CBN raises alarm as Nigeria’s fintech sector leans heavily on foreign funding
Nigeria’s fintech ecosystem one of the fastest-growing in Africa is at a pivotal moment. While digital financial services continue to reshape how Nigerians save, pay, lend, and transact, the Central Bank of Nigeria (CBN) has raised a serious alarm about the sector’s heavy dependence on foreign capital, warning that this exposure could undermine long-term stability and growth.
Fintech Growth vs Funding Vulnerability
According to the CBN’s 2025 Fintech Policy Insight Report, Nigeria’s fintech startups raised approximately $520 million in equity funding in 2024, an admirable achievement amid tough global market conditions. However, this figure still trails the roughly $747 million raised in 2019, when Nigeria accounted for about 37% of all African startup investments.
Despite this vibrant activity, the central bank warns that reliance on foreign investment exposes fintech firms to global market volatility including currency risk, capital flight, and shifts in investor confidence.
“These dynamics highlight the importance of developing domestic funding avenues, such as leveraging Nigeria’s capital markets, to reduce currency risk and sustain fintech growth,” the CBN stated in its report.
CBN Governor Olayemi Cardoso framed Nigeria’s fintech evolution as both remarkable and precarious:
“Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” Cardoso said, “Today, with improved stability of our currency and domestic economy, it is clearer than ever that financial innovation can advance inclusion at scale.”
The Catch: Foreign Capital, Local Risks
Foreign capital has been instrumental in driving rapid fintech innovation in Nigeria. But this influx of external funds also creates structural vulnerabilities:
- Global market shocks can reduce investment availability.
- Currency fluctuations can erode capital value when repatriated.
- Shifting international risk appetites can slow future funding rounds.
The CBN points out that limited domestic financing avenues such as Nigeria’s capital markets make it difficult for fintechs to fund growth internally without excessive reliance on offshore investors.
A Strategic Shift
For Nigeria’s fintech industry to realize its full potential, the apex bank urges a shift toward stronger domestic financing frameworks. This means:
- Encouraging local venture capital and private equity participation
- Mobilizing capital market instruments tailored to fintech growth
- Exploring blended finance and credit guarantee schemes to derisk long-term investments locally
Experts agree that reducing dependence on foreign capital will help insulate the ecosystem against global macroeconomic headwinds and strengthen its resilience in downturns.
Nigeria’s digital finance sector remains one of the continent’s most dynamic markets processing billions of transactions and driving financial inclusion. But growth without stability can be fragile.
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