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posted 2 years ago
Introduction
With the rapid growth of technology, Start-ups have continually found ways to improve financial services. This trend has been matched by the growing appetite of consumers globally, for faster and more convenient financial services. The financial sector in Nigeria has witnessed a growth in FinTechs with their revenue expected to reach $543m in 2022.
In this article, we have set out below the process of setting up a fintech company in Nigeria.
Fintechs in Nigeria are generally categorized and regulated as follows:
Fintech categories |
Regulators |
|
i |
Payment service providers, mobile money operators, digital bank, switch companies |
Central Bank of Nigeria (CBN) |
ii |
Lending |
CBN; State Ministry of Home Affairs |
iii |
Savings, investment and funding |
CBN; Securities and Exchange Commission (SEC) |
iv |
Cryptocurrency |
CBN; SEC |
v |
Insurtech |
National Insurance Commission |
Notwithstanding the above, some regulators cut across all sectors due to their general regulatory function such as the National Communications Commission (NCC) (for FinTechs providing value added services) and the National Information Technology Development Agency (NITDA) (for users of data, amongst other things).
There are also capital deposits required by relevant regulators such as CBN for setting up FinTechs, to find out more, click here.
Founders of FinTechs are advised to ensure that intellectual property developed in the cause of the business are protected. It is important that the company’s logos are registered as trademarks at the Trademark Registry; and the software and codes are registered at the National Copyright Commission or Patent Registry (if it qualifies). Although software and codes are automatically copyrighted under Nigerian law, it is useful to carry out the registration of the software at the relevant registry.
It is pertinent to note that intellectual property rights automatically vests in the developer (which could be employees or contractors of the company) under Nigerian law. To ensure that the rights vest in the company/founder, it is advisable that the FinTech enters into an agreement with the developer assigning rights in the software to the company/FinTech either through an employment contract or a Copyright Agreement.
Founders may choose to first source for funds from family and friends, after which they may need to progress to venture capital and other institution.
The CBN and the SEC recently launched programs to aid FinTechs in test running their software under-regulated spaces. Click here to find out more about these programs.
Conclusion
With the population of unbanked Nigerians currently calculated at above 50% of the adult population, there are great growth opportunities in the FinTech ecosystem. It is, however, recommended that professional advice is obtained by emerging and existing FinTech founders from the inception of the FinTech, to properly guide the business.
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