Nigeria’s fintech sector has become highly indispensable in Africa, attracting attention from investors worldwide.
By early 2025, over 430 fintech companies were operating in the country, a huge jump of 70% from 255 in January 2024.
This makes Nigeria the continent’s Fintech leader, hosting 28% of Africa’s fintech companies and accounting for around 44% of the region’s fintech funding.
But what is driving this surge, and what needs to change to maintain this growth?
This article explores the trends drawing investors to Nigeria, the numbers behind the fintech surge, and the challenges the sector must tackle to reach its full potential.
Fintech Trends Drawing Investors to Nigeria
Digital Payments and Mobile Wallets
Digital payments are the biggest magnet for investors. In 2024, Nigeria processed over 108 billion mobile money transactions worth around $1.68 trillion, a 53% jump from the previous year.
Factors like cash shortages, increasing smartphone use, and the Central Bank of Nigeria’s initiative for a cashless economy are driving this growth.
POS transactions alone hit N18 trillion in 2024, up 69% from N10.7 trillion in 2023. The number of POS terminals jumped 129%, from 2.4 million to 5.5 million. Companies like OPay, PalmPay, and Moniepoint have also supported this, extending financial services to millions through their agent networks.
Embedded Finance and Banking-as-a-Service (BaaS)
Embedded finance is gaining traction as startups develop tools enabling businesses to provide banking services easily. Anchor, founded in 2021, is a prime example. Its platform allows developers to integrate account creation, transfers, savings, and loans into their apps.
By early 2024, Anchor processed over N1 trillion ($652 million) across 1.5 million transactions for more than 400 businesses. Investors favor embedded finance for its ability to expand financial access without relying on traditional banks.
Alternative Lending and BNPL Solutions
Credit and digital lending are hot sectors. Small and medium enterprises in Nigeria need roughly N13 trillion ($9 billion) in credit, creating ample opportunities.
Digital lending and Buy Now, Pay Later (BNPL) solutions provide flexible options, using alternative data and mobile tech to reach those underserved by traditional banks.
Cross-Border Payments Innovation
Remittances from Nigerians abroad represent a huge market. Fintech companies are addressing the high fees, slow transfers, and limited access of traditional services by offering faster, cheaper solutions.
The Central Bank’s Pan-African Payment and Settlement System (PAPSS) and updated international money transfer rules have opened additional opportunities. Cross-border payments continue to attract investor interest.
Digital Banking and Neobanks
Digital-only banks appeal to Nigeria’s tech-savvy population. Neobanks provide instant account opening, real-time updates, and intuitive money management tools.
Notable companies include Moniepoint, which became a unicorn in October 2024 after raising $110 million.
The company processes over 800 million transactions monthly, worth more than $17 billion, powering much of Nigeria’s POS activity and opening 10 million bank accounts. PalmPay and OPay have also sustained rapid growth despite regulatory challenges, showing strong companies can thrive.
Funding and Market Insights
Funding Trends
Despite global funding challenges, Nigerian fintechs raised around $520 million in 2024, matching 2023 levels. While lower than peak years 2021–2022, Nigeria’s share of African fintech funding increased to 44% in the first half of 2024.
However, funding now favours established firms. The average deal size fell from $13 million in 2023 to $5 million in 2024. Big rounds, like Moniepoint’s $110 million, remain rare.
Market Size and Growth Projections
Nigeria’s fintech market was worth about $1.13 billion in 2024 and is projected to reach $4.24 billion by 2033, growing around 15.8% yearly. Digital payments could reach $154.5 billion in transactions by 2029.
Mobile money alone is expected to grow 19.2% annually, reaching $140.2 million by 2033, driven by Nigeria’s population, smartphone adoption, and growing middle class.
User Adoption
Mobile money usage rose 63% in 2023, with transactions reaching 3.9 billion in 2024. E-payment volumes totalled N1.56 quadrillion in the first half of 2024, 70% of 2023’s total. Still, only 8% of Nigerians aged 16–64 used mobile payments in 2024, highlighting a huge untapped market.
Comparison with Other African Hubs
In fintech companies and funding, Nigeria is leading, securing 36% of Africa’s investment from 2020 to mid-2024. Kenya, driven by M-Pesa, raised $638 million in 2024 and remains mobile money-focused. South Africa’s funding dropped 36% in 2024, while Egypt is still a growing player.
Together, Nigeria, Kenya, South Africa, and Egypt account for 90% of Africa’s fintech funding. Nigeria’s strength lies in its market size and diverse fintech ecosystem, spanning payments, lending, wealth management, insurtech, and emerging tech like crypto.
Challenges Slowing Investor Confidence
Regulatory Uncertainty
Frequent policy changes are a huge concern. In April 2024, the CBN temporarily froze sign-ups for fintechs over forex-linked crypto concerns, alarming investors. Inflation hit 34.8% in 2024, prompting speedy policy adjustments. Regulatory oversight is split across multiple agencies, creating confusion.
Infrastructure Limitations
Internet access is still uneven, particularly in rural areas, and power outages disrupt services. Digital ID systems are incomplete, slowing KYC processes and onboarding.
Fraud and Cybersecurity
Financial fraud is a top threat. From 2023 to April 2025, Nigeria lost over N320 billion to fraud, mostly in digital payments and fintech apps. Cases rose 26% in 2024. Common attacks include phishing, SIM swaps, and identity theft. Fraud undermines consumer trust and affects investors.
Currency Instability
The naira’s volatility complicates valuations and exposes fintechs to forex risks, especially when reporting in dollars.
Scalability Issues
Many early-stage fintechs struggle to secure funding, face high customer acquisition costs, and contend with compliance and tech challenges as they scale.
What Must Change for Sustainable Growth
Stable, Clear Regulations
Predictable policies are essential. Regulatory sandboxes and innovation hubs should be expanded. A central fintech regulatory agency could streamline oversight and boost investor confidence.
Robust Fraud Prevention and Digital Identity
Mandating audits for large fintechs, creating a national fraud reporting system, and improving digital ID infrastructure would reduce risk and speed up onboarding.
Investor-Friendly FX Policies
Clear rules for dividend repatriation, transparent forex allocation, and hedging tools would strengthen investor trust.
Collaboration Across Stakeholders
Startups, banks, and regulators should work together through joint programs and shared initiatives. Banks should act as partners, supporting tech innovation while sharing licenses and financial backing.
Regional and Global Expansion
Fintechs must explore regional markets via PAPSS and beyond. Global partnerships and international recognition demonstrate that Nigerian companies can compete worldwide.
Conclusion
Nigeria’s fintech sector is at a turning point. A young population, digital adoption, and investor interest provide strong fundamentals. But then, regulatory uncertainty, infrastructure gaps, fraud, and currency volatility remain obstacles.
The question isn’t if Nigeria will stay Africa’s fintech leader, it likely will. The bigger challenge is evolving into a world-class, globally competitive fintech ecosystem.
With stable regulations, strong digital identity systems, collaboration, and regional expansion, Nigeria’s fintech could become one of the world’s most innovative. The opportunity is ready for the taking.
