The warning is contained in the CBN’s 2025 Fintech Policy Insight Report, which acknowledged the sector’s impressive expansion but noted that limited access to domestic funding continues to leave fintech firms vulnerable to external economic shocks.
According to the report, Nigerian fintech startups raised an estimated $520 million in equity funding in 2024, a significant drop from about $747 million recorded in 2019. That earlier year marked a peak period when Nigeria accounted for nearly 37 percent of total startup investment across Africa.
While the apex bank commended the resilience of the fintech ecosystem amid global macroeconomic pressures, it warned that overreliance on foreign capital could pose serious challenges, particularly during periods of tighter global financial conditions.
“The sharp rise in interest rates in advanced economies in 2022 contributed to a slowdown in venture capital funding,” the CBN noted, adding that the development underscored the need to strengthen local funding sources.
The bank stressed that expanding domestic financing options, including more effective use of Nigeria’s capital markets, would help reduce currency risks and support sustainable long-term growth in the fintech sector.
“These dynamics highlight the importance of developing domestic funding avenues to reduce currency risk and sustain fintech growth,” the report stated.
CBN Governor Olayemi Cardoso described Nigeria’s fintech evolution as one of the country’s most significant financial transformations, noting that the ecosystem has grown over the past decade into one of Africa’s most vibrant innovation hubs.
“Even amid global economic headwinds, Nigerian fintech firms continued to attract investment and drive change,” Cardoso said. He added that improving currency stability and broader macroeconomic reforms now present new opportunities to deepen financial inclusion at scale.
Beyond funding concerns, the report highlighted the need to strengthen system integrity through enhanced compliance reforms, anti-money laundering supervision, and stronger consumer protection frameworks, describing these measures as essential to sustaining investor confidence.
However, feedback from industry stakeholders pointed to regulatory costs as a major constraint. About 87.5 percent of respondents surveyed by the CBN said regulatory and risk compliance expenses significantly limit their capacity to innovate, while delays in product approvals were identified as persistent bottlenecks.
The report also revealed that 62.5 percent of fintech firms plan to expand operations across Africa and support regulatory passporting frameworks to ease entry into other markets. The CBN cautioned, however, that successful cross-border expansion would depend on access to stable funding and improved regulatory coordination among African countries.
On digital infrastructure, the apex bank highlighted Nigeria’s strong performance in real-time payments, noting that more than 25 percent of electronic transactions now occur through instant payment channels. The volume of such transactions rose to about 11 billion in 2024, up from five billion in 2022.
The NIBSS Instant Payments (NIP) platform was described as one of the most mature and widely adopted instant payment systems globally, reinforcing Nigeria’s leadership in digital payments infrastructure.
The CBN said its ongoing focus on domestic funding development, regulatory modernisation, and innovation infrastructure is aimed at positioning Nigeria not only as a leading fintech hub in Africa, but also as a regulatory reference point for other emerging and high-growth economies.