Experts in the Information and Communications Technology have listed unsalable business model, insufficient fund, skill shortage, lack of proper regulation and others, as the factors hindering the growth of the start-ups in the electronic payment sub-sector of Nigeria.
They explained that unsalable business model accounted for 27 per cent of reasons for payment start-up failures; insufficient fund, 24 per cent; no advantages over existing solutions, 15 per cent; skills shortage, 13 per cent; regulation, 12 per cent; and too much competition, nine per cent.
The Managing Director, Point Web Solutions, Mr. Olusegun Mustapha, said the electronic payments industry had experienced continuous innovation on a worldwide basis, with new entrants aiming to grab a share of the market, while established players tried to defend and grow their existing business but were limited by the factors earlier mentioned.
According to him, entrepreneurs are always under pressure over the challenge of trying to ensure operating margins, while the payment sector remains attractive because the market continues to expand, and there is opportunity for players to participate in the transaction value.
“African payments and Fintech entrepreneurs are faced by a shortage of venture capital — more acute than in other regions of the world, which is restricting their ambitions.
“The shortage of investment is marked at the angel and series level. A stage with many investors opting to wait until the business model is proven and the company is profitable,” he said.
The Chairman, Africa Payments Innovation Jury, Mr. John Chaplain, also said the main reason for the failure of start-ups was that the business models were not salable. This, he attributed to a shortage of strategic and product development skills.
Chaplain stated, “It is important to identify the first use cases that encourage consumers to use digital payments services. Arguably when a consumer uses one electronic payment service regularly, it is easier to encourage them to use further services—but the first service is
key.
“Africa is at the beginning of its growth curve with significant opportunity for leapfrogging international trends. The potential is very promising and the market is still virgin. East and West Africa would be the preferred markets.”
