There were 109.2 million internet users in Nigeria in January 2022. Nigeria’s internet penetration rate stood at 51% of the total population at the start of 2022.
In March 2023 the Central Bank of Nigeria (CBN) approved the Open Banking regulation. The CBN released operational guidelines, specifying rules concerning customer data. An Open Banking Registry is to be created by the CBN under these guidelines to monitor all participants in the ecosystem. Banks and other financial service providers are required to receive explicit consent from a customer to access their data.
The Data Protection Bill 2020 was built on the Nigerian Data Protection Regulation (NDPR), implemented in January 2019. The new bill aims to ensure that data processing in the country conforms to international standards and safeguards personal information. The legislation bears a close resemblance to the European Union’s General Data Protection Regulation (EU GDPR) and marked the first formal step by Nigeria towards Open Banking.
An Open Banking Working Group was formed to advance the open banking agenda and represent various market participants.
Bankers and Fintech experts came together and launched 2018 Open Banking Nigeria, an initiative aimed at building open-source, non-profit API standards designed to be used by banks and other financial institutions in Nigeria for free. More than 40 local and international partners supported the initiative, including digital and incumbent banks and tech providers.
In 2020, McKinsey reported that Nigerian Fintechs were primarily focused on payments and consumer lending, with frictionless payments as a particular growth area. The adoption of Fintech is mostly due to access and convenience, according to their survey.
Nigeria is consistently shown to be near the top of African nations when it comes to Fintech investment. In 2021 the Partech report had Nigeria gaining $1.8 billion, with South Africa second at $832 million.
In 2019, the electronic payments platform Interswitch was recognised as its first Fintech unicorn with a valuation of $1 billion (p.10).
Nigeria embarked upon a National Financial Inclusion Strategy in 2018, stating an aim to ‘reduce the proportion of adult Nigerians that are financially excluded to 20% in the year 2020 from its baseline figure of 46.3% in 2010.’
Nigeria is becoming an increasingly cashless economy due to the financial inclusion drive, with digital payments up 57% between Q1 2019 to Q1 2020 (p. 13).
The Central Bank of Nigeria has set up a regulatory sandbox framework to allow a controlled testing environment for Fintechs.
Ernst and Young’s 2020 report stated that ‘the quality and volume of Fintech talent in Nigeria is limited and insufficient. Attracting and retaining talent remains the biggest challenge faced by Fintechs in Nigeria’ (p. 10). The main issues were relying on a local talent pool and a lack of advanced digital skills such as data analytics and cybersecurity.
Nigeria ranked 103rd out of 134 countries in Wiley’s Digital Skills Global Index 2021.
In May 2022, the Central Bank of Nigeria issued the Operational Guidelines for Open Banking in Nigeria. In February of the previous year, they released their framework for Open Banking, outlining the data sharing across the banking and payments ecosystem.