Much ado about FinTech

Factual Pursuit of Truth for Progress


By Evelyn Dan Epelle

It is true that the financial technology industry in Africa is booming. But where is the money?

WASHINGTON – Data insights on FinTech solutions in Africa, akin to modern financial products in developed economies, highlights some important indexes for the up-and-coming innovator in today’s formal and informal financial markets. Typical of many blanket studies, Nigeria was used as a case study for the African continent by local aggregators Stears Data, where analysts have posited that ‘financial technology is booming.’ With an estimated $600 million in funding over a 5-year period for Nigeria alone, the data analysis climaxed that; banking the unbanked is possible and profitable.

By emphasizing how traditional banks have failed to facilitate financial inclusion at the lower echelon, opportunities to further productize and innovate for the informal sector have opened up. For example, in-depth analysis of survey data that criticized financial inclusion in Sub-Saharan Africa (SSA) showed that FinTech solutions specifically designed for Nigeria must target the unique needs of local communities, in order to be deemed impactful.

With nearly half of the banked in Nigeria operating via traditional channels, the true nature of needs for the informal sector is easily eclipsed – yet the urge to innovate will not wait.  Bringing our cat out of the bag will help resolve the problem with this post-positive analogy. Already, the claim that Nigeria’s financially-included population relies on traditional banks breaks down at the absence of real population data for Africa’s most populous nation. It is widely known, that Nigeria’s population statistic has largely remained guesswork since 2006 when the last official census supposedly held.

To get started on financial inclusion, Nigeria will have to determine first, the value of p, then draw a more objective crosstab on the subject. Also, does the subset p = financially excluded have any motivation to abandon informal savings practices for technology-backed formalities? Picture the everyday market woman, whose household needs are tied to daily sales at Onitsha, Oshodi, or Ariaria, pivoting from sticking Naira notes in her brazier while bargaining with rich people, to owning a mobile device that helps track meager savings.

Why Nigeria’s Fintech Industry may un-boom

Banking the unbanked in Nigeria will require more than drooling about early progress and profits. A look at the challenges and trends with financial inclusion in a developed economy like America can be instructive; the U.S has the second-highest poverty rate in the developed world, with 78 percent of Americans living paycheck-to-paycheck. The Center for Financial Inclusion (CFI), which seeks to advance inclusive financial systems for low-income people around the world, describes how America is making progress with financial inclusion. It is data first, healthy fiscal policies, and rapid, venture-backed innovation of its FinTech industry.

Innovation is a positive step toward financial literacy and freedom. It has fostered financial inclusion in countries like Kenya, India, and China, but the same can be said of Nigeria only when strategic action to layer progress is taken. In Nigeria, one must look outside how the unbanked can save, to answering the most critical question; what will the unbanked save? Without acknowledging the socio-economic reality of the masses, Nigeria’s booming FinTech industry risks developing products that never get past privileged populations. While the rise of technological innovation in any developing country is laudable and supports financial inclusion, the rising poverty index in Nigeria will easily bottleneck progress.

Reaching the unbanked will require mass empowerment through fiscal policies that catalyze a dire need for long-term savings. After all, the more money that one has, the more long-term that one can think. Informal saving channels exist partly because, although the poor do not save, it creates a sense of security as they model the survival skills of the rich.


Please enter your comment!
Please enter your name here