FG to improve fintechs’ access to funds via regulations, digital infrastructure

Efforts to attract fintechs to the stock market and leverage their fundraising capability to boost liquidity may have yielded some progress as the Federal Government, through the Ministry of Communications, Innovation and Digital Economy, disclosed plans to create an appropriate regulatory environment and improve digital infrastructure that would enable fintech to access funds, especially from angel investors.

Also, the government expressed willingness to facilitate the export of tech products and services, as well as collaborate with the NGX on tailored listing options for startups through the exchange technology board.

Minister of Communications, Innovation and Digital Economy, Bosun Tijani, while speaking at a tech event at the weekend themed, ‘Invest in Africa’s Future – Let’s Talk About Exits’, a joint initiative by the Ministry, NGX, and Future Africa in New York, supported by Stanbic IBTC, CardinalStone Partners and Chapel Hill Denham, said the current administration is poised to prioritising innovation and encouraging entrepreneurs, adding that Nigeria is open for investments.

The SEC, had in December 2022, approved the rules of listing on NGX tech board to boost investment in indigenous financial technologically inclined companies across Africa and provide greater visibility to the companies.

Findings showed that Nigerian fintech is approaching investors and getting funded, especially from venture capitalists (VC) in countries such as the United States, United Kingdom, Switzerland and Belgium. From these offshore destinations, the fintech firms have raised over $876.5 million between 2016 and 2022.

From 2014 to 2020, for instance, fintechs raised about $600 million in funding, attracting 25 per cent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone – second only to Kenya, which attracted $149 million.

The African fintech sector secured $1.45 billion in funding for 2022, a 39.3 per cent increase from the previous year with the sector being the most attractive to investors last year, making up 43.4 percent of all start-up investments ($ 3.3 billion) into the continent.

Indications also emerged that 205 fintech start-ups raised funding, with Nigerian fintech making up almost 40 percent of startups and 46 percent of fintech funding,” it said.

Experts have argued that these venture capitalists have invested a huge amount of money in emerging financial services startups, thus making it possible for fintech firms to grow and access more capital offshore.

Tijani said: “We want to prioritise the ability of our technology companies to export products and we are targeting Africa first and then eventually start selling to the rest of the world. We cannot do all of this as a country if we do not prioritise innovation and encourage entrepreneurs to build. Nigeria is now open to investments.”

He pointed out that Nigeria had been grappling with over-dependence on oil in the last few years, noting that diversifying from over-reliance on a single sector requires increasing productivity in other sectors.

He, however, added that this can be achieved through the advancement and application of technology and innovation.

Also speaking, the Chief Executive Officer of NGX, Temi Popoola stated that the Exchange will work assiduously to support the agenda of the new government, noting that NGX is keen on fostering innovation that would attract a larger pool of investors and mature tech companies to list on its platform.

He pointed out that the demand for private capital currently outweighs public capital, adding that the NGX is currently discussing with the Securities and Exchange Commission (SEC) on private markets to enable the exchange to do business with non-listed companies like startups.

Chief Executive Officer of Flutterwave, Olugbenga Agboola noted that his company is focused on the Nigeria project as most of its investible capital had been deployed to Nigeria since inception.

He also stated that the company is ready to tap opportunities created by the markets to scale and further deliver value to investors.

In addition, the Chief Executive Officer of Chapel Hill Denham, Bolaji Balogun while delivering his remarks urged Nigerians to leverage the opportunity to participate in the capital formation going on in the tech sector rather than allowing the space to be controlled by foreigners.