NIGERIA Law and Practice Contributed by: Isa Alade, Seyi Bella, Ayodele Adeyemi-Faboya and Ayomikun Ogunkanmi, Banwo & Ighodalo
1. Fintech Market 1.1 Evolution of the Fintech Market Nigeria maintains a prominent position among the top four countries in Africa for fintech. A recent report highlighted its leading role in host - ing the largest concentration of fintech compa - nies on the continent, with South Africa, Kenya, and Egypt ranking second, third, and fourth, respectively. In 2024, Nigeria attracted 47% of the fintech deals in Africa, solidifying its status as the most active destination for such transac - tions. In 2024, fintech remained the dominant force in Africa’s tech ecosystem, securing USD1.4 bil - lion, which accounted for 60% of total equity funding. The sector attracted 131 deals, repre - senting 29% of all transactions. Fintech experi - enced a 16% year-on-year increase in deal count and a 59% growth in total funding, underscoring its rapid expansion. In Nigeria, fintech made up 72% of the country’s total equity funding. While Nigeria was one of Africa’s most diverse VC mar - kets in 2023, sectoral diversification decreased in 2024, with fintech taking the lead in local fund - ing. Large funding rounds from companies like Moove Africa and Moniepoint influenced this shift. Without these two megadeals, fintech still accounted for 31% of Nigeria’s total funding, which would have been a slight decline from the 37% seen in 2023. 2024 also witnessed a refocus on indirect regulation of the Nigerian fintech industry and increased reports of incidents of de-banking fin - tech operators: in particular, the Central Bank of Nigeria (CBN) reportedly imposed various mon - etary penalties on banks for non-compliance with compliance obligations in general and KYC obligations which trickled down to fintech entities becoming increasingly more concerned
with compliance to avoid the risk of getting de- banked. Another important development in 2024 is the issuance of a Payment Terminal Service Aggre - gator (PTSA) license to Unified Payments Ser - vice Limited in April 2024, thereby increasing the number of PTSAs in Nigeria to two. All payment service providers were then mandated to inte - grate with both PTSAs. Regulatory attitudes, funding patterns and widespread adoption of emerging technology are likely to shape the evolution of the Nigeri - an fintech landscape in the coming twelve (12) months. Emerging technology such as artifi - cial intelligence (AI) will likely be integrated into financial services, particularly for robo-advisory services and wealth management platforms. Fintech Regulatory Landscape in 2024 Reviewed Guidelines of International Money Transfer Services in Nigeria On 31 January 2024, the CBN issued the Reviewed Guidelines of International Money Transfer Services in Nigeria (Reviewed IMTS Guidelines), effectively repealing the previ - ous guidelines issued on 26 September 2014. The Reviewed IMTS Guidelines establish a new framework for the licensing and opera - tion of International Money Transfer Operators (IMTOs) in Nigeria. It introduces several new requirements, including those for starting IMTO services and restrictions on IMTO operations. Interestingly, the Reviewed IMTS Guidelines specify that all banks are prohibited from oper - ating IMTO services and that fintech companies are not allowed to obtain approval for IMTO. The guidelines, however, do not expatiate what it means by “fintech companies are not allowed to obtain approval for IMTO.”
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