CBN warns Nigeria’s fintech boom still exposed to foreign capital risks

CBN has warned that Nigeria’s fintech boom is still exposed to foreign capital risks.

 

NewsOnline Nigeria reports that Nigeria’s fast-growing fintech sector remains heavily reliant on foreign investment, leaving it vulnerable to global market shocks, according to the Central Bank of Nigeria’s (CBN) 2025 Fintech Policy Insight Report.

 

The report revealed that Nigerian startups raised about $520 million in equity funding in 2024, down from roughly $747 million in 2019, a year when the country attracted nearly 37 per cent of total startup investment across Africa. While the sector has shown resilience despite global economic pressures, the apex bank cautioned that dependence on external capital exposes fintech firms to volatility in international financial markets.

 

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According to the CBN, Nigeria’s performance amid global macroeconomic headwinds reinforces its status as a leading hub for financial innovation on the continent. However, the sharp rise in interest rates in advanced economies since 2022 significantly slowed venture capital flows into emerging markets, including Nigeria.

 

“These dynamics highlight the importance of developing domestic funding avenues, such as leveraging Nigeria’s capital markets, to reduce currency risk and sustain fintech growth,” the report stated.

 

CBN Governor, Olayemi Cardoso, noted that Nigeria is experiencing a rapid financial transformation, with its fintech ecosystem expanding from a handful of startups into one of Africa’s most vibrant innovation landscapes over the past decade.

 

“Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change. Today, with improved stability of our currency and domestic economy, it is clearer than ever that financial innovation can advance inclusion at scale,” Cardoso said.

 

Beyond funding concerns, the report highlighted Nigeria’s leadership in digital financial infrastructure. It disclosed that over 25 per cent of electronic transactions in the country are processed through real-time payment channels, with nearly 11 billion transactions recorded in 2024, up from five billion in 2022. Nigeria’s instant payments system, NIBSS Instant Payment (NIP), was described as one of the most mature and widely adopted platforms globally.

 

The CBN also stressed the need to strengthen system integrity and reputation, citing ongoing compliance reforms, enhanced anti-money laundering supervision, and improved consumer protection as critical to sustaining investor confidence.

 

Looking ahead, the central bank said its focus on domestic funding, regulatory modernisation, and innovation infrastructure is aimed at positioning Nigeria not only as a fintech leader but also as a regulatory reference point for other emerging and high-growth economies.

 

However, the report identified regulatory costs as a major challenge. About 87.5 per cent of fintech stakeholders surveyed said the expense of meeting compliance and risk requirements significantly constrains innovation, while delays in product approvals and regulatory timelines remain key bottlenecks.

 

The report added that 62.5 per cent of fintech firms plan to expand regionally and expressed strong support for regulatory passporting frameworks to enable cross-border operations within Africa. Nonetheless, the CBN warned that successful regional expansion will require a stable domestic funding base and coordinated regulatory oversight.