Start-Up Nigeria: Opportunities, Challenges and the Future

The story of Nigeria’s economic revolution is gradually unfolding as the country recently became the largest economy in Africa and the 24th biggest economy in the world. It is very surprising and in fact unique to see a lot of foreign investors coming into Nigeria despite the daunting challenges the country is facing even at […]

The story of Nigeria’s economic revolution is gradually unfolding as the country recently became the largest economy in Africa and the 24th biggest economy in the world. It is very surprising and in fact unique to see a lot of foreign investors coming into Nigeria despite the daunting challenges the country is facing even at this time. With several challenges in corruption, infrastructural deficiency and insecurity especially in the North, there is so much more to be desired and talked about in Nigeria than these problems. A growing army of young technopreneurs (Technology focused Entrepreneurs) is emerging.

We are a country of about 170 million people with a great percentage of the population being vibrate youths with median age of 19, leading to a great consumer-driven market, the largest oil producing nation in Africa, the largest mobile market in Africa with over 125 million mobile subscribers and a penetration rate of 75%, an economy of about $510b and growth rate of more than 8 percent, an interesting capital market as seen by a recent data released by the Nigerian Stock Exchange showing that international investors bought about $789 million of Nigerian stocks in the first 3 months of the year.

These are pointers of great and positive economic growth. Of interest is that for the first time, sectors like the Telecommunications, ecommerce, Agriculture, Information Technology and Entertainment have shown significant positive growth within just a few years. This shows that Nigeria can also have an alternative source of economic growth, other than its over dependence in oil.

The contribution of the technology industry to Nigeria`s progress is becoming significant. It becomes obvious that the backbone of leading economies in the world today is hinged on technology and entrepreneurship. We see Technology powering every facet of human endeavor, enabling effective governance, empowering security, driving economic and social changes. No nation, especially among the developing countries, can afford to neglect the importance of technology if they want to be relevant. This is the new economy driven by knowledge and based on technology and innovation. This new sect of economic and sustainable growth is one that can take us from the unemployment situation we find today to global relevance and competitiveness.

Going by the projections released by Gartner a few months ago, Information Technology spending will nearly hit the $4 trillion threshold while Software spending will be $158 billion in 2016.The positive economic indexes coming from Nigeria as an emerging market shows we are certainly a centre of global attraction and an investors haven.

Just as a report based on the research done by Omidyar Network on Accelerating Entrepreneurship in Africa shows that despite the challenges entrepreneurs in Nigeria face (like lack of access to capital and funding, infrastructural and power deficiencies etc.), there is a positive and strong entrepreneurial culture in the country, driven mainly by the young population. This shows that many young Nigerians are eager to become entrepreneurs, if given the needed support in an enabling environment!

In fact, the story is just beginning with the passion, hunger and drive I see in many young Nigerians who are driving what is called the Start-up Nigeria Ecosystem-A generation of code warriors, business experts, idea specialists, strategists, geeks, innovation experts and drivers of techinovation in Nigeria. This is a new story that has been getting international attentions, a story of a growing Africa Tech Hub in Nigeria.

Key Drivers of Change in the Nigeria Start-up Ecosystem

Coming into Nigeria for the first time and landing in Lagos-the commercial nerve centre of Nigeria, you will be welcomed by this vibrate city with over 20 million people, a city that has been compared to New York, Cairo and New Delhi. You have the Lagos Island and the Lagos Mainland separated by one of the longest bridges in the world called the 3rd mainland bridge. The city is also dotted with clusters of suburbs. A major area that is consciously becoming a tech cluster is the Yaba area of Lagos. This is where you will find most start-ups in Nigeria and a growing Startup Ecosystem is emerging with the support of Lagos state government, private companies like MainOne, International organizations and good spirited individuals like Tomi Davies who are driving these changes to grow a structured ecosystem. Yaba is gradually attracting an increased broadband and internet infrastructure, co- location of tech hubs, home to two academic institutions: the University of Lagos and the Yaba College of Technology, there is also research and creative centres around the area.

Thanks to Bosun Tijani and Femi Longe, two young Nigerians that started the first Technology Hub in Nigeria called the Co-Creation Hub (CcHub).The CcHub is at the centre of tech innovation amongst young people in Nigeria. It is Nigeria’s first open living lab and pre-incubation space designed to be a multi-functional, multi-purpose space where work to catalyze creative social tech ventures take place. It is a place for technologists, social entrepreneurs, government, tech companies, impact investors and hackers in and around Lagos come together to co-create new solutions to the many social problems in Nigeria. CcHUB was largely funded by the Omidyar Network and the Indigo Trust among other organizations that has continuously supported their existence since 2010.

Today the Yaba area is often referred to by many as the Silicon Valley of Nigeria, but that doesn’t make much difference, the truth is the passion, hunger, enthusiasm I see in the eyes of young software developers in Nigeria as they gather together at the CChub to help grow their startups is of much interest. Within a period of 4 years other hubs have sprang up within and around the Yaba axis.

Some of them include the IDEA Hub established by the federal government of Nigeria, the TVClabs driven by Tomi Davies, Wennovation Hub, Passion Incubator co-founded by Olufunbi Falayi and the newly started Leadpath Accelerator. Others are the L5lab by serial entrepreneur Chika Nwobi, Spark.ng co-founded by Jason Njoku, Lagos Angel Network, Mobile Monday, Venia Business Hub, Paradigm Initiative of Nigeria(PIN)founded by Gbenga Sesan, Capital Square, Rocket Internet Incubator, the proposed Silicon  Village, Techlaunchpad, and the Tinapa Knowledge city in Calabar, Cross river state. These are all efforts/ideas by several individuals, organisations and tech hubs focused at helping, supporting and growing the Nigerian Startup Ecosystem.

Success Stories

From my standpoint, owing to where we are coming from in a space of few years, some successes stories can be seen among the Nigerian Startup ecosystem and you can find them in the hubs that I mentioned above. Though one has not really measured their successes in terms of their profitability, share capital and all of that, but the positive report from them is fueling the interest of investors into the Nigeria tech ecosystem and that is good.

Startups like Iroko Partners and Jobberman have received funding and are expanding their operations and providing employment for Nigerian Youths. The interesting start-up development going on under the spark.ng is one I find very interesting in the ecosystem. Internet Start-ups like Konga, Jumia, Kaymu, Olx are actually opening and pushing the frontiers of ecommerce in Nigeria. NairaBet, Paga, Tranzit, Kuluya Games, Maliyo Games, Prowork, Afritickets, Ticketmobile, Nearest Locator are among the top startups to watch.

There has also been on the increase awareness in social entrepreneurship where technology is used as a tool to drive social causes. These area has also created interesting startups like the Enough is Enough Nigeria, Iwatch Nigeria, iPolice, iconnect, BudgIT, PolicyNG, Wecyclers, Flying Doctors, Efiko, HealthMobile, Open Government, Nigerian Constitution for All etc.

Challenges

The Startup Ecosystem in Nigeria is a vibrate one no doubt with huge challenges. These challenges can be termed external and internal, start-up founders go through external factors like huge infrastructural deficiency in Nigeria, high cost of Internet, computers and other tools to work with, lack of funds and investment friendly environment, great knowledge and skill gap, a big gap between the government and the Startup industry. The biggest of them is that the industry has not really seen the needed support from the government and has been kept going only by private initiatives.

One can easily notice that aside these external factors and challenges, the one thing I find more worrisome for the ecosystem here is lack of the spirit of innovation, collaboration and openness to opportunities in other parts of the world. The right attitude is actually needed to build the ecosystem. And that is really missing. Systems of these nature elsewhere thrive on collaboration within the country and with people outside the country. You easily find startup founders in Nigeria wanting to do and be all by themselves just to answer a startup founder when they lack the business acumen required to develop their start-ups into a profitable business. Finding the right people to work with is always a major challenge in the system.

There is also this disconnect between the tri-angle of innovation which is the academia, the government and the technology industry in Nigeria. This disconnection has hindered the contribution of the academics towards startup development in Nigeria. The startup ecosystem is yet to find its way into the actual technology industry in Nigeria. Over the last four years efforts are being made through several conferences like EduNet, ISPON Conference or Mobile Web West Africa to bring the government, the academics, the Start-Ups and the Nigeria Tech industry together to share ideas and collaborate.

What the Future Holds for Start-Ups in Nigeria

I personally believe that in few years to come some of these challenges I mentioned would have been tackled if the Nigerian government show more support to the industry. There is great potentials in investing and supporting the startup ecosystem in Nigeria at this time. We have seen several companies like Nokia, MTN, Tecno, Samsung, BlackBerry, Qualcomm, Google, Microsoft, etc. supporting the ecosystem. There are huge opportunities yet to be explored around Education, Ecommerce, Health, and also Telecommunications. There is need to develop startups that create products for the large consumer market in Nigeria. As the use of mobile phone is growing, it also provide huge opportunities for Nigerian Startups.

This article was written by Kenneth Omeruo and first appeared in the Seedstars Blog

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