Nigeria: Charting New Economic Roadmap With Fintechs


Emma Okonji examines the economic potential of FinTech players in the development of Nigeria and the need to grow and mentor technology startups to drive such development.

All over the world, there is a paradigm shift from oil-based economy to knowledge-based economy that is driven by technology. Just as technology rules the world, nations are beginning in invest in emerging technologies and in technology startups. Some startups, through training and mentorship, have over the years, grown into global technology companies that are addressing specific challenges with their technology solutions. The FinTech among them have through their solutions, changed the old narrative in the financial sector, and have made financial transactions a lot easier and safer. Majority of the FinTech companies are generating so much revenue that is far much than what is being generated from the oil and gas sector of the Nigerian economy.

It is for this reason that most government agencies, private organisations and banks in Nigeria, are investing in the training and mentorship of technology startups, in order to develop them into global FinTech companies that will not only address specific challenges, but will also create jobs for Nigerian youths, while growing the Nigerian economy.

African FinTech Foundry (AFF), the FinTech arm of Access Bank, is one of the financial institutions in Nigeria that has consistently invested in FinTechs in the last three years, through its accelerator programme, where it plans to raise 40 successful technology startups and develop them into different successful FinTech businesses that will address global challenges.

Giving insight into the potential and value of FinTech companies, the Head, African FinTech Foundry, Mr. Daniel Awe, told THISDAY that the banking business had evolved from its old traditional way to a technology driven banking system, courtesy of the financial technology solutions that were developed by FinTechs to disrupt the financial sector.

According to Awe, “AFF looks at the FinTech ecosystem, the innovators, the startups, entrepreneurs that have great ideas, which can be developed into technology solutions that can address specific industry challenges in different sectors of the economy such as banking, energy, telecommunications, education, health, insurance, sports, among others.

Majority of the FinTechs are into financial payment solutions, and the reason is that the payment space is so large that virtually every sector of the economy cannot do without financial transactions, which involve payment and alternative to payment.”

FinTech as the New Oil

Different global statistics have shown that FinTechs all over the world are making huge impact to grow economies, and have positioned themselves as the money spinning knowledge-based companies that are ruling the world in terms of revenue generation.

Nigerian budget for 2021 for instance, is $35 billion, but Google alone, which is a global technology company, made a revenue of $169 billion in 2019, which means Google’s revenue is more than the revenue of a country like Nigeria.

Apple has a cash reserve of $180 billion. This means Apple alone is richer than Nigeria and could even foot Nigeria’s bills in the next six years or more. Apple can conveniently tell Nigeria to stop producing and selling oil because it can conveniently take care of Nigeria’s annual budget in the next six years or more. That is the power of technology.

The capitalisation of Amazon is bigger than the GDP of the entire African continent. The capitalisation of Apple is bigger than the GDP of Africa.

So Global technology companies like Google, Apple, Microsoft, IBM, Twitter, Ericsson, among others, are doing great and they are changing the world and ruling the entire world with technology innovation.

So solving specific challenges with technology solutions by FinTech and technology companies, is the new trend and it is the new oil that the world is talking about.

AFF’s Investment in FinTechs

The African FinTech Foundry (AFF), the FinTech arm of Access Bank, had in the last three years, consistently trained and mentored startups in Nigeria, through its AFF Accelerator Programme, where startups are given intensive training and mentorship for several weeks, before the final selection of the best teams that would graduate from the AFF Accelerator programme to the AFF Catalyst programme, where further mentorship will take place and where they are exposed to pitch their business ideas to local and international investors for business growth.

According to Awe, “We received over 3,000 applications for the 2021 AFF Accelerator Programme. From the list of over 3,000 applications, we shortlisted to 357, and further shortlisted to 70, before selecting the top 10 for pitching, which AFF will further mentor to become FinTech companies of global repute. We assembled the best of judges from investment companies as well as local and international investors and capitalists to listen to the pitches and make their choice of investments, depending on the solution that appeals to them most.

“Investors and capitalists are looking for where to invest their money and the AFF platform is a good place to invest their money to further develop the startups, hence we invited them to AFF Accelerator pitching programme to listen to the pitches from among the selected top 10 startups. What AFF is doing with the accelerator programme, is to showcase the best of FinTech talents to the whole world as potential startups that could attract investments. AFF is a platform to showcase potential startups to the world. The startups need mentors at their formative stage who will not only fund their business ideas, but also guide them on how to generate money and reinvest such revenue into the business to further expand it.”

Giving further details of the vision of AFF, Awe said it plans to develop and grow as much as 40 portfolios of successful technology startups in the next four years, who will be addressing specific challenges with their solutions, while generating huge revenue and creating jobs for Nigerians.

“In the next four years, we want to have about 40 portfolios of startups who will be addressing specific challenges with their solutions, and making money from the business that will drive job creation and employment for Nigerians and the entire world.

“We plan to further escalate that number such that in the next seven to 10 years, some of them will become a billion dollar worth of FinTech business. This is the kind of development we are looking at in Nigeria. We may grow our Gross Domestic Product (GDP), but we need to create new businesses in order to develop faster as a country and to further grow the Nigerian GDP and economy,” Awe further said.

Giving further details about the 2021 AFF Accelerator Programme, Awe explained that the startups who applied in 2021, were trained for 17 weeks before the final selection process that brought out the top ten.

The Solutions

Some of the solutions that were pitched, seek to address payment system and the challenges associated with farm produce. Afrinovate, one of the top ten solutions from AFF Accelerator Programme, seeks to address digital financial services at the grassroots level, using agent network, and local Afrinovate points across the country. It is a one-stop-shop where customers can access all their financial services and also have access to insurance and lending. It plans to cover the entire Nigeria and further expand to other African countries. Another solution, called OgaPoS, seeks to address payment solution in restaurants, bars and clubs, such that the customer who has the OgaPoS app, could make online orders even before arriving at the restaurant. The solution seeks to reduce time of waiting after orders must have been placed.

CapitalX was another solution that pitched. It is a mobile lifestyle digital app that rewards customers for using digital app for their financial transactions.

Sanwopay, a mobile app solution for making payments at physical markets, malls and to bus drivers and their conductors, was among the solutions pitched. The app is such that every user who belong to the Close User Group (CUG), could make online payments for goods and services, including transportation services, using the mobile phone. It seeks to address the issue of incomplete payment during transactions. Sanwopay also offers loan facilities to bus drivers who need quick loans for repairs of their broken down busses.

Josla Electric was also pitched, which seeks to curb wastage of electricity consumption, to as much as 60 per cent reduction in electricity waste. Other solutions pitched were Farm Delite, Agro, RegXta, InsuranceHub, among others.

The startups who pitched, were able to develop solutions that address specific challenges across various sectors like payment system, energy, education, governance, transportation, eateries, among others.

AFF’s Expanded Initiative

For those who could not make it to the top 10, Awe said they do not need to feel bad about it, because they could learn from their failures in order to grow and succeed from future opportunities that would be offered by the AFF Accelerator programme.

“We have Key Performance Indicators (KPIs) with which we judge them, and those who are able to meet up with our standards, are selected and showcased. We will continue to mentor them, having graduated from the AFF Accelerator programme to the AFF Catalyst, where further mentorship will take place,” Awe said.

Executive Director, Business Banking at Access Bank, Chizoma Okoli, while admonishing the top 10 startups from the AFF Accelerator programme who pitched their solutions, said FinTech would continue to rule the world and it is the way to go.

She advised the selected top 10 startups to take advantage of the AFF Accelerator programme to further develop their business ideas, since lots of opportunities abound for them.

“Access Bank will help you achieve your dream through support and mentorship, we will be with you always as you grow your business and climb the ladder of success. It is true that businesses fail, but do not be deterred by the number of failures, just be focused and believe in your dreams to succeed. The journey may be rough in the first two to three years, but after the trying and challenging moments, comes success. It is not easy to grow a business to a point of success, but with the right support from Access Bank, you will surely be successful,” Okoli said.

ISPON Hackathon Competition

The Institute of Software Practitioners of Nigeria (ISPON), a private sector driven organisation, had through its annual ISPON National Software Conference and Competition, trained and mentored startups from different tertiary institutions across the country.

In one of its Hackathon competitions, ISPON launched a 42-hour App building competition in which the 27 contestants who came from different parts of the country to participate, were grouped into a teams of 2 and 3 (a total of 10 teams)to build their choice of software application within 42 hours. The Hackathon competition was facilitated by the Institute of Software Practitioners of Nigeria (ISPON).

Team Two emerged as winners, and were presented with N450, 000 cash prize and three smartphones during the launch of the centre. The team developed a software App called Le-Media – an App that allows people to combine learning with entertainment.

Government Support for Startups

The Lagos State Government is also supporting the growth of startups, through various grants. The state has awarded grants to startups and science research initiatives from various universities within the state. The total grant of N100 million is part of the six pillars of the development agenda of Governor Babajide Sanwo-Olu administration of Lagos State, which includes fuelling technology-driven innovations to transform Lagos into a 21st century digital economy and Smart City. During the maiden edition of Art of Technology (AOT Lagos 1.0) on 5th December 2019, the governor announced a N250 million grant for science and technology-related ideas and initiatives, and has continued with the yearly grant till date. The beneficiaries of the grant are innovating and solving problems in the areas of food security, manufacturing, health management and COVID-19 alleviation, and they are the first set to be picked to benefit from the N250 million seed fund earmarked, last year, as Research and Innovation Fund by the state government.

Software Developers’ Open Workspace

Aside mentorship, pitching, and competition, the private sector has also devised means of grooming startups by offering them open workspace in different technology hubs build across the country. The software and app developers, make use of the open workspace for a fee. Hubs like Co-Creation Hub (CC-Hub), Appzone, Workcity, Google, TeamApt, among others, have created workspace that startups could take advantage of to further develop into global FinTech companies.

Founder of Interswitch, a FinTech company that plays in the payment space, Mr. Mitchell Elegbe, said opportunities abound for FinTech players, and that they do not need big capital to begin. “It’s about a knowledge-based economy that requires skills and little capital that grows into large financial base over short period of time. Fintech is only a payment aspect of the general startup ecosystem. Diversification in the startup ecosystem has led to the development of solutions that are addressing challenges in sectors of the economy, using the same technology skill in different ways,” Elegbe said. He therefore called for more support for startups that will chart a new economic roadmap for the growth of the Nigerian economy.

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Source link : https://allafrica.com/stories/202109300563.html

Author : This Day

Publish date : 2021-09-30 12:31:31

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