Nigeria, with about 200 million people and Africa’s largest economy, is a viable market for fintech startups. Between January and August last year, the value of e-payment transactions in Nigeria was 804 trillion naira (about $2 trillion) with online transfers accounting for nearly one-third, according to the Central Bank of Nigeria.
Young Nigerians are a particularly easy target for scholarship scams. Faced with rising unemployment, many are seeking to immigrate to high-income countries in hopes of a better life. On the surface, the scam looks like the old tricks that have been used for years to defraud hapless prospective students with fake scholarships. But it reveals a troubling new trend: The same impunity and loopholes that fraudsters normally use are now superpowered by fintech, making the potential windfall for the scammers and losses for the scammed even bigger.
For the scammers to have succeeded, at least one other corporate organization along the payments chain didn’t do its due diligence, says Babatunde Obrimah, chief operating officer, Fintech Association of Nigeria, a nonprofit organization that advocates for fintech in the country: “Somebody at the end of the transaction is liable,” he adds.
Payment companies are regulated by the Central Bank of Nigeria, which mandates that payment service providers ensure that all transactions on their platforms are validated by credible financial institutions. The central bank has launched an investigation into the scam and will provide further information after it is concluded, spokesman Osita Nwanisobi said in a text message.