(Bloomberg) -- Two of the year’s hottest Nigerian stocks are companies that reinvented themselves as financial technology providers, targeting demand among the country’s vast ranks of consumers without bank accounts.

Chams Plc has soared more than 800% to be the top performer in Nigeria’s 151-member all-share index after securing fintech licenses in 2022. Computer Warehouse Group Plc has rallied almost sevenfold to be the No. 4 stock, after setting up its Fifthlab fintech unit last year.

The surge in the stocks underscores opportunities for the sector in a country with one of the lowest bank branch densities and largest unbanked populations in the world. It’s also down to the popularity of the companies among young Nigerian investors who are major users of their services.

“Young people are finding it attractive to buy Chams and Computer Warehouse, as they’re seeing their services,” said David Adonri, head of Highcap Securities Ltd., a Lagos-based brokerage. “We have a lot of young investors coming in to the market and the tech companies are the beneficiaries.” 

Chams was founded in 1985 and for long was mostly known for identity-verification products. Since 2020, the company has pivoted to areas such as mobile-phone payment platforms and producing smartcards for banks. “We have changed the business model to be full fintech, got all the fintech licenses and we are deploying them,” Chief Executive Officer Mayowa Olaniyan said in an interview.

Computer Warehouse has operated since 1992, but the establishment last year of Fifthlab, which provides mobile money, billing and payment platforms used by consumers, small businesses and banks, has quickly become a strong growth driver, said CEO Adewale Adeyipo.

Only about 45% of adults in the nation of more than 200 million have bank accounts, according to the World Bank, compared with an average of 70% in the BRICS economies. More broadly, investors have been drawn to the African mobile money space, with fintechs such as Interswitch Ltd., Flutterwave Inc. and Jumia Technologies AG achieving billion-dollar plus valuations.

The popularity of smartphones in Nigeria has been a boon for fintech providers, especially when the pandemic prompted banks to close branches. They got a further boost last year, when the central bank announced the phasing out of old, high-denomination naira notes, a policy it has since relaxed. 

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For all their success, Chams and Computer Warehouse remain relatively small companies on the Lagos bourse, valued at about $11 million and $19 million respectively. While enthusiasm around their technology has attracted investors, the outlook may boil down to earnings, said Highcap’s Adonri.

“Whether they will sustain the rally will depend on what happens at the end of the financial year,” he said. “The dividend they pay will determine how those buying now will start to react to the securities.”

--With assistance from Anthony Osae-Brown.

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