In terms of activity levels and capital raised, the fintech industry is the most active sub-segment in the Nigerian startup ecosystem.
According to the Nigerian Startup Ecosystem Report 2022, published by startup-focused news and research organization Disrupt Africa, which uses Disrupt Africa’s datasets, knowledge, and networks to document what startups are doing where in the nation, who is investing there, and who is supporting the ecosystem.
It is published in collaboration with Sabi, Africa’s top provider of commercial infrastructure for the distribution of goods and services, Quona Capital, a venture firm focused on fintech that can increase access for underserved customers and small businesses in emerging markets, and MAX, which is developing Africa’s biggest mobility-tech platform.
Talking Drum Communications, Newtown Partners, Kwik, and LipaLater are more partners.
The article uses a list of 481 Nigerian tech startups for whom there was sufficient data as its starting point. Fintech firms make up a total of 173 of those startups, or 36%, which is nearly three times greater than its closest rival, e-commerce and retail-tech.
Although there are many different sub-industries, lending and financing (34 companies, 19.7% of Nigerian fintech initiatives) and payments and remittances (46 startups, 26.6%) are the two sectors with the most activity. The blockchain, investtech, personal finance, and business administration verticals are all seeing a lot of activity.
Payments and remittances are the “original” fintech field, which refers to it as the most established and active of all fintech sub-sectors, and are thus widely indicative of the major trends across Africa. Given the opportunity afforded by the difficulty for African consumers to obtain conventional credit-based services, the lending and finance market is regularly and steadily growing in popularity among startups. In comparison to its contemporaries on the continent, Nigeria is relatively active in fields like blockchain, investtech, and open banking, but it is underserved when it comes to insurtech.
With 8,653 employment, or an average of 50 per business, the Nigerian fintech sector is by far the largest employer within the nation’s larger startup ecosystem.
RenMoney (892), Cowrywise (570), Flutterwave (541), TeamApt (460), FairMoney (385), and Kuda are six of the top 10 employers in Nigeria’s startup sector (356).
The most common industry for startup investment in Nigeria, as well as the rest of the continent, is fintech. This pattern is only becoming stronger. US$507 million has already been invested on the area in 2022, which makes up 67.8% of Nigeria’s total funding for the year. It is also astounding to see how much more money is being invested in Nigeria’s fintech industry, especially in the last few years as overall fintech funding has started to surpass the half billion dollar level.
The e-commerce and retail-tech sector ranks second in terms of startup activity behind the fintech sector, with 58 startups, or 12.1% of the total in Nigeria. Nigeria has a unique image in the e-commerce world as the home of African pioneers Jumia and Konga, but due to the industry’s exceptionally high levels of churn and unstable sources of capital, it has fallen behind fintech in terms of appeal with aspiring business owners.
Within this industry, startups are engaging in a wide range of activities. Eleven (19%) are all-purpose, multi-product internet retailers; for an international example, consider Jumia or Amazon.
Nine (15%) of these solutions are categorized as “retail-tech solutions,” which refers to tech-based goods and services created to assist currently operating physical retailers in digitizing and expanding their businesses. This field has been a developing niche within the larger digital commerce space.
Beyond that, there is activity in niches related to B2B, auto, food and drink, clothing and accessories, furniture and home decor, and garments and accessories.
When compared to other industries, e-commerce and retail-tech are slightly more concentrated in Lagos, with 52 of the 58 companies, or 90%, being based there. The cities of Abuja, Ibadan, Port Harcourt, and Aba are also active.
With 45 startups, or 9.4% of the total, the e-health industry in Nigeria is the third most populated in the country.
The trend towards contact-free and digital solutions brought on by COVID-19 has, as in other markets, given Nigerian e-health entrepreneurs a boost in recent years. Consumers and medical institutions are now more interested than ever in virtual services