBFCs.

The digital lending platform market is classified into component, solutions, service, deployment, business model, product, application, and region.

Point of Sale (POS) systems held more than a 10% share of the digital lending platform industry in 2022. POS systems enable lenders to source and validate documents and e-signatures of credit customers and facilitate conditional decisions instantly. Advancements in mortgage POS systems allow lenders to process loans more efficiently and manage large volumes of data regarding lending rates, borrower behavior, and risks.

The digital lending platform market share from design & implementation is anticipated to record over 21.5% CAGR from 2023-2032. Design and implementation service providers are expected to address the growing need for robust and validated digital asset management processes.

Technological advancements and rapid integration of artificial intelligence (AI) will enable the automation of services pertaining to the design & implementation of digital lending platforms.

The market landscape is fragmented into cloud and on-premise deployment. The cloud segment is projected to exhibit over 20% CAGR through 2032. Due to low maintenance features and cost-effectiveness, cloud-based digital lending is picking up pace. Increasing demand for fast processing, documentation storage, and reduced cost and time consumption associated with loan processing will proliferate cloud-based digital lending platforms.

The industry is segregated into staff-driven, and customer driven. The staff-driven segment is expected to witness promising growth between 2023-2032.

Digital lending platforms cater to staff needs including loan disbursement, customer acquisition, and repayment. Growing end-user requirements to reduce the risk of fraud, and improve loan processing efficiencies will accelerate the segment growth.

Mortgage loan accounted for more than 15% share of the digital lending platform in 2022. Large mortgage banks are increasingly implementing digital strategies and technologies to boost the traction of credit seekers for mortgage loan. Digital mortgage solutions reduce costs per loan, allowing considerable savings. The influx of smart technologies will advance the capabilities of mortgage lifecycles on digital lending platforms.

North America digital lending platform market share was more than 38% in 2022. Rapid digitization of banking services in the region has resulted in the acquisition of open-banking platforms. A large number of fintech giants in the U.S. and Canada are ramping up efforts to digitize lending processes and safeguard financial services. For instance, in September 2022, J.P. Morgan announced plans to acquire Renovite Technologies, Inc., a cloud-native payments technology firm to modernize payment infrastructure.

Some of the key players profiled in the Digital Lending Platform market report include Base-Net Informatik AG, ARGO Data Resource Corporation, Built Technologies, Inc., Decimal Technologies Pvt. Ltd., and CU Direct.

[Source]

According to a World Bank Report, the private credit bureau coverage in Nigeria was 13.9% in 2019. The numbers must have improved post pandemic but there is still a long way to go. 

Yabx aims to bridge the gap between the new-to-credit segments and the banks in Nigeria at scale and introduce new age fintech products and solutions in the high demand markets of the country.

The company will further amplify its local operations in Nigeria to capitalise on the investments being made in the digital lending space of the country.

Yabx has partnered with several African banks to create large, scalable and profitable digital lending portfolios by leveraging its fintech platform.

In Nigeria, where banks generally have faced challenges in underwriting its own captive base optimally, Yabx will not only help banks to widen the horizon of services they offer to their captive base but also allow them to launch new and innovative products like Buy Now Pay Later, Personal Loans, Payday loans, MSME loans etc.

Commenting on the expansion, Rajat Dayal, CEO & Founder of Yabx said, “While digital financial services have catalysed financial inclusion, access to financial services and credit remains an obstacle in countries like Nigeria. Without available credit services, smalls farmers, SME owners, and the new to credit segments face difficulty in obtaining loans to make profitable investments or pay off debts”.

“Today, banks and financial institutions in Nigeria are more than keen to partner with us and launch new and innovative products for new-to-credit segment. Our platform doesn’t only increase the reach of such banks but also helps them play a major role in creating a global credit score which will eventually help the new to credit segments in the country build a life without any external aid,” further added Rajat. 

Yabx uses Big Data Analytics and AI/ML algorithms on large volumes of alternate data to create a detailed financial identity of customers and help banks underwrite them over Yabx Loan origination and Lifecycle Management System. This customer origination and servicing can be done on various channels like the bank’s own digital banking app, USSD channel, website or even as embedded options in third-party apps.

Yabx’s growth and innovation has also been validated at the most reputed global platforms ranging from the United Nations Capital Development Fund (UNCDF) to being recognised as the “LendTech of the Year” at the Asia Fintech Awards 2022. The Fintech start-up also won the “Best BNPL Solutions Award” at the recently concluded Global Fintech Fest 2022.

With such global recognition and presence already in place, Yabx is set to accelerate its mission in the Nigerian market to open up corners of opportunities that didn’t exist earlier.