Why Nigeria’s buy-now-pay-later market isn’t exploding yet—And what must change

Many Nigerians have seen it in Hollywood films: a young man strolls into a store, grabs what he cannot afford, and charges it to his credit card, knowing that the lender will reclaim the funds from his paycheck the next month. It’s a seamless picture of how credit financing can work in a mature system—a level of efficiency and trust that Nigeria’s market is still striving to achieve. Yet, despite the buzz around Buy Now, Pay Later (BNPL), the Nigerian credit market hasn’t exploded the way many expected, and the reasons reveal both the challenges and the opportunities for the industry.

At the recent BusinessDay Talk Exchange on X, titled ‘Buy Now Pay Later: Can Credit Financing Truly Work in Nigeria?’, BNPL operators and an engaged audience came together to dig into why this form of credit hasn’t taken off as expected.

Insights from the panel, plus the shared experience from the listeners, painted a vivid picture of Nigeria’s credit financing landscape. From tricky repayment patterns and regulatory hurdles to shifting consumer habits, the conversation revealed the practical challenges and opportunities shaping Nigeria’s credit market today.

Read also: ‘Buy now, pay later’ market in Nigeria to hit $2.61 billion

How BNPL Works in Nigeria

If you’ve ever seen the option “buy now, pay ₦X every month” while shopping online or in a mall, you’ve encountered the BNPL model in action. More Nigerian businesses—both online retailers and physical stores—are now offering instalment-based financing to help consumers acquire gadgets or other necessary assets without paying the full cost upfront.

During the X Space conversation, a listener named Anthony shared his recent experience using BNPL to buy a smartphone. He paid 30% upfront and spread the balance across six months.

“The offer also stated that if I could finish paying the sum within three months, a part of the sum would be waived,” he said—highlighting how flexible some offers have become.

How Zero or Low-Interest BNPL Is Possible

Some dealers secure discounts directly from manufacturers, allowing them to offer BNPL at market price without losing profit. Others enter new market segments by offering zero-interest options and treating the forgone interest as customer acquisition costs. Some adopt non-interest models that leave out interest entirely but capture value through fees or embedded margins.

Most businesses offering BNPL in Nigeria continue to tweak and refine their models, adjusting pricing, interest, or repayment structures as they gain deeper understanding of consumer behaviour and risk dynamics within their market segment.

Read also: From garri to gadgets: Nigeria’s enduring culture of buy now, pay later

Why BNPL Adoption Is Rising

The State of Enterprise Report (2025) by EnterpriseNGR projects the BNPL market to grow from $1.42 billion in 2024 to $2.61 billion in 2030, driven largely by fintechs expanding access to credit.

According to one of the panelists, Samuel Oyekanmi, Research Lead at Norrenberger, demand for credit financing is increasing because prices of desired assets often rise faster than Nigerians can save for them.

“BNPL is now emerging as the sensible option, especially for income-generating assets. With benchmark interest rates at 27%, it is easier and makes more sense to use BNPL than to take a traditional bank loan,” he explained.

Chris Jatto, Head of Growth at Max, reinforced this view. Nigerians value ownership—particularly of assets that support income generation. Demand is high, he said, but qualification filters significantly reduce the number of eligible applicants.

Despite this growing desire, BNPL adoption is rising more slowly than expected.

Infrastructure gaps slow down BNPL Growth

The first step in offering credit is verifying identity and creditworthiness. But with broadband penetration still under 50% and a large portion of the workforce in the informal sector, many Nigerians have limited digital financial footprints.

Oluwatunmise Adeyemo, fintech executive and former Growth Manager at Credpal, explained that credit bureaus remain the easiest route for assessing creditworthiness. But in Nigeria, many lenders still fail to report data, leaving credit bureaus with incomplete histories.

To compensate, BNPL providers create their own scori2030ng systems using bank statements, utility bills, spending patterns, and other behavioural indicators.

“I know some lenders who will never offer credit to applicants with betting transactions,” Adeyemo said. “Others check expense-to-income ratios to determine your repayment capacity.”

What lenders do with this data depends on their risk appetite. Some decline applicants simply for lacking prior credit history; others flag “risky behaviours” like gambling and betting.

“The absence of advanced infrastructure indirectly excludes many people from this ecosystem,” he noted.

How Businesses Manage Risk in a Thin-Credit Environment

For businesses like Max, which serve a specific segment—commercial riders—the assessment criteria differ.

“First we confirm that you are a rider,” Jatto said. “Then we conduct rider’s tests and vision tests. We know the asset can generate income, so we need to confirm you can operate it optimally.”

Max mitigates risk through a structured onboarding process and training to clear misconceptions. It also offers multiple safety nets: health insurance, vehicle insurance, trackers for the vehicles, and emergency response support. These measures ensure riders can keep working and repaying until full ownership is achieved.

Other BNPL models use different tools. Phone dealers may remotely lock devices when payments default. Some record debtors on video making repayment commitments—and publish the video if payments stop. This was part of the experience Anthony, earlier referenced, shared on the Talk Exchange. These measures do not eliminate risk but offer leverage in a challenging repayment environment.

Persistent Challenges

Even as the market grows, significant hurdles remain. One is consumer distrust.

“Nigerians don’t trust something that isn’t straightforward,” Oyekanmi noted. “The middle class might avoid BNPL because they don’t understand it—yet they are the ones who actually qualify. Meanwhile, those most eager to use it may lack the means to repay.”

This mismatch often leads to higher default rates. Some operators report that debtors expect forgiveness simply because they are unable to pay—without considering how this undermines the business model.

“People think they can just run away with the asset,” Adeyemo added. “They don’t understand how damaging their repayment behaviour can be—not just to the business but to their own ability to access credit in the future.”

The Way forward

For BNPL to scale sustainably in Nigeria, players agree that the system must evolve on three fronts: infrastructure, regulation, and consumer awareness.

Today’s fragmented data environment shuts out millions who want credit but cannot meet the industry’s digital criteria, revealing the need for a more robust national credit infrastructure—one that aggregates data from banks, lenders, cooperatives, and other financial touchpoints.

Oluwatunmise Adeyemo stressed that such a system would give Nigeria a stronger credit bureau network and move the country closer to a unified, reliable national credit score.

On this, Oyekanmi added that the industry needs more automation in qualification processes. With many facilities ending in partial or non-repayment, standardised credit assessment tools would help operators identify genuine borrowers more accurately and deter those seeking to game the system.

He noted, too, that while mandatory registration with the FCCPC remains crucial for transparency and consumer protection, Nigeria needs clear, proactive BNPL regulations—rules designed to safeguard the public and the operators before harm occurs, not after.

Consumer education is another gap that must be bridged. Many Nigerians eligible for BNPL remain sceptical of credit generally. Oyekanmi believes more public education is needed so people understand that borrowing isn’t inherently bad—especially when used to acquire assets that create value and pay for themselves.

For Chris Jatto, clarity on the role of guarantors and the cost of recovering defaulted assets should also become a regulatory priority. Clear rules would help protect operators who spend significant resources tracking assets when borrowers abscond.

Ultimately, Nigeria’s BNPL sector has the demand, the momentum, and the players. What it needs now is the infrastructure, the guardrails, and the public understanding to unlock its full potential.

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