MTN eyes direct lending as data rules tighten in nigeria

By seeking banking licenses and direct lending, MTN aims to transform its vast mobile money network into a full-fledged digital banking powerhouse, reducing reliance on partners and targeting Africa’s massive unmet credit demand.

MTN Group is strategically pursuing banking licenses across select African markets to transition from facilitating loans through partners to directly lending from its own balance sheet, a move aimed at expanding its credit offerings and reducing dependency on third-party financial institutions. CEO Ralph Mupita and Fintech CEO Serigne Dioum emphasize a measured, market-by-market approach, focusing on countries with large customer bases and substantial mobile money wallet funds, where direct lending and deposit-taking can be most viable. This gradual shift reflects MTN’s ambition to leverage its extensive fintech ecosystem—including 70.8 million monthly active MoMo users and over two million merchants—to capture a greater share of Africa’s largely untapped formal credit market, where only 4 to 5 percent of adults currently have access to formal loans.

Lending has emerged as one of the fastest-growing segments within MTN’s fintech operations, alongside payments and e-commerce, underscoring the company’s broader ambition to capitalize on Africa’s fintech revenue potential, which it estimates could grow up to 13-fold over the next five years. By expanding direct lending capabilities, MTN aims to tap into the continent’s predominantly cash-based transaction environment—where over 90 percent of transactions remain cash-driven—thereby driving credit growth and deepening financial inclusion. While maintaining existing partnerships during this transition, MTN plans a cautious expansion of balance-sheet lending to manage credit and financial risks effectively.

The Central Bank of Nigeria's mandate requiring all payment transaction data generated within Nigeria to be stored and managed domestically by January 1, 2027, has set a firm regulatory deadline that fintech firms must meet to avoid penalties such as fines or license restrictions. This directive specifically targets payment data, which the CBN considers systemically sensitive, thereby elevating fintechs like MTN to the status of critical financial infrastructure rather than startups, and signaling a broader tightening of regulatory oversight.

Nigeria faces significant infrastructure challenges in meeting the data localisation mandate, with current commercial data centre capacity estimated between 50 to 56 megawatts and ambitious plans to triple Lagos’s capacity to over 250MW by 2030. Despite investments from players like Equinix, Airtel’s Nxtra, and Kasi Cloud, persistent issues such as limited and costly power supply—where national electricity generation hovers between 3,000MW and 4,000MW and energy costs have surged over 64%—pose critical bottlenecks to building resilient, disaster-recovery-capable data centres needed to handle Nigeria’s explosive electronic payment growth, which soared from 16.3 billion transactions in 2021 to a projected 60 billion in 2026.

The data localisation policy compels fintechs to undertake complex migrations from foreign hyperscale cloud providers like AWS, Microsoft Azure, and Google Cloud—none of which operate full data-centre regions in Nigeria—to domestic infrastructure, demanding rigorous engineering efforts to maintain uptime and operational continuity. This transition is complicated by the lack of empirical, vendor-neutral benchmarks for local cloud platforms, requiring fintechs to conduct extensive stress testing to ensure local data centres can support mission-critical financial workloads, a challenge that MTN is addressing by facilitating collaborative ‘War Room’ roundtables and offering sovereign cloud solutions that promise lower latency and compliance assurance.

Beyond compliance, the CBN’s data localisation mandate is increasingly viewed as a strategic lever to build Nigeria’s digital sovereignty and competitive advantage by fostering trusted infrastructure, institutional capabilities, and operational resilience. Experts emphasize that localisation alone will not drive digital growth; it must be paired with strengthened connectivity and redundancy, especially after the 2024 subsea cable disruptions exposed vulnerabilities. Consequently, fintechs are encouraged to adopt hybrid cloud architectures that keep sensitive data within national borders while leveraging global cloud innovation, integrating compliance into long-term digital transformation strategies that balance regulatory demands with scalability and innovation.