The Central Bank of Nigeria (CBN) has warned that Nigeria’s booming fintech sector remains dependent on foreign capital, making it vulnerable to shocks from global market fluctuations.
The warning is contained in the apex bank’s 2025 Fintech Policy Insight Report, which noted that despite its rapid growth, the sector is still exposed to external economic pressures due to limited domestic funding options.
According to the report, Nigerian fintech startups raised about $520 million in equity funding in 2024, a decline from roughly $747 million in 2019, when Nigeria accounted for nearly 37 percent of total startup investment in Africa.
While acknowledging the sector’s resilience amid global macroeconomic challenges, the CBN said the heavy reliance on external capital poses risks, especially during periods of tightening global financial conditions.
“The sharp rise in interest rates in advanced economies in 2022 contributed to a slowdown in venture capital funding,” the bank stated, adding that the trend highlights the need to deepen local funding sources.
The apex bank stressed the importance of developing domestic financing channels, including better use of Nigeria’s capital markets, to reduce currency risks and ensure sustainable fintech growth.
“These dynamics highlight the importance of developing domestic funding avenues to reduce currency risk and sustain fintech growth,” the CBN said.
CBN Governor Olayemi Cardoso described Nigeria’s fintech journey as a major financial transformation, noting that the ecosystem has evolved over the past decade into one of Africa’s most vibrant innovation hubs.
“Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” Cardoso said, adding that improved currency and macroeconomic stability now offer fresh opportunities for financial inclusion at scale.
The report also underscored the need to strengthen system integrity through compliance reforms, anti-money laundering supervision, and consumer protection, which it identified as critical to sustaining investor confidence.
However, stakeholders surveyed by the CBN flagged high compliance costs as a major challenge. About 87.5 percent of respondents said regulatory and risk compliance costs significantly limit their capacity to innovate, while delays in product approvals remain key bottlenecks.
The report further revealed that 62.5 percent of fintech firms plan to expand regionally and support regulatory passporting frameworks to ease entry into other African markets. The CBN, however, warned that such cross-border expansion requires stable funding and coordinated regulation.
On digital infrastructure, the bank highlighted Nigeria’s leadership in real-time payments, noting that over 25 percent of electronic transactions are processed 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 most mature and widely adopted instant payment systems globally.
The apex bank said its focus on domestic funding, regulatory modernization, and innovation infrastructure is aimed at positioning Nigeria not just as a fintech leader but also as a regulatory model for other emerging and high-growth economies.