In recent conversations with multiple Fintech operators, it’s clear that everyone wants to know: what does the future hold for digital lenders in Nigeria?

It’s not hard to see why there is so much interest. Digital lenders have grown in ubiquity, particularly within the Nigerian tech ecosystem. Digital lending is also unlocking new innovative product offerings in adjacent sectors like agriculture, health, consumer goods etc. Take for instance, Hello Tractor, which raised $1 million in 2022, to help farmers finance the purchase of new tractors. 


Key takeaways:

  1. When it comes to giving out loans, Nigerian banks have shown a low-risk appetite, particularly neglecting individuals and small businesses. 

  2. Digital lenders are focused on closing these financing gaps but still have to figure out how to do so profitably. 

  3. Becoming a microfinance bank allows lenders to build a more sustainable business model, but it has limitations.


In trying to understand what 2023 may look like for digital lenders, there’s one key trend we’ve been observing that could give us major clues: more digital lenders becoming microfinance banks. In the past three years alone, a new wave of digital lenders have transitioned into microfinance banks (MFBs). 

The chart below shows some of the popular lenders that have become MFBs.

Essentially, digital lenders are trying what traditional banks have refused to do: make loans available to regular individuals and small businesses.

But there are several hurdles