 Welcome back to the breakfast here on PLOS TV Africa. There are now six categories of payment operations in Nigeria, according to a document released by the Central Bank. At the top, a company is involved in switching, processing and mobile money operations, which will have to show proof of two billion Naira shareholders funds to do business. There are lower benchmarks for all the categories of financial technology companies and this morning we are joined by Ullumbuiwa Ullubuiga, a writer with a tech cabal to talk about this. Good morning, Mr. Ullumbuiwa. Good morning. Thank you for having me. Good morning. All right, so when the CBN put out this notice, there was mixed reactions. I also read and I saw a couple of people say, well, this is good news and it will bring some stability to also bring some assurance to people who are getting involved in fintech across Nigeria. Where do you stand? Do you think this is a great move by the CBN or maybe too early? I think it's important to state that there's not a lot that's new here, but the new regulations in quotes. Most of the requirements remain the same. The shareholding and capital requirements as well remain the same. So it's not a bad thing. I think that because of the way some regulation has happened in Nigeria over the last couple of years, we now sort of think of all types of regulation as a bad thing and this is not exactly the case. Regulation usually can be a great thing and protects the end user and that's usually where thinking is from. But for these new regulations in quotes, there's nothing to be angry about or to be upset about. It doesn't affect anybody and it's all good. Okay, I want you to help us break this down. For people who don't understand all this financial jargon, when the central bank released their new circular saying these are the requirements for payment companies, fintech companies and they're saying, you need to have 100 million Naira shareholders affected by losses. For the people who don't really understand, what does this mean? One thing to note is that these are capital intensive businesses that deal with people's monies. So it's really important that when you set up companies like this, that you can show that you have the required money or capital to make it work. So yeah, that's basically what the thinking is. Think of it just like a bank as well that deals with people's money. The central bank must know at every point that you have the capital to keep the business moving because that's the most important thing for the stability of the business so that we don't have situations where say three months down the line there's some trouble in there about not being able to meet the obligations or not remitting people's deposits or just generally having problems with cash flow. So usually that is the thinking when there are capital requirements for businesses like this. Okay, so you don't think that these licenses being pegged at 2 billion for this, 2 billion for that? You know, it's not going to limit the entry to people who have disruptive ideas and want to step into the fintech space? No, it's not. I do think that because like you have said there are six different levels. So it really depends on where you are playing because if you are playing at the very top then one must reasonably expect that you can afford to bring whatever capital requirement that the CBN asks. There are licensed categories with lower entry costs. So yeah, you can always consider that but I do think that this is fair. I spoke to someone at the fintech yesterday and he thought it was fair and says there are no big changes here so there's nothing for them to worry about right now. Where do fintechs or startups like that normally get funds from to set up? Do they get sick loans? So you could do a bunch of things. If you have some brilliant idea, get money from family and friends to begin like maybe the scratch of your business. You could also bring in some other people who have the money to fund it as well. So I mean you have a bunch of options but to be fair, two billion is a lot of money. So at that stage you are playing with bigger players, probably some if you have some institutional investors, you have some angel investors, whatever you need to do. So still talking about investment. We know that most of the investments that we've seen in fintech companies in Nigeria are international. We also have institutions that basically set up processes to make sure that you're going from ideation to execution. The SID stars and the like. Let's talk about the place of investment funding in fintech in Nigeria. Do you think a lot has been done, especially by local investors, not just the ones who give you all the billions of dollars. We're talking about local investors now. Do you think fintech companies are getting a lot of that? And what more can be done to ensure that the fintech space is thriving with all the backing and support that it needs? I think an interesting way to look at it is to think of every ecosystem in terms of their maturity. Every tech ecosystem goes through the same stages. Nigeria and much of Africa is still at that stage where we're getting a lot of foreign investments, which is very good. But it's not to say that we're not getting a lot of local investors. There are quite a lot of local investors, angel investors for instance. There are even networks of angel investors. Now there are also Nigerian created VCs or African focused VCs that are created by Nigerians. Micro traction has quite a lot of investments in Nigeria. I know that the Future Africa Fund said the other day that it has made just in 2021, I think it has made about 13 or 14 investments, which is a lot. If you consider that last year, I don't think it's made more than 14 or 15 investments in total. Yes, the foreign money has come in and a lot of it keeps coming in, but there is a lot of participation on the local front and I'm sure that that will continue to happen. So what we're going to see is, we're going to see a lot more of the bigger players coming. Sequoia invested in Africa recently. I think it was announced last week. There's another, there's a rumor of a deal from Tiger Global as well. But yes, while this is happening, we're also seeing that a lot of local investors are putting their money where their mouth is. That's going to happen side by side. And at some point, you see that a lot of local money will keep going into fund this part of. So where the ecosystem is at a really great place right now. Well, some people would also argue that we probably should have waited a little bit for us to reach some level of stability with regards to FinTech in Nigeria. It's still growing, it's a space that not very many people are familiar with. So would you say that the CBN maybe should have just waited a little bit before these targets were set for FinTech in Nigeria just to encourage more people to get into the space and to allow for more people to... I would say that to be honest, one place where CBN deserves credit is in relation to its regulation of FinTech. They've done some really great work. Recently they released their draft framework for open banking, which I believe will be a big game changer. I do not think that this keeps serious people out. There's even a sandbox where you could try to hand out whatever solutions you want to create. So no, this does not keep anybody who is serious out. As we've seen, FinTech continues to be about the sector that attracts the most funding across Africa and in Nigeria as well. So I do not think that that's going to go away. There's plenty, there's lots of solutions you can think of as FinTech problems and that have FinTech components as well. But that's never really going to go away. I do not think that what this CBN has done is a bad thing. Regulation is super, super, super important and will always remain important. Because you have to think of regulation as something that wants to protect the end user. I want to keep everything stable. I would ask more questions about regulation because like you said, this protects both the FinTech and the consumers. But looking at FinTech in Nigeria, how would you assess just how much impact they've made regarding when it comes to creating a more digital banking services for people. Just all the benefits that FinTech has had in Nigeria's financial space in the country. I mean, is it easy for granted until you think about things like the pandemic and all the restrictions that COVID-19 brought? Even when you come to today right now, if you were going to go to the bank to sort out an issue, you'd need two, three hours. That's just the reality of it. You need two, three hours to, if you wanted to make an over-the-counter withdrawal, ATMs have never been as filled as they are today. So FinTechs and mobile money players that allow you to do basically every sort of banking service without going into the bank, they make a world of difference. If we come to things like even digital lending, for instance, it has never been easier to get a loan for anybody who has a smartphone and has a big job. You just dial a shortcode, download an app, play there, what digital lending does in Nigeria. So these are things that affect people's lives every other day, right? And FinTech makes all the difference in ensuring that the access to many of these things, they are easier and quicker than they've ever been. So for me, usually, you would find, for instance, I was in Ikeja the other day. Ikeja is supposed to be as central to Lagos as central is. And I needed to withdraw some cash, and there was no ATM around me. And eventually I had to use one of the agents of this mobile money player to withdraw some money. And you'd be surprised that that's how a lot of people in Lagos get their money to pay. I think a couple more times than normal. I've also made use of some of all those agents on the roadside. There's zero queues and zero traffic and there's not much that you complain about. Well, let's also talk about in what directions you feel Nigerian FinTech may also want to expand into. In what directions do you think that we are currently headed that is exciting for you and you see us in the next few years? I do think that when I look at, for instance, something like digital lending, the fact that there's a lot of players who mean, for instance, that people are going to diversify into other things. Not just BPD loans. We're going to see someone crack something like asset financing, for instance. I think there's a company right now that's trying to hack mortgage financing. But that's pretty difficult, but that's still going to happen. What we're going to see is, because right now if you look at FinTech, you see that a lot of it is focused on just payments, receiving money, paying money, transferring money to someone. A lot of FinTechs are going to dig below the surface and it's going to be a lot more complex. They'll come up with more complex solutions because their services like insurance, their services like loans, there's a lot more complex services than just withdrawing money and transferring money. But this is the first step. Even with this first step, there's still a lot of places a lot of these FinTechs have not bought into. So two things will happen. We're going to expand access. Just by the shared demands of competition, we'll see people expanding to more areas. All right. We'll apologize. We have to wrap it here. We appreciate your perspective on FinTech issues every time. Thank you for coming. Thank you very much for having me. All right. Our next conversation on the breakfast will be on the ongoing constitutional review. We have a political affairs analyst to discuss this with us.