Nigeria’s Digital Extraction Problem: How Firms Like Optasia Profit from Nigerians Without Building Nigerian Wealth — and How to Fix It
A quiet digital drain is underway in Africa’s largest economy. A new generation of foreign “AI–fintech” vendors is monetising Nigerian consumers at vast scale, offering airtime advances, nano-loans, and algorithmic credit scoring through the country’s mobile networks. Optasia, formerly Channel VAS, exemplifies this model. It provides airtime and data credit services for telecom giants such as MTN and reportedly serves over 121 million monthly active users worldwide, processing tens of millions of micro-loans each day. Now, as the company seeks to raise roughly ZAR 6.3 billion, or about $375 million, through a public offering, much of its valuation rests on African—and especially Nigerian—transaction volumes. Yet the intellectual property, cloud infrastructure, and retained earnings all sit offshore. Nigeria provides the demand, the data, and the distribution rails; others reap the equity value.
Without deliberate policy intervention, the country is exporting value and importing dependency.
The mechanics of this extraction are straightforward but deeply consequential. These firms integrate directly with mobile network operators, mining subscriber data such as call logs, recharge patterns, data consumption, and repayment history to price nano-loans dynamically. They take a revenue share from every disbursed loan or airtime advance, yet the algorithms and data models that enable this system reside abroad while Nigerian users supply the behavioural fuel. Meanwhile, many of these companies operate through foreign parent entities, routing fees offshore under the guise of “technology services” or “licensing” payments.
This reduces local taxable income and deprives the Nigerian state of much-needed revenue. The rules that might address this—such as those governing Significant Economic Presence and transfer pricing—exist, but enforcement is inconsistent and often too slow to keep pace with the speed of digital innovation.
Even where these firms establish Nigerian subsidiaries, the local presence is minimal. Most employ only small teams handling sales, compliance, and customer operations. The high-value activities—research, data science, platform engineering—remain anchored abroad. The result is a digital ecosystem that extracts more than it contributes, providing few skilled jobs and almost no technology transfer or capital-market participation. Nigerians bear the credit risk and pay the fees, while foreign platforms capture the profits and, more importantly, the compounding equity value that global investors reward.
What Nigeria currently captures from this digital economy is a fraction of its potential. Taxation frameworks theoretically allow the country to tax non-resident firms and enforce transfer-pricing compliance, but profit shifting through intra-group service fees continues to erode the base. Consumer-protection regulations, such as the FCCPC’s digital-lending rules, focus narrowly on abusive lending practices without addressing broader questions of value capture, data localisation, or intellectual property retention.
The Nigeria Data Protection Act of 2023 and the NITDA content guidelines provide a foundation for data governance, yet compliance remains uneven, particularly among telco-adjacent fintechs. Nigerians generate the data and pay the fees; others own the servers and the equity.
Other emerging markets have faced—and fixed—this imbalance. India’s central bank requires loans to be originated by regulated domestic entities and insists that financial data be processed within its borders. Indonesia’s financial regulator caps foreign ownership in peer-to-peer lending platforms and mandates local incorporation.
These policies are not protectionist but pragmatic: they invite foreign participation on terms that ensure domestic value creation. Market access, in other words, must come with national benefit.
Nigeria can achieve a similar balance. Policymakers should create a joint NCC–CBN licence category for telco-embedded credit and airtime advance services, ensuring that any firm offering such products operates through a locally incorporated and regulated entity. Data processing for Nigerian subscribers should occur within the country’s borders, using cloud environments that comply with national data-protection laws. Foreign firms seeking to profit from Nigerian users should hold a meaningful level of domestic equity, while intellectual property relevant to local operations should be escrowed within Nigerian jurisdiction for continuity and oversight. Companies should be required to disclose their Nigerian revenues, the share of data processed locally, and the scale of their investment in domestic R&D.
Telecom contracts should be transparent and non-exclusive, ensuring that consumers, not just corporate intermediaries, share in the benefits. Enforcement of tax obligations should be strengthened through coordinated audits by the Federal Inland Revenue Service, the Central Bank, and the Nigerian Communications Commission. And when these firms list abroad, they should be required to offer Nigerian investors participation through depositary receipts or equivalent vehicles, ensuring that the country’s capital markets capture some of the upside generated by its consumers.
Optasia’s planned public offering crystallises a wider problem: Nigeria’s digital demand is enriching global shareholders rather than Nigerian citizens. The country already has the legal and regulatory architecture to prevent this outcome—the NDPA, the NITDA content rules, the Significant Economic Presence framework—but it lacks coordinated enforcement. The solution lies not in rejecting foreign technology but in insisting that those who profit from Nigerian scale also invest in Nigerian capability. Market openness must be matched by value reciprocity.
The next six months are critical. Regulators should issue a joint NCC–CBN notice of intent to formalise licensing for telco-embedded credit services, direct mobile operators to disclose and revise exclusivity arrangements, and clarify how inter-company platform fees are treated under existing tax rules. NITDA should enforce compliance on data residency and model training, while the Ministry of Finance and the Securities and Exchange Commission work together to enable Nigerian depositary participation in offshore listings linked to local operations.
Nigeria need not close its digital borders to reclaim value. What it must do is renegotiate the terms of participation. If foreign firms wish to monetise Nigeria’s data and demand, the price of admission must be measured in jobs, taxes, skills, intellectual property, and shared capital-market inclusion.
To remain open without being exploited, Nigeria must ensure that the digital wealth created within its borders stays, at least in part, within them. Market access should no longer be a one-way street. If others seek Nigeria’s scale, they must also help build Nigeria’s wealth.