Nigeria must overcome its infrastructure challenges and shortage of skills if it is to help the country’s nascent tech scene to grow, say analysts and entrepreneurs.
The country boasts such successful tech companies such as fintech company Interswitch, edtech firm Andela and e-commerce site Jumia, which last year raised $326-million in funding.
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In addition, investments from overseas programmes such as Y Combinator, Village Capital and 500 Startups continue afoot, despite the country having slipped into a recession last year.
Nigeria’s burgeoning startup scene and its large market and entrepreneurial population with over 180 million people is what lured Facebook founder Mark Zuckerberg to Lagos’s Yaba startup district in September last year.
Generation Enterprise managing director Bunmi Otegbade, who helped get 30 entrepreneurs to pitch to Zuckerberg and President Muhammadu Buhari, believes the government’s lack of support for the sector is not the problem.
For Otegbade it’s rather the country’s poor infrastructure and shortage of good talent — better software engineers and technical workers — that is holding back the tech sector.
“The people in the tech system is the first problem. If we can improve them we can then work towards improving policies,” he reckons.
“If there are investors in Nigeria who asked what needs to be done to find better deals, they would say you just need to work on improving the team behind the entrepreneur,” he adds.
Harsh business climate
While the country is ranked by the World Bank at 169 on ease of doing business, Bunmi believes Nigerians have become used to operating in a harsh business environment, with few incentives for startups. For instance, businesses must start paying taxes from day one. Electricity is rarely stable.
“Most tech companies need to spend 40% (of revenue) on power revenue, compared to six percent in other countries,” he says.
But adds Otegbade: “We have become so used to them (the problems) that we don’t see them anymore”.
‘Better government policies’
However, Collins Onuegbu, from the Lagos Angels Network and executive vice chair of Signal Alliance, disagrees. He says better government policies can play a catalysing role in the initial surge of startups in Nigeria.
“Nigeria is currently trying to diversify its economy from oil. Tech is one of the areas of that diversification so we are hopeful that government involvement will allow the sector to keep its current trajectory and become a bigger contributor to the rebound of the Nigerian economy.”
He believes the worst of the recession that started last year is over and that foreign investment will start flowing back into the country soon.
Investor confidence needed
For Polish entrepreneur Marek Zmyslowski, who has been living in Lagos for over four years, there are no shortcuts — Nigeria needs more educated customers and better competition. “You don’t just need more government support, you need investor confidence.”
For Zmyslowski, who runs software service for hotels called HotelOga, the state of the entrepreneurial ecosystem in Nigeria is comparable to what it was in Poland 30 years ago.
He says many Nigerian startups make the mistake of believing that they will acquire customers quickly online. However he says because not enough customers are online this is often not the case.
For instance half his startup’s marketing budget has gone on radio adverts or paying for sales agents at bus stations and airports. “Many times we find it’s the first purchase anyone has made online,” he says.
With the cost of internet so-called “zombie phones” are common — where users turn off their data access to prevent apps from automatically updating and using up their expensive data.
‘Fallen behind’
But Nigeria wasn’t always like this, argues Nigerian tech expert Emeka Okoye of Cymantics. Last month he said in an interview with Nigerian tech site Techpoint.ng that while Nigeria once sold software systems to US banks, the country has fallen behind such that it has no tech ecosystem.
He says more must be done by the government and other roleplayers to get Nigerians to produce technologies rather than consume imported goods
But Onuegbu chimes in that the press in Nigeria assume wrongly that tech entrepreneurship there is only a recent phenomenon.
“Over 20 years ago, a class of startups did exactly what Emeka described from a part of Lagos called Surulere. For some reason, most of these companies failed to scale and grow their businesses beyond their initial promise.”
Held back by state
He says while Nigerians are an entrepreneurial people, the country has been held back by a government that focused on a one product, oil-based economy, adding that this has stifled creativity and entrepreneurship.
“The current struggles the economy is going through should be an opportunity to reset the country and its economy and build a future based on entrepreneurship and creative business development.
“I believe that this should not only benefit tech but every other sector that a country of 180 million people needs to help citizens enjoy better livelihood and professional fulfilment.”
For entrepreneur Dayo Elegbe, who runs Lagos based mobile marketing startup Sponge, Nigeria is on the cusp of something big,
He returned to Lagos after living and working for 20 years in the UK, because he says the opportunity was too great to forego.
“One of the reasons I came back is I’m an entrepreneur and I couldn’t literally walk away from such a good opportunity. I came back to Nigeria and realised that this is going to be one of the biggest mobile markets in the world,” says Elegbe.
Ventureburn was unable to get in contact with anyone at the Nigerian Information Technology Development Agency.
Last month Nigeria’s Minister of Industry, Trade and Investment Okechukwu Enelamah revealed that his ministry is working on plan for a digital economy which would create over three million jobs.
Featured image: jbdodane via Flickr (CC 2.0, resize)
