By James Emejo
Ahead of the implementation of the African continental Free Trade Agreement (AfCFTA) next year, President, Fintech Association of Nigeria, Dr. Segun Aina has urged the federal government to extend funding grants to fintech operators in order to encourage local entrepreneurship and innovation as well as limit external financing options which is “detrimental to the economy”.
He said while local fintech and innovation funds remained critical for the growth of the sector, the current situation whereby financing support from Foreign Direct Investment (FDIs) dominated fintech investments is harmful to the economy and does not promote local entrepreneurship.
Speaking during a web conference on the NG-AfCFTA Workshop (Trade in Services), he said Nigeria accounted for $663 million out of the $1.34 billion in Africa FDI investment in fintech firms in 2019 as well as $137.5 billion globally.
According to him, Nigeria’s leadership and beneficial participation in the agreement could only be enhanced through an agile fintech ecosystem with a strong payment infrastructure and support from stakeholders.
Aina, said the government and regulators needed to quickly develop and promote progressive regulations and policies to drive the process of Nigerian fintech companies to scale to other countries with ease particularly business passporting rights.
The AfCFTA implementation had been postponed from July 2020 to January 2021 due to the global impact of the COVID-19 pandemic.
However, in his presentation titled: “Growing Nigeria’s Trade in Services in Africa with AfCFTA- Perspectives and Expectations of the Fintech Industry”, the Fintech president identified lack of patient capital for the fintech start-ups at seed stage and scaling, regulatory issues and cost of licenses, cost of operations especially multiple registrations in other African countries as key challeges facing the development of the sector.
Also, he said lack of cross border foreign currency settlement system as well as bureaucracy of operating/setting up across borders in the continent remained obstacles which needed to be addressed going forward.
But he said there are expectations that as operationalisation of the trade agreement looms, Nigeria is expected to champion business passporting rights which enables the country’s service companies to establish and operate in other countries without need for local incorporation and other operational challenges
He also predicted a digital currencies regime where Nigeria is primed to lead as the biggest economy in Africa.
He said fintechs are currently supporting and fast tracking Nigeria and the continent’s digital transformation with 10-year target achieved in 90 days, largely influenced by the COVID-19 pandemic.