Nigerian fintechs are burning millions to acquire customers; And, the math doesn’t add up

The uncomfortable truth is that many Nigerian fintech entities are spending more to win customers than those customers will ever generate in revenue. The unit economics don’t work, but venture funding has masked the problem for years. And, now that funding has reduced, the math is becoming impossible to ignore.

Customer acquisition cost (CAC) is how much a company spends in marketing, sales, and promotions to win a new customer.

For global fintech companies, the average CAC sits at $1,450 per customer, according to Red Branch Media data from 2025. For emerging market fintechs, that number drops to a median of $50 per customer, based on 2022 Tellimer research.

While specific 2025 “all-in” median figures for these regions vary, recent benchmarks for consumer-focused (B2C) segments, which dominate emerging markets, range from $45 to $180 per customer, according to YouYaa.

At first glance, Nigerian fintechs appear to have a structural advantage.

Photo illustration: From out of pocket to out of app

The hidden costs nobody talks about

The $50 CAC figure doesn’t capture the full picture.

Tellimer’s research found that the annual cost to service each customer in emerging markets also sits around $55. That means even before considering acquisition costs, fintech companies are spending more than $100 per customer in the first year alone.

For context, Cash App in the United States generates approximately $50 in average annual revenue per user. When Cash App’s CAC was at its legendary low of $5 in its early days, the company had room to profit. When that CAC jumped to $10, according to Payments Dive, the margins tightened, but the business model still worked.

At $50 CAC plus $55 servicing cost, Nigerian fintechs are underwater from day one unless they can generate significantly more revenue per customer than their American counterparts.

They don’t. Nigeria’s inflation hit 34.8% in December 2024 (now rebased, though, and significantly lower), a 30-year high, according to the National Bureau of Statistics (NBS).

The naira has collapsed against the dollar. Real purchasing power has eroded. The average Nigerian fintech customer simply doesn't generate the revenue needed to justify the acquisition and servicing costs.

Then, there are the compliance costs. Mature global fintech entities spend 8 to 12% of revenue on regulatory compliance. Early-stage fintech companies in emerging markets spend 15 to 20%, according to industry data compiled by Red Branch Media.

With Nigeria’s Central Bank of Nigeria oversight (Know Your Customer requirements and anti-money laundering obligations), compliance costs eat into already thin margins.

Fintech regulation in Nigeria

When the numbers don’t lie

Flutterwave UK’s 2024 financial results offer a rare glimpse into the reality behind the growth headlines.

The company reported revenue of £6.6 million, up 21% from 2023. That sounds healthy until you see the net loss of £2.27 million, a sharp increase from the £485,000 loss the previous year, according to Techpoint Africa and Innovation Village reporting.

Operating profit collapsed 89% to just £142,299. Administrative expenses surged from £4.2 million to £6.4 million as headcount grew from 22 to 31 employees. Most critically, cash reserves fell from nearly £15 million to just £743,000. A company processing billions in transactions and growing revenue still burned through 95% of its cash in a single year.

Flutterwave’s parent company raised $250 million in February 2022 at a $3 billion valuation. A detailed analysis by Lumibrief in January 2026 estimated that after banking fees and reserves, approximately $200 million was deployed.

With an estimated monthly burn rate of $3.5 million, the company has burned through roughly $164.5 million over 47 months, leaving about $35.5 million in runway as of January 2026. That is 10 months of cash remaining.

This explains why Flutterwave acquired Mono, a Nigerian fintech, in an all-stock deal in early 2026. When a company valued at $3 billion uses stock instead of cash for acquisitions, it’s because cash is too precious to spend.

The unit economics don't support burning cash on growth anymore.

The funding mirage

Nigeria attracted $410 million in fintech funding in 2024, maintaining 2023 levels according to Tech In Africa research.

But that headline number hides a critical detail. Moniepoint and Moove captured $220 million of that total with their $110 million raises each. After those two deals, the next largest was Yellow Card’s $33 million, a 70% drop from the top rounds.

The funding is concentrated in proven, late-stage companies. Early-stage fintech entities with unsustainable CAC ratios are getting shut out. The venture capital model that allowed companies to lose money while growing users is over.

Investors now want to see a path to profitability, and most Nigerian fintech entities can't provide one.

The market processed 108 billion mobile money transactions worth $1.68 trillion in 2024, according to Fintech News Africa. Nigeria had over 430 fintech companies as of February 2025, up from 255 in January 2024 (see image below).

More companies are competing for the same customers, driving CAC even higher through promotional campaigns and referral bonuses.

Fintech companies in Nigeria

The Central Bank of Nigeria even froze new customer onboarding for several fintech platforms in April 2024. When regulatory action prevents growth, companies burn cash servicing existing customers without the ability to offset those costs with new revenue.

The math gets worse, not better.

Read also: The ‘crack’ in CBN’s social media handle requirement for KYC

The retention problem

Industry research shows that 73% of users abandon fintech apps within the first week. For CAC to make sense, companies need customers to stick around long enough to generate revenue that exceeds acquisition and servicing costs.

The ideal ratio is 4 to 1, meaning customer lifetime value should be four times higher than CAC.

Cash App achieved legendary growth by focusing on network effects. The company saw retention increased by 31% when users had four or more friends on the app. They spent between $5 and $15 in referral bonuses at various growth stages to build that network.

Even Elon Musk’s PayPal in its early days offered $20 to users who opened accounts and another $20 for referrals.

Retention; The path to growth

Nigerian fintech entities tried the same playbook – still do. Aggressive cashback promotions, referral bonuses, and sign-up incentives flooded the market.

The problem is that Nigerian users learned to game the system. They sign up for bonuses, withdraw the money, and move to the next platform offering better promotions. There’s no loyalty because there’s no network effect strong enough to make switching costly.

The companies that did build network effects, like OPay with its 60 million users and monthly transaction volumes exceeding $12 billion in monthly transaction volume as of early 2026, had to burn staggering amounts of capital to get there. OPay's success didn't come from sustainable unit economics. It came from being willing to lose more money than competitors for longer.

In all, the Nigerian fintech ecosystem is heading toward aggressive consolidation. Companies that can’t raise new funding and can’t achieve profitability will either be acquired or shut down. The $50 (₦67,272.50 as of the time of writing this report) CAC that looked manageable in a world of cheap venture capital and 2% USD interest rates is unsustainable when funding dries, and global interest rates sit above 4%.

The fintech entities that survive will be the ones that figure out how to acquire customers organically through content and product rather than through paid marketing and promotions.

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