|By Babatunji Wusu
The Central Bank of Nigeria (CBN) has cautioned that Nigeria’s fast-growing fintech sector remains heavily dependent on foreign capital, exposing it to shocks from global financial market swings.
The warning is contained in the apex bank’s 2025 Fintech Policy Insight Report, which acknowledged the sector’s rapid expansion but stressed that limited domestic funding continues to heighten its vulnerability to external economic pressures.
According to the report, Nigerian fintech startups raised about $520 million in equity funding in 2024, down from roughly $747 million in 2019, when Nigeria accounted for nearly 37 percent of total startup investment in Africa. While the CBN praised the sector’s resilience amid global macroeconomic headwinds, it warned that sustained reliance on external capital poses serious risks during periods of tightening global financial conditions.
The bank linked the funding slowdown to global trends, noting that the sharp rise in interest rates in advanced economies in 2022 significantly dampened venture capital flows. It said the development underscores the urgent need to deepen domestic funding sources.
The CBN urged stronger use of Nigeria’s capital markets and other local financing channels to cut currency risks and secure long-term fintech growth. It said building robust domestic funding avenues is critical to sustaining innovation and stability in the sector.
CBN Governor, Olayemi Cardoso, described Nigeria’s fintech evolution as a major financial transformation, noting that the ecosystem has grown over the past decade into one of Africa’s most vibrant innovation hubs. He said that despite global economic pressures, Nigerian fintech firms continued to attract investment and drive financial innovation.
Cardoso added that improved currency conditions and macroeconomic stability now provide new opportunities to scale financial inclusion across the country.
Beyond funding, the report stressed the need to strengthen system integrity through tougher compliance reforms, enhanced anti-money laundering supervision, and stronger consumer protection frameworks, describing them as essential to maintaining investor confidence.
However, industry stakeholders surveyed by the CBN identified high compliance costs as a major constraint. About 87.5 percent of respondents said regulatory and risk compliance expenses significantly limit their ability to innovate, while delays in product approvals continue to slow market entry.
The report also revealed that 62.5 percent of fintech firms plan regional expansion and support regulatory passporting frameworks to ease entry into other African markets. The CBN warned, however, that successful cross-border expansion depends on stable funding structures and coordinated regulatory oversight.
On digital infrastructure, the apex bank highlighted Nigeria’s leadership in real-time payments, noting that more than 25 percent of electronic transactions now run through instant payment channels. About 11 billion transactions were processed in 2024, up from five billion in 2022.
The report described the NIBSS Instant Payments (NIP) platform as one of the world’s most mature and widely adopted instant payment systems.
The CBN said its push for stronger domestic funding, regulatory modernization, and innovation infrastructure is aimed at positioning Nigeria not only as a fintech powerhouse but also as a regulatory benchmark for other emerging and high-growth economies.
