Repurposed Decades-Old Firms Prove Unlikely Winners In Nigerian Fintech

In the Nigerian stock market, two standout performers of the year have emerged, both transformed from traditional businesses into thriving financial technology entities. Chams Plc and Computer Warehouse Group Plc have made significant strides, attracting attention for their transition into fintech and tapping into the vast market of unbanked consumers in Nigeria.

Chams Plc, originally established in 1985, initially focused on identity verification solutions. However, since 2020, the company has undergone a remarkable shift, diving into mobile payment platforms and smartcard production for banks. CEO Mayowa Olaniyan highlighted this change, telling Bloomberg they’ve obtained full fintech licenses and are actively deploying them. Chams stock has rallied by over 800 percent, earning it the top-performer spot on the bourse.

Similarly, Computer Warehouse Group has soared. Operational since 1992, the company reached a pivotal moment last year with the establishment of Fifthlab, its fintech arm. Fifthlab quickly gained traction by offering mobile money, billing, and payment platforms utilized by consumers, small businesses, and banks, according to CEO Adewale Adeyipo.

The surge in these companies’ stocks not only reflects the potential for fintech in a country with a scarcity of bank branches and a significant unbanked population but also underscores their appeal to the younger generation of Nigerian investors who are active users of their services.

Industry experts have emphasized the attractiveness of these tech companies to young investors, noting their growing interest in the market and the evident benefits of these tech-centric stocks.

Nigeria’s mobile phone penetration, especially among young consumers, coupled with the pandemic-induced closure of bank branches, served as a catalyst for fintech providers. Furthermore, the country’s decision to phase out high-denomination currency notes further contributed to the surge in demand for mobile money services.

Despite their remarkable ascent, both Chams and Computer Warehouse remain relatively small players on the Lagos Stock Exchange, with valuations around USD 11 M and USD 19 M, respectively. While investor enthusiasm has been strong, there’s a recognition that the companies’ future performance will ultimately hinge on their earnings and dividend payouts.

Insiders reckon that the sustainability of their current market rally will be contingent on their fiscal year-end results and investors’ response to their dividend policies. This pivotal period will likely determine how investors, particularly those entering the market now, perceive these securities going forward.