While the first tech start-ups in Nigeria emerged in the early 2000s, the ecosystem truly began to develop in the years from 2012. Financial technology (fintech), e-commerce and retail technology enter-prises dominate the current start-up landscape; however, the ecosystem has expanded to encompass key areas of the national economy including recruitment, mobility and logistics, agri-tech and entertainment.
Nigeria, and in particular the largest city Lagos, is the primary destination for African start-up activity. Indeed, according to StartupBlink, a surveyor and researcher of global start-up activity, Nigeria ranked number one in Western Africa and 64st globally in 2023 in terms of the strength of its start-up eco-system. Furthermore, according to African research organisation Disrupt Africa, the 481 enterprises it tracked for its 2022 report on Nigeria’s start-up ecosystem employed a total of 19,334 people, significantly more than the 11,340 employed in South Africa’s start-up space. Of the aforementioned Nigerian companies, 425 operate out of Lagos.
Fintech is the largest area of the start-up ecosystem, comprising 173 firms, or 36% of the Nigerian firms tracked by Disrupt Africa. Developments in the segment have also catalysed growth in other industries. “The increasing maturity of credit and finance options is boosting growth along value chains, with enterprises and entrepreneurs given efficient access to affordable finance,” Adedeji Olowe, co-founder of lending platform Lendsqr, told OBG.
INVESTMENT & DEVELOPMENT
Bucking the economy-wide trend of private and foreign investment inflows constrained by inflation, currency depreciation and resulting foreign exchange challenges, Nigeria is the leading African venture capital destination. Some 383 tech start-ups raised a total of $2bn between 2015 and 2022. To put that into perspective, from 2015 to June 2022 South Africa attracted venture capital amounting to $994m, while between 2015 and September 2021 Egypt’s start-ups drew in $791m. Between January and August 2022 alone 107 Nigerian start-ups secured $748m.
There are 150 public and private incubators and accelerators in Nigeria, with around half the companies tracked by Disrupt Africa having been through incubation and acceleration. The largest provider of those services, Co-Creation Hub, offers incubator programmes lasting up to one year and grants of up to $250,000. Other accelerators include Adaverse, ARM Labs, Enspire Incubator and FasterCapital.
POLICY & PARTNERSHIPS
While the government has launched initiatives to support start-ups in recent years, many are short-lived and ultimately discontinued. Likewise, although successful university-run incubators and courses in entrepreneurship exist, their availability and quality are often lower than those in South Africa and Egypt, as is corporate engagement, making the success and rapid growth of Nigeria’s start-up ecosystem all the more impressive.
Recent announcements herald a positive shift in that dynamic. In April 2022 the National Information Technology Development Agency (NITDA) partnered with the Japanese International Cooperation Agency to open its NINJA accelerator programme to a second cohort of entrepreneurs, and in October 2022 NITDA signed a deal with Amazon Web Services (AWS) that will see the two entities collaborate to enable start-up growth. Funding grants of up to $100,000 are available through the initiative, and AWS’ presence in the country will preclude the need for start-ups to pay for digital services outside of the country. Perhaps most significant was the passing into law of the Nigeria Startup Act in October 2022. The act is designed to support start-up growth through an enabling regulatory environment, and its passage implies recognition from the government of the contribution an appropriately governed and agile start-up ecosystem can make to economic growth.
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