The Central Bank of Nigeria (CBN) has raised concerns over the Nigerian fintech industry’s heavy reliance on foreign capital, warning that the trend exposes the fast-growing sector to volatility in global financial markets.

The warning is contained in the CBN’s 2025 Fintech Policy Insight Report, which noted that while Nigeria remains one of Africa’s leading fintech hubs, excessive dependence on external funding poses risks to long-term sustainability.

According to the report, Nigerian fintech startups raised about $520 million in equity funding in 2024, a decline from approximately $747 million recorded in 2019, when the country accounted for nearly 37 per cent of total startup investment on the continent. Despite the drop, the apex bank said the sector has demonstrated resilience amid global economic headwinds.

However, the CBN cautioned that reliance on foreign capital leaves fintech firms vulnerable to shifts in global investor sentiment and macroeconomic shocks. It attributed the slowdown in venture capital flows partly to sharp interest rate hikes in advanced economies in 2022, which dampened global risk appetite.

“These dynamics highlight the importance of developing domestic funding avenues, including leveraging Nigeria’s capital markets, to reduce currency risk and sustain fintech growth,” the bank stated.

CBN Governor, Mr Olayemi Cardoso, described Nigeria as being in the midst of a rapid financial transformation, noting that the fintech ecosystem has expanded over the past decade from a handful of startups into one of Africa’s most vibrant innovation landscapes.

“Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” Cardoso said. “With improved currency and macroeconomic stability, it is clearer than ever that financial innovation can drive financial inclusion at scale.”

Beyond funding concerns, the report highlighted Nigeria’s leadership in digital financial infrastructure. It revealed that more than 25 per cent of all electronic transactions in the country are processed through real-time payment channels, with nearly 11 billion transactions recorded in 2024, up from five billion in 2022. The Nigeria Inter-Bank Settlement System (NIBSS) Instant Payment (NIP) platform was described as one of the most mature and widely adopted instant payment systems globally.

The apex bank also emphasised the need to strengthen system integrity and investor confidence through enhanced compliance reforms, anti-money laundering supervision, and robust consumer protection frameworks.

The report further revealed that compliance costs remain a major constraint for fintech operators. About 87.5 per cent of surveyed stakeholders said regulatory and risk-compliance expenses significantly limit their capacity to innovate, while delays in product approvals and regulatory timelines were also identified as persistent challenges.

Looking ahead, the CBN noted that 62.5 per cent of fintech firms plan to expand across African markets and expressed support for regulatory passporting frameworks to enable seamless regional expansion. However, it stressed that cross-border growth must be supported by stable domestic funding and coordinated regulatory oversight.

By prioritising local capital mobilisation, regulatory modernisation, and strong innovation infrastructure, the CBN said Nigeria aims not only to retain its fintech leadership but also to emerge as a global reference point for effective fintech regulation in emerging and high-growth economies.