Nigeria’s fintech ecosystem is one of Africa’s most vibrant, with its nucleus positioned in Lagos. According to the 2024 annual data released by the Nigeria Inter-Bank Settlement System (NIBSS), the country processed 10.47 billion transactions via the Nigeria Instant Payment (NIP) platform in 2024, representing one of the highest real-time payment volumes globally, according to a Vanguard analysis.
But behind these metrics sits a tougher reality: founders and investors increasingly see regulation as a brake on innovation and growth.
Governor Olayemi Cardoso, under the aegis of the Central Bank of Nigeria (CBN), has made no secret of the ambition to position the country as a model for fintech regulation on the continent. The CBN’s 2025 Fintech Report, Shaping the Future of Fintech in Nigeria: Innovation, Inclusion & Integrity, casts digital finance as strategic infrastructure and a pillar of growth. But the same report also reveals a persistent tension: regulatory frameworks that aim to protect the system are slowing the very innovation they’re meant to support.
Regulation as a hidden drag on growth
For investors and founders alike, speed to market isn’t optional. It is fundamental to valuation, capital efficiency, and competitive positioning. Across mature fintech hubs, regulatory engagement is designed to be iterative and time-bound. In Nigeria, the Central Bank’s own data suggests that system is under strain.
According to the CBN’s fintech survey, 62.5% of Nigerian fintechs report that regulatory timelines materially delay product launches, while 37.5% say it takes more than 12 months to bring a new product to market, largely due to licensing and compliance requirements. For a sector built on rapid iteration, that delay is not marginal. It fundamentally alters business economics.
Odunayo Eweniyi, Co-founder & COO at PiggyVest, shares this disenchantment with regulatory bottlenecks. “The problem we have is that a lot of the rules are grey, and innovation moves faster than regulations. I like rules when they are clear… but grey rules create a sense of duty that is hard to navigate.”
In finance, a 12-month wait can be dangerous for growth, forcing investors to reprice risk, widening discount rates, and often erasing first-mover advantages before a single customer is onboarded.
Why compliance costs can be a burden
In most business contexts where regulation holds sway, compliance costs are often framed as administrative overhead. In reality, they are a capital allocation problem.
The CBN’s data shows that 87.5% of Nigerian fintechs say regulatory compliance costs significantly limit their ability to innovate. These costs go far beyond licence fees. Firms point to sustained spending on anti-money-laundering systems, cybersecurity architecture, risk-management frameworks, and overlapping reporting requirements across regulators.
For early-stage fintechs, these are largely fixed costs. They do not scale down with revenue and must be absorbed long before products reach meaningful market traction. The result is a compressed runway and difficult trade-offs: funds earmarked for product refinement, engineering talent, or customer acquisition are redirected toward compliance maintenance.
From an investor perspective, this changes the growth profile of Nigerian fintechs. Higher fixed costs flatten early growth curves, delay break-even timelines, and raise the capital threshold required to compete. Over time, this dynamic favours better-capitalised players and increases barriers to entry, even in segments where demand remains strong.
Compliance, in this context, functions less like paperwork and more like a structural tax on innovation, one that quietly reshapes competition and valuation outcomes across the ecosystem.
However, Rebecca Ajose, an expert product manager, believes that compliance is rather inevitable, so it’s necessary to build an innovation strategy that embeds compliance into fintech products. “Regulation is not the enemy of innovation, it’s a framework for sustainable scaling. The fintech ecosystem is tightening security & data protection (NDPR & others), and compliance must be designed into every feature, not bolted on later.”
A divided industry and what it signals
The CBN report itself acknowledges a split-in-the-middle sentiment:
- 50% of fintech operators describe the regulatory environment as enabling;
- 50% view it as restrictive.
That split highlights deeper questions: Is regulation ensuring integrity, or is it tipping into unintended obstruction? What are the implications that could stem from this?
For half of the ecosystem, regulation is seen as a foundation for stability and early success, citing core infrastructure like the Nigeria Inter-Bank Settlement System whose real-time payment’s structure processed nearly 11 billion transactions in 2024. Respondents within the report point to strong oversight as a contributor to trust and system resilience.
For the other half of fintech firms, the same framework is viewed as restrictive. They cite delays in licensing, ambiguous guidance, and uneven enforcement across agencies as persistent obstacles. That divergence is especially salient when layered against data showing chronic time-to-market delays and high compliance costs.
Iyinoluwa Aboyeji, Founding Partner at Future Africa, weighs in on this ambivalence. “There is a general lack of coordination in the Fintech industry in coming together to tell the government the needs of the industry. Fintech entrepreneurs are [often] bellyaching about a bygone era.”
The recent closure of Lidya in late 2025, a pioneer in digital SME lending, serves as a cautionary tale. Despite raising over $16 million, the firm struggled to maintain its pivot in a high-friction environment, eventually succumbing to financial distress and executive exits.
Implications for investor appetite
Looking from the lens of an investor, when regulation causes a drag in flow, it breeds valuation uncertainty and higher perceived risk.
As such, the projected profits move further into the future, and the discount rate (the penalty for uncertainty) gets steeper. To put it simply, it’s hard to bet on a winner when the rules of the game aren’t flexible or consistently applied.
Across Africa, the contrast is instructive. Markets like Kenya and South Africa, where regulatory sandboxes (safe zones to test-run new ideas) and licensing pathways are relatively predictable, have benefited from faster fintech iteration and steadier capital inflows.
The Kenyan environment owes its regulatory clarity to its Capital Markets Authority’s regulatory sandbox which has allowed innovators like Pezesha to test and refine products before scaling regionally, eventually raising significant funding and expanding into Ghana and Uganda after exiting the sandbox.
Nigeria sits uneasily between these poles. Its scale, talent base, and payments infrastructure make it one of Africa’s most attractive fintech markets. Yet regulatory ambivalence, while enabling for some but restrictive for others, introduces a friction that investors cannot ignore.
In that sense, Nigeria’s dilemma is not about demand or innovation, but about whether regulatory clarity can keep pace with ambition.
To diversify or dial back?
To survive the strict regime of fintech regulation in Nigeria, founders and stakeholders are pushing back. Data from the CBN report shows that 62.5% of local fintechs are planning or executing regional expansion into other African markets.
That ambition makes sense: scaling beyond Nigeria’s borders offers access to new customers, diversified revenue streams, and growth that isn’t constrained by a single market’s regulatory pace.
But this brings new challenges. Licensing regimes differ across borders, creating fragmented compliance obligations and additional costs for firms with regional ambitions.
To address this, stakeholders are calling for passporting frameworks that would allow licences issued in Nigeria to be recognised in peer markets like Ghana, Kenya, South Africa, Uganda, or Senegal, a move that could reduce expansion friction and unlock cross-border scale.
The CBN itself acknowledges this situation of regulatory tardiness, stating that it is looking into a Single Regulatory Window that would harmonise licensing and supervisory requirements across multiple regulatory agencies.
The report stated, “Exploring models for a Single Regulatory Window to simplify multi-agency compliance processes and reduce time-to-market. Reviewing approval timelines and operational guidelines to address industry feedback on delays and ambiguity.”
This is buttressed by the Nigerian Fintech Regulatory Commission (NFRC) Bill, 2025 with official bill number HB.2389, which proposes a central regulatory body for Nigeria’s fintech sector. It passed for second reading by the House of Representatives on October 28, 2025.
| Proposed Solution | Strategic Goal |
| Regulatory Passporting | Mutual recognition of licenses across Kenya, Ghana, and South Africa. |
| Single Regulatory Window | A “one-stop shop” to harmonise requirements across multiple Nigerian agencies. |
| NFRC Bill 2025 | A legislative push to centralize fintech oversight under a single commission. |
What this means for Nigerian fintechs
Nigeria’s ambition to be an exporter of fintech policy is bold, but it faces a credibility test. If the proposed Single Regulatory Window can drastically cut approval cycles, Nigeria may regain its premium valuation. If not, investors will continue to price the friction, treating the country not as a home of innovation, but as a high-cost market where compliance eats the upside.
To be fair, regulation itself isn’t bad; friction is. The difference is whether policies accelerate confidence and clarity, or whether they slow innovation so much that capital flows to smoother waters.
The question for 2026 is simple: Can the CBN move as fast as the code its firms are writing?
