Down an alley off Kukawa Street in Lagos Island, across from a building abandoned mid-construction, Paulo Communications does a brisk trade. On an average day, dozens of customers walk past fried food and fresh fruit stands to visit his street-side shop and top up their mobile phones or pay their monthly satellite TV bills.
The shop’s biggest business is mobile transactions. It completes dozens of withdrawals, deposits and payments for customers every day, using half a dozen different systems offered by telecommunications giants, big banks and the fintech companies that have made Lagos — Nigeria’s commercial capital — Africa’s hottest start-up scene, accounting for roughly a fifth of the continent’s total venture capital funding in 2020.
“There are at least 20 bank branches near here, but still they come to me,” says proprietor Paulo Umunnabuike, showing off an array of point-of-sale machines from each of the companies that he uses. “At the bank, you wait in line — here, it is much faster.”
After years in which Nairobi, the Kenyan capital, led Africa’s tech revolution, momentum has shifted to west Africa and to Lagos, which has attracted more than $1bn in venture capital in the past two years from Silicon Valley, China and elsewhere. In 2020, as the coronavirus pandemic hit tech fundraising, Nigerian companies raised $307m in venture funding, a fifth of Africa’s total, according to Partech, a venture fund, in its annual report on technology in Africa. Nearly 40 per cent went to the fintech sector.
The swell in fintech in Nigeria has come even as critics argue the government has taken a heavy-handed, sometimes antagonistic approach to the nascent sector, and as internet connectivity rapidly expands across the continent, in part thanks to high-speed subsea cables backed by the likes of Google and Facebook. The “last billion” — as the population of people least connected to the internet are known — are coming online and many of them live in Nigeria, home to one in seven Africans on the continent.
“Even if I wasn’t Nigerian, I would probably be here,” says Tayo Oviosu, founder of Paga, a payments company that was Umunnabuike’s first fintech partner and processed $2.3bn in transactions for 17m users last year. “The opportunity of Nigeria . . . is really profound — there are so many things to solve.”
The sheer size of Nigeria — 200m people, including roughly 60m adults who lack bank accounts — has driven explosive fintech growth….
Read More: Explosion in electronic payments powers start-up boom in Nigeria