Founder and Group CEO of Interswitch, Mr. Mitchell Elegbe, remarked that numerous fintech ventures in Nigeria might struggle to achieve profitability due to their initial strategy of offering certain services for free.
Elegbe made these known on Saturday during the 4th edition of the Doing Business in Nigeria Conference in Lagos. He emphasized that the practice of using free services to gain market share could ultimately hinder the monetization efforts of many fintech firms in the future.
“You don’t give a poor man something for free and then the next day you want to come charging for it. He will insult you,” he said.
He added “He will tell you, you should have left me where I was before. So this idea that I can win market share by giving you something to use for free, then one day, I can monetize it, you had better be sure your unit economics is right because you may never be able to monetize it, and that is why a lot of fintechs today will never become profitable,”
During his keynote address at the Conference, the Managing Director of Interswitch shed light on the unique challenges of operating a business in Nigeria.
He emphasized that achieving profitability should be the foremost priority for every business endeavor. Speaking to a diverse audience of young entrepreneurs from across Nigeria, Elegbe stressed the importance of understanding unit economics from the outset to ensure sustainable growth.
Furthermore, he urged business owners to supplement their formal education with insights gained from practical experiences, emphasizing the value of learning from the streets to grasp customer behaviors effectively.
Elegbe highlighted a common pitfall among Nigerian startups, attributing many failures to over-reliance on fundraising without adapting to the intricacies of the local business landscape.
He cautioned against comparing Nigerian startups to those in Silicon Valley, noting the distinct operating environment of the Tropical Savanna region.
Regarding the current funding landscape, Elegbe shared insights gained from his global travels seeking investors, revealing forewarnings of the funding slowdown two years prior.
The theme of this year’s DNBC, ‘Sustainable Transformations: Innovating for Growth,’ underscored the conference’s aim to facilitate knowledge exchange among business professionals.
Convened by Linda Uneze, Managing Partner of Maurice Xandra Solutions, the platform seeks to empower potential investors and entrepreneurs through shared experiences and insights.
