CBN sounds alarm over Nigeria’s foreign-dependent fintech

The Central Bank of Nigeria (CBN) has warned that the country’s growing fintech sector relies heavily on foreign investment, which makes it vulnerable to global market changes.

In its 2025 Fintech Policy Insight Report, the bank said that although fintech is growing quickly, it still faces risks because local funding options are limited.

Nigerian fintech startups raised about $520 million in 2024, down from $747 million in 2019. Back then, Nigeria accounted for nearly 37% of all startup investments in Africa.

The CBN said reliance on foreign capital can be risky, especially when global financial conditions tighten. “The rise in interest rates in advanced economies in 2022 slowed venture capital funding,” the bank noted.

It urged the development of local funding channels, including better use of Nigeria’s capital markets, to reduce currency risks and ensure sustainable growth.

CBN Governor Olayemi Cardoso called Nigeria’s fintech growth a major financial transformation. He said the sector has become one of Africa’s most innovative hubs, attracting investments even during tough global economic times. He added that improved currency and macroeconomic stability offers new opportunities for financial inclusion.

The report also highlighted the need to strengthen compliance, anti-money laundering supervision, and consumer protection to keep investor confidence high.

However, many fintech companies said high compliance costs limit their ability to innovate, and delays in product approvals remain a problem.

The CBN said about 62.5% of fintech firms plan to expand to other African countries, but warned that this requires stable funding and coordinated regulations.

On digital infrastructure, Nigeria leads in real-time payments, with over 25% of electronic transactions processed through instant payment channels. In 2024, 11 billion transactions were made, up from five billion in 2022.

The NIBSS Instant Payments (NIP) platform is one of the most widely used instant payment systems in the world.

The CBN said its focus on domestic funding, regulatory updates, and innovation infrastructure aims to make Nigeria not only a fintech leader but also a model for other emerging economies.