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BD Insider: Why Stripe and Wise are betting on Nigeria

These fintech giants are making new moves into Nigeria

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🍔Quick Bite: Stripe and Wise are making new moves into Nigeria, with Stripe focusing on the country’s growing consumer market and Wise targeting its large remittance flows. These shifts highlight Nigeria’s increasing importance to international businesses.

🧠 The Breakdown

In recent months, Stripe, the largest private fintech company, announced plans to allow US retailers to sell directly to Nigerians. Shortly after, Wise (formerly TransferWise), another global fintech giant, resumed enabling local payouts to Nigeria.

When two major players like these re-enter the Nigerian market—despite previously halting or scaling back operations due to operational challenges—it raises key questions: why is Nigeria becoming increasingly important to international businesses, and what factors are driving these global companies to reinvest in the country?

Stripe’s view: Nigeria as a consumer market

Stripe’s move to allow US merchants to sell directly to Nigerian consumers without setting up a local entity shows a clear understanding of Nigeria’s potential as a consumer market. Merchants would now be able to collect payments in Nigeria using local payment methods in naira, and Stripe would settle the merchants in their home currency.

Stripe’s play here is a bet on Nigerian consumers’ increasing willingness to buy from international retailers and pay for services in USD. According to data, Nigeria’s imports from the US have consistently grown over the last few years, with a significant portion being consumer goods. Data from Statista shows that a total of $45.95 billion worth of goods were imported into Nigeria last year. Nigeria’s imports from the US was worth $4.04 billion in 2023, according to the United Nations COMTRADE database.

This highlights the demand for products and services that may not be readily available domestically in Nigeria.

Stripe’s integration with Paystack, a leading Nigerian payment processor acquired in 2020, further underlines how international businesses adapt to local realities. The decision to settle merchants in their home currency while enabling Nigerian customers to pay in naira solves a long-standing challenge of currency conversion that often leads to cart abandonment, improving conversion rates and revenue potential for US retailers.

Wise’s perspective: Nigeria as a receiving market

After terminating remittances to Nigeria in naira due to the Central Bank of Nigeria’s recent guideline in January 2024, Wise now allows its UK customers to send naira to Nigerian bank accounts.

Nigeria is one of the largest remittance markets in the world, receiving over $20 billion last year from its diaspora, particularly in the US and the UK according to the World Bank. Wise’s push to offer cheaper, faster remittance services caters to this massive flow of money into the country, helping Nigerians receive funds from abroad with minimal fees.

A major challenge Wise could face is the issue of two foreign exchange markets in Nigeria, where the official market rates and the parallel market rates vary. This variance could make customers turn away from Wise because they don’t want to trade their USD at the official market rates.

Why Nigeria is back in focus: Key drivers

Several factors are driving Nigeria’s renewed importance on the global stage, with demographic and economic trends playing a significant role in making it an attractive market today.

One key factor is Nigeria’s population, which stands at around 230 million. With about 70% of the population under the age of 30, there is a growing adoption of digital services like mobile payments, e-commerce, and digital remittances.

This youthful demographic is already fueling the growth of e-commerce in the country. Nigeria’s e-commerce market is projected to reach $75 billion by 2025, with platforms like Jumia and Konga driving online shopping habits, supported by payment gateways such as Paystack (acquired by Stripe) and Flutterwave.

Nigeria also boasts one of the largest diasporas in the world, with millions of Nigerians residing in the US, UK, Europe, and the Middle East. These individuals regularly send money back home, creating a constant demand for affordable and efficient remittance services—making Wise’s continued interest in Nigeria a logical move.

Additionally, Nigeria's recent efforts to unify its multiple exchange rates, led by the Central Bank, have made the market more predictable for international investors. This reform helps stabilise the market for cross-border businesses, attracting global companies like Stripe and Wise that rely on transparent and reliable foreign exchange mechanisms.

Strategic partnerships and local acquisitions

International companies entering Nigeria have learned that success can depend on strong local partnerships or acquisitions that provide them with a foothold in the market. Stripe’s acquisition of Paystack in 2020 is a prime example of this strategy.

Similarly, Wise could potentially explore local partnerships or acquisitions to deepen its integration in the Nigerian market. With the rise of local fintechs focused on remittances, digital banking, and payments, there are several opportunities for Wise to expand its footprint by aligning with established players who understand the nuances of the Nigerian financial ecosystem.

Partnerships with local businesses also enable these global companies to navigate regulatory hurdles, gain market insights, and build trust with Nigerian consumers.

Nigeria’s repositioning on the global stage

Stripe’s view of Nigeria as a booming consumer market and Wise’s focus on it as a key remittance destination demonstrates how global businesses are reevaluating the country’s potential.

As Nigeria continues to address its economic and regulatory challenges, its importance on the global stage will only grow. For international companies willing to invest in long-term strategies, the rewards of entering or expanding in Nigeria could be substantial. The market is dynamic, young, and increasingly connected, offering tremendous opportunities for those prepared to navigate its complexities.

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