The Startup ecosystem in Nigeria over the last decade has been taking immense shape and 2019 was a great year in terms of securing funding from investors and angels across the world.
According to AFRICOM2019’s updated list of 76 startups across Africa in 2019 who secured cumulatively more than $1 million in funding; from a chain of up to 159 different investors, Kenya, South Africa, and Nigeria jointly racked up the highest funding at 71% with Nigeria leading with 16 Startups.
— Maxime Bayen (@MaxBayen) November 13, 2019
Slowly, the gender disparity is been given attention as there is significant progress to how much funding went to women-led ventures. The numbers against the 76 startups saw 20% of funding going to women-led startups.
FinTech ventures led the funding table with 34% which was an indicator of the emerging FinTech industry taking the center stage as InterswitchGRP racked up to $922 million in 81 cumulative deals.
An up-ground look at the numbers for Nigeria would bring some level of excitement looking at the progress over the last decade and how much Nigerian led innovations are thriving and as well as grabbing global attention.
Some of the success stories are Andela, OneFi, mDaaS, Arnergy, Kudas, FairMoney, OPay, InterswitchGRP, TechAdvance, Max, S4gene, Gokada and host of others across key sectors.
Even though there’s no clear data or numbers to highlight the level of contribution of these ventures to Nigeria, with majority of these leading innovations having headquarters in Lagos – they have contributed immensely to the local GDP of Lagos which is evident in the number of jobs, revenue year-on-year and the scalability indicator that they’ll do much more in a few years time which may slightly result to more job opportunities. What is more? Bringing the attention of the globe to Africa’s biggest economic city, Lagos – as a place to innovate and thrive.
The numbers seen ground-up does not look well across Nigeria which is evident in the level of regional economic growth. A case is that of the oil-rich South-South taking the most of the Niger Delta sub-region of Nigeria with about 6 states – Rivers, Edo, Delta, BAYELSA, Akwa Ibom and Cross River.
In 2018, the National Bureau of Statistics puts the south-south region contribution of the National GDP at 22%.
Why are many Niger Delta Start-ups not making it to the global stage? Are they startups at all?
A popular opinion that Nigeria needs at least five more cities with the same commercial capacity and energy of Lagos to begin to reap the kind of economic benefits she is capable of, especially with her immense availability of youthful human resources brings to forefront underlying issues for consideration.
Since it was stripped of capital status in 1991, Lagos has grown immensely through a combination of taxes and enabling the explosion of the private sector, to become Africa’s 7th largest economy. (Ref TechCabal)
In 2017, Lagos was said to have generated $136 billion, more than a third of the country’s GDP. Come 2020, if and when projects like Dangote’s oil refinery is completed and functioning at full capacity, Lagos could rise even higher to become an economic powerhouse on the continent.
If we ask the question again, why is the South-South not producing many global startups? The answer begins to become clear. There are a host of factors to be considered. The business environment, security, politics, government policies, fewer thriving ecosystems, absence of high skilled-creators, low level of business education and the absence of commitment from relevant stakeholders responsible for driving a vision of a thriving regional economy.
For instance, the general Nigeria business environment is hostile and it is even worse in the Niger Delta region which is evident in the fact that they are only a few multinational companies headquartered within. Some of the contributing factors to this are the level of insecurity, absence of relevant infrastructures, ineffective economic institutions (especially ministries of technology, education, finance, and economy) within the region and over-emphasis on oil and politics.
The overlapping effect on the region amongst other things are that attention is given to irrelevant issues instead of tackling issues that are responsible for driving economic growth within the region – especially power, human capacity development, attention to growing SMEs, and building support frameworks that would enable private sector involvements in the overall growth strategy.
Another point of note is the low presence of government partnerships with emerging business hubs and startup incubators as drivers towards talent development, outsourcing, and business acceleration.
Among the few incubators within the region, there have not been identifiable synergy in the area of partnerships, resource sharing and or, network sharing which are viable means to developing a chain-like ecosystem across verticals.
Another area with insignificant attention is the absence of migrated skilled labor (or better put, indigenous creatives abroad who return home to transfer skills) as the case of some of the thriving start-ups in Lagos like Gokada, and CCHub, Hotels.ng to mention a few.
Are there startups at all?
For the sake of doubt, there are thousands of emerging ideas churned out of the creeks and rivers of the region, even without attention – but the problem is the direction… Are they moving towards ending as another idea test, or a random business initiative or something budding towards becoming a global brand with local impact?
The answers are tied to whether they are creating products that meet market needs, are scalable with identifiable traction and if they have the needed skill to grow the business beyond being given money. This is true for all startups whether in Lagos or anywhere in the world.
This highlights the fact that the Lagos skill-sector has played a key role in the level of growth of the many thriving startups in Lagos. The question: are they leading skilled communities within the region? That can be good leverage for budding startups? Especially in the area of technology, product development, financing, business development, and public-private partnerships?