Nigeria’s Booming Start-up Scene Draws Foreign Investment

Even with eyes half closed, the gritty Yaba district in Lagos bears scant resemblance to Shoreditch, the hipster heart of the start-up scene in London. That, though, is the comparison ’Bosun Tijani makes when he talks about Nigeria and a once-in-a-generation opportunity to invest in the future giants of African technology.

Mr Tijani is chief executive of Co-Creation Hub, an incubator for businesses and social enterprises in Yaba. He is both a participant in and an observer of the explosion of Nigeria’s digital economy, with hundreds of ventures spawned in the past three years.

“There is now a critical mass of people who believe they can build a sustainable and successful business,” Mr Tijani says, on the last day of a five-city tour meeting investors in Europe. “Serious money is beginning to hit the market.”

Venture capitalists are noticing a wave of internet entrepreneurship, including cashless payment companies, social networks and retail.

Bullish financiers see the sector as a way to tap growth in a market of 186m people without becoming mired in the politics of big energy or infrastructure projects, or falling hostage to oil prices.

“What I think is truly magical about technology is that it has shown growth that is completely uncorrelated to the GDP cycle,” says Pule Taukobong, a partner at South Africa’s CRE Venture Capital, which backs Nigerian start-ups. “We’re excited because this is a generational opportunity to be at the beachhead of that as it happens.”

The entrepreneurs who build solutions are going to be a key part of Africa’s future

Kola Aina
Others agree. According to VC4A, an online community of Africa-focused investors and entrepreneurs, the average investment secured by Nigerian start-ups rose from $57,000 in 2015 to $73,000 this year — with just over 40 per cent able to secure external capital.

Several factors have jolted the industry into gear. Reliable internet is more widely available and telecoms companies have boosted data capacity, while new payments companies have made online transactions safe.

On a recent morning at Co-Creation Hub, young Nigerians pored over laptops at desks allocated to start-ups including LifeBank, which helps hospitals source blood and medical products; Mamalette, a social enterprise for expectant mothers, and Truppr, a tool to help users locate fitness events. Among the hub’s graduates is We­cyclers, a company which uses cargo bikes to help Lagosians earn money by recycling.

The fizzing start-up scene is attracting the attention of tech companies in the west. When Facebook founder Mark Zuckerberg made his first trip to sub-Saharan Africa in 2016, he visited both the Co-Creation Hub and Andela, a company co-founded by US entrepreneur Jeremy Johnson. The Chan Zuckerberg Initiative chose Andela for its first private sector investment.

Mr Johnson, 33, set up Andela after seeing the chance to generate thousands of jobs in Africa by running a programme to find “genius-level” software developers, who then work remotely for US and European companies.

“Across Africa you’ve got a pretty stark difference between perception and reality,” he says. “In this case, I’d say the excitement is actually pretty reasonable relative to what’s happening and what’s possible.”

Source: Financial Times