CrowdLending (Business) - Nigeria

The projected total transaction value in the Crowdlending (Business) market market in Nigeria is expected to reach US$6.11m in 2024.
When compared globally, it is evident that the highest transaction value is forecasted to be China, amounting to US$16bn in 2024.
Nigeria's CrowdLending market in Capital Raising is experiencing a surge in digital platforms offering diverse investment opportunities to individual and institutional investors.

Definition:

Crowdlending platforms, otherwise know as lending-based Crowdfunding enable small and medium-sized enterprises to get loans from single or multiple, private and institutional investors via an online brokering platform. On credit platforms such as Funding Circle, OnDeck, Kabbage and Lending Club, businesses can obtain small loans up to a set maximum value. As a rule, financing requests are analyzed by the provider via an internal scoring system and are checked against additional minimum requirements such as turnover. Subsequently, these financing requests can be invested in by private and institutional investors at an appropriate interest rate determined by the credit rating of the company. This makes it possible for SMEs to borrow quickly and easily, as the basic requirements for obtaining finance are more flexible compared to traditional bank loans.

Alternative financing for SMEs and freelancers (bank-independent loans)
Small business loans issued by single or multiple private and institutional investors (non-banks)
Online loan request, scoring and approval

Traditional bank loans
Consumer loans and credit card transactions
Business-to-Business credit scoring and rating services
Online marketplaces for consumer loans (see Marketplace Lending)

The CrowdLending (Business) market in Nigeria has been experiencing significant growth in recent years, driven by a combination of customer preferences, market trends, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Nigerian businesses have shown a growing interest in CrowdLending as a source of funding. This is primarily due to the convenience and accessibility offered by online platforms, which allow businesses to connect directly with potential lenders. CrowdLending also provides an alternative to traditional banking channels, which can be time-consuming and require extensive documentation. Additionally, the ability to access funding from a diverse pool of lenders appeals to businesses seeking flexible and tailored financing options.

Trends in the market: One of the key trends in the CrowdLending market in Nigeria is the increasing participation of retail investors. As more individuals become aware of the potential returns offered by lending to businesses, they are turning to CrowdLending platforms as an investment opportunity. This trend has been supported by the development of user-friendly platforms and the implementation of robust risk assessment mechanisms, which provide investors with greater confidence in the lending process. Another trend in the market is the emergence of specialized CrowdLending platforms catering to specific sectors or industries. These platforms leverage their expertise and industry knowledge to offer tailored financing solutions to businesses operating in niche markets. This trend has been driven by the recognition that different industries have unique financing needs and require specialized lending models.

Local special circumstances: The Nigerian business landscape is characterized by a large number of small and medium-sized enterprises (SMEs) that often face challenges in accessing traditional financing. CrowdLending platforms have emerged as a viable alternative for these businesses, offering them an opportunity to secure funding for growth and expansion. This has contributed to the growth of the CrowdLending market in Nigeria, as SMEs form a significant portion of the country's business ecosystem.

Underlying macroeconomic factors: The Nigerian economy has experienced periods of volatility and limited access to credit, which has created a favorable environment for the growth of the CrowdLending market. During times of economic uncertainty, businesses may struggle to secure loans from traditional financial institutions. CrowdLending platforms, on the other hand, offer a more flexible and accessible source of funding, making them an attractive option for businesses in need of capital. Additionally, the increasing penetration of internet and mobile technology in Nigeria has facilitated the growth of the CrowdLending market. As more individuals gain access to online platforms, the potential pool of lenders and borrowers expands, creating a larger market for CrowdLending services. In conclusion, the CrowdLending (Business) market in Nigeria is developing rapidly due to customer preferences for convenient and accessible financing options, market trends such as the participation of retail investors and specialized lending platforms, local special circumstances such as the presence of a large number of SMEs, and underlying macroeconomic factors including limited access to credit and the increasing penetration of internet and mobile technology.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.