Nigeria’s Digital Economy Bleeds as Foreign Technology Vendors Stifle Growth, Says Expert

•How they’re frustrating local fintechs 

•MTN vendor, Optasia, rakes N1.4trn 

•To float $375M IPO on JSE

Emma Okonji

Despite the new regulations and reforms of the Federal Competition and Consumer Protection Commission (FCCPC) on digital lending, designed to give Nigerian Fintechs a fair chance in a space dominated by foreign players, foreign technology vendors operating in Nigeria were still allegedly preventing local Fintechs from doing business with them, thus stifling the Nigerian digital economy.

Although FCCPC’s new regulations aim to ensure Nigerian Fintechs thrive in fair competition, protect consumers from exploitative lending practices and guarantee that Nigeria retains a share of the digital wealth generated within its economy, telecommunications companies, still preferred to use technology companies from outside of Nigeria and neglected local Fintech players that could also do the job.

Giving insight to the activities of foreign companies in Nigeria, Policy Analyst, Ayodele Adio, told THISDAY that some foreign companies had distanced themselves from local Fintechs and did not invest in them, but rather investedin other foreign Fintech companies to accomplish their business in Nigeria.

According to him, Nigerian regulators in the Fintech and telecoms space were not doing enough to protect local investment in Nigeria and enforce local content law.

“Between 2019 and 2023, MTN reportedly earned an estimated N5.6 trillion from airtime and data lending alone. Optasia, the South African parent company of Nairatime Nigeria Limited, through Nairatime, took roughly 25 per cent of that value, amounting to billions of naira annually, extracted quietly from Nigerian consumers and from Fintech opportunities that could have gone to local innovators.

“While the enormous wealth was created in Nigeria, from Nigerian users, using Nigerian networks, not a single kobo of that value stayed in Nigeria,” Adio said, adding that Optasia exclusively powers MTN’s airtime and data lending business (XtraTime) in Nigeria, one of the largest and most lucrative micro-lending operations on the continent,” he said.

According to a recent report from Reuters, Optasia was preparing to raise up to 6 billion rand ($375 million) through an Initial Public Offering (IPO) on the Johannesburg Stock Exchange, a development, according to industry players, that excluded Nigerians from investing in the IPO because the IPO would be sold in South Africa, even though Nigeria was one of the largest markets for Optasia.

When Optasia (formerly Channel VAS) entered Nigeria in 2014, it was introduced as a digital innovation partner, enabling telcos like MTN and Airtel to offer airtime and small-credit advances to millions of Nigerians.

Over time, this partnership has grown into one of the largest unregulated financial ecosystems in the country. Each day, billions of naira move through platforms powered by Optasia’s AI-driven credit engines. But while the loans are disbursed in Nigeria, the real wealth, the data, the profits, and the intellectual property, were flown abroad.

Optasia’s footprint spans Nigeria’s two biggest mobile operators, MTN and Airtel, with a combined subscriber base exceeding 150 million. Through their ‘Borrow Me Credit’ and ‘Extra Credit’ services, Optasia’s platform processes vast numbers of micro-loans, each with an average fee of about 15 per cent.

When contacted, MTN Nigeria declined comment on the matter, while Airtel Nigeria refused to respond to inquiries from THISDAY.

However, an  official of MTN Nigeria, who did not want his name in print, debunked allegations that Optasia was refusing to integrate local Fintech players to operate digital lending in Nigeria.

According to the source, Optasia was one of the four technology vendors that bid for the job of digital lending with MTN Nigeria and Airtel Nigeria and that Optasia won the separate bidding process for MTN Nigeria and Airtel Nigeria, from inception of digital lending in Nigeria.

The source, however, said Optasia did not provide digital lending services for MTN and Airtel, but only provided the technology platform on which the services ran on, insisting that the telecoms’ operators that provided the digital lending services, did engage with local Fintechs and also invested in their business.

He was of the view that the issue was more of regulatory and wondered why other regulatory bodies in Nigeria were interested in investigating Optasia, after it was granted licence by the Nigerian Communications Commission (NCC) to operate in Nigeria.  

But Adio disagreed. According to him, “While telecoms companies like MTN and Airtel provide the customer base and handle repayment through airtime deductions, Optasia, a foreign company, supplies the scoring engine, funding algorithms, and digital infrastructure — all hosted abroad. Both share the fees and interest, typically in the range of 10–15 per transaction.”

Analysing the danger of such transactions, Adio said,“Despite processing trillions of naira in loans, none of this credit activity is reported to Nigeria’s licensed credit bureaus such as CRC Credit Bureau or FirstCentral.

“This means that millions of Nigerians who consistently borrow and repay these airtime loans build no formal credit history — they remain invisible to banks, mortgage providers, and legitimate financial institutions.

“Nigerians are effectively generating some of the richest micro-credit datasets on the continent — repayment patterns, income signals, default behavior — yet that information is monetised abroad while citizens themselves get no credit benefit from it.

“Optasia’s data analytics and model training occur outside Nigeria. The company uses Nigerian subscribers’ data to improve its algorithms, but the resulting intellectual property and profits are retained offshore,” Adio further said.