Late last September, the Grammy Award–winning Nigerian musician Burna Boy was back on stage in San Francisco. He wasn’t performing as usual, to a sold-out stadium, but making his debut appearance as the global brand ambassador for a fintech company, Chipper Cash, a pan-African payments unicorn. 

The slickly produced product launch event featured clips from the star’s music videos, his new Chipper Cash TV commercials, and a panel discussion with the startup’s co-founders, and it was broadcast on Instagram Live to Burna Boy’s millions of fans. Barely five days later there was an announcement of a partnership between Kuda Bank, a Nigerian neobank,and Fireboy DML, a fast-rising Afrobeats artist, whose “Peru” remix with global pop star Ed Sheeran, was one of the biggest songs at the end of 2021 in the U.K. and Nigeria. In December, Flutterwave, another Nigerian fintech unicorn, announced a global brand partnership with Wizkid, another Grammy Award–winning star. Other fintech names including Risevest, Bitsika, OPay, and WorldRemit have all inked deals with major Nigerian pop stars in the past year.

In 2021, investors, including global giants SoftBank and Tiger Global, put $1.37 billion into Nigerian startups, according to Africa: The Big Deal, a pan-African funding tracker. Much of that money is in U.S. dollar–denominated funds, giving companies significant financial firepower in a country battling the devaluation of its currency. These well-funded startups are spending big on celebrity endorsements and sponsorship deals as well as cash giveaways to entice customers in Nigeria’s huge but increasingly crowded markets.

“Competition in Nigeria has become a lot more furious over the last couple of years,” said Stephen Deng, co-founder and partner at DFS Lab, an Africa-focused early stage venture fund. “As companies have raised more money, a lot of that money has gone into user acquisition.”

It’s barely three years since Paystack, a Lagos-based payments startup, put up its first billboard in Nigeria’s commercial capital. The company tweeted at the time, “We had no idea what we were doing when we embarked on this project, and we wished we had a guide to show the way.” Today, on busy highways in Lagos, billboards and street posters by Kuda Bank and Chipper Cash run for several kilometers. 

Marketplace and education tech companies like Autochek, Glovo, and uLesson are spending too, but it’s fintech companies ——which are among the most successful, and well-funded, members of the country’s startup ecosystem — that are spending the most freely.

In 2020, Paystack was acquired by Stripe for more than $200 million; a recent fundraising round valued Kuda Bank at $500 million, while Chipper Cash’s November 2021 series C pushed its valuation to more than $2 billion. To justify those large valuations, fintech companies need to demonstrate growth, which means spending big on customer acquisition. 

“A lot of startups are on the classic high-growth treadmill of needing to prove out bigger customer bases that have higher monetization potential, to justify their valuations,” Deng said. Endorsements from music stars, who often have large social media followings, are a quick way to build trust — at a cost. Three entertainment industry insiders told Rest of World that the major deals involving Wizkid and Burna Boy would likely have been valued at close to $1 million each — a huge sum in Nigeria.

“If you put together how much money local startups have spent on marketing in the last two years, it is probably higher than all their marketing expenses in the previous years combined,” said Ayeni Adekunle, CEO of BlackHouse Media (BHM), one of Nigeria’s prominent advertising and public relations agencies.

These endorsements are sometimes accompanied by cash giveaways. Just a few weeks after Chipper Cash partnered with Burna Boy, it doled out 5,000 naira ($12) each to nearly 10,000 app users when they verified their accounts and sent the star a fund request. A few other fintech and cryptocurrency companies, like OPay, VBank, and Kuda Bank, have also given away cash prizes to entice customers to use their apps.

But the biggest and most expensive competition for eyeballs happens on Africa’s biggest broadcast event, the reality TV show Big Brother Naija. When it runs, typically for upwards of 90 days, starting roughly each  July, the show attracts millions of viewers to Africa’s biggest pay TV company, MultiChoice, which has roughly  21 million monthly subscribers. For the last three seasons, tech companies and online gaming operators have been the leading advertisers and sponsors on Big Brother Naija.  

“A lot of startups are on the classic high growth treadmill of needing to prove out bigger customer bases that have higher monetization potential to justify their valuations.”

Last year, Abeg, a social payments company acquired by PiggyTech Global, beat Kuda Bank and other interested parties to become the headline sponsor for the sixth season of Big Brother Naija, coughing up $2 million for two seasons, according to two people with knowledge of the terms. When the show aired between July and October 2021, the adoption of Abeg, PiggyTech’s payments app, jumped from around 20,000 users to to nearly 2 million, according to the company. A year earlier, Kuda Bank rode on the show’s popularity and said it doubled its customer base to over 600,000 by the end of 2020.

“For the most part, startups in Nigeria have been used to digital advertising, but that hasn’t scaled properly,” said Joshua Chibueze, chief marketing officer and co-founder at PiggyTech Global. “There is a particular section of the market that wouldn’t pay attention to what you’re offering, until they see you on the medium they are already used to and trust,” he told Rest of World.

Startups are already spending more than banks on advertising, according to Steve Babaeko, CEO of ad agency X3M Ideas Group and the president of the Association of Advertising Agencies of Nigeria, who said that only the telecoms and consumer goods sectors spend more.

The tech boom has certainly been good for the advertising industry, but some industry analysts aren’t convinced startups’ marketing push will be sustainable. 

David van Dijk, co-founder of the African Business Angels Network (ABAN), said that inflated marketing spending raises questions about fintech’s customer acquisition costs in a struggling environment, where average household income is low and economic growth has been sluggish at an average around 2% a year for the last seven years. Unemployment jumped from around 10% in 2015 to 33.3% by 2021. Calculations about the lifetime value of a consumer are often based on “some multiple from the West,” he said, which isn’t necessarily appropriate for Nigeria. “It is becoming more difficult to make the business case, especially in a weak economy, with companies trying to gain market share by giving away products for free,” van Dijk said.