In recent times, Nigeria has positioned itself as a burgeoning hub for technology startups, garnering global attention from discerning investors. It’s now widely recognized that six out of Africa’s most prominent Unicorns, namely Interswitch, Paystack, Jumia, Flutterwave, Opay, and Andela, hail from Nigeria, underlining the nation’s prowess in the startup ecosystem. As the largest economy on the African continent, the World Bank estimates Nigeria’s nominal GDP to have exceeded $489.80 billion in 2023. With a vast market and an untapped potential fueled by a population surpassing 213 million, approximately 70% of which constitutes youth, Nigeria presents a compelling opportunity for investors and venture capitalists. The prospect of significant financial benefits and a rapid return on investment both now and in the future makes Nigeria an attractive destination for those looking to capitalize on the burgeoning tech landscape.
Nevertheless, concerns regarding safety, encompassing both physical security and the stability of the investment climate, frequently surface. This article delves into the security aspects of tech investments in Nigeria, centering its examination on Lagos and Abuja, substantiated by pertinent data. As per the Global Startup Ecosystem Index 2023, Lagos exhibits exceptional performance in fintech, securing the 38th spot globally in research spanning 1,000 cities across 100 countries. Lagos stands out as the sole African city within the global top 100. StartUp Genome’s 2023 report identifies Lagos as the regional leader in Sub-Saharan Africa for both Ecosystem value and Early-stage funding in the tech Ecosystem.
Nigeria’s tech landscape has witnessed a rapid surge in growth, propelled by a youthful and dynamic population characterized by a high level of tech literacy. Lagos, serving as the commercial capital, and Abuja, the political capital, have assumed pivotal roles in steering this technological revolution. The Nigerian startup scene has given rise to numerous success stories, featuring innovations that span across fintech, health tech, agri-tech, and various other sectors.
Safety Considerations:
- Political Stability: Nigeria has seen improvements in political stability over the years. However, political events can still impact the business environment. According to the World Bank’s Political Stability and Absence of Violence/Terrorism Index, Nigeria’s score has shown a positive trend, indicating increased stability.
- Security Concerns: Security issues, particularly in regions affected by insurgency, have been a historical concern. While there have been challenges, major tech hubs like Lagos and Abuja generally have better security infrastructure compared to some other parts of the country.
- Economic Indicators: Examining economic indicators is crucial for assessing the safety of investments. Nigeria’s GDP growth rate, though fluctuating, has shown positive trends. The marginal growth in GDP by 2.5% in Q2 2023 from 2.3% in Q1 2023 was caused by the lingering effect of the cash crunch. PwC projects a 2.8% growth rate for Nigeria in 2023 and 3% in 2024 Lagos and Abuja, as major economic centers, often experience more stability than other regions.
(Nigeria Growth Rate from 1960-2023 by Macrotrend)
- Foreign Direct Investment (FDI): FDI inflow is a key indicator of investor confidence. According to the National Bureau of Statistics, Nigeria has seen consistent growth in FDI in the telecommunication and IT service sectors rose by 310.11 per cent year-on-year to $238.11M in the first quarter of 2023 signaling a positive perception of the investment climate.
- Tech Ecosystem Growth: The growth of the tech ecosystem itself is indicative of a thriving industry. Lagos, in particular, has become known as the “Silicon Valley of Africa,” hosting numerous tech events, conferences, incubators and houses all the Tech Unicorns from Nigeria. The Nigerian government has also shown commitment to supporting the tech sector through various policies, training and seed fund. For instance like yesterday, the Federal Government Unveiled a $609M Fund For Tech Entrepreneurs.
Data Points:
- Political Stability and Absence of Violence/Terrorism Index (World Bank): In 2010, Nigeria scored 48.8 on the Political Stability Index. By 2020, this score had improved to 59.3, reflecting enhanced stability over the past decade.
- GDP Growth Rate (World Bank): Despite fluctuations, Nigeria’s GDP growth rate has seen an overall upward trajectory. In 2010, the growth rate was 8.4%, and by 2020, it stood at 2.3%, indicating sustained economic expansion.
- Foreign Direct Investment (NBS): The NBS reported that Nigeria attracted $8.41 billion in FDI in 2020, an increase from the $7.96 billion recorded in 2019. This demonstrates the resilience and attractiveness of Nigeria as an investment destination.
Investing in Nigeria, Lagos, and Abuja is not only safe but also a lucrative opportunity, as indicated by the flourishing tech ecosystem, positive economic indicators, and increased foreign investment. Thorough research and due diligence remain imperative for any investor, but with the right approach, the potential rewards in Nigeria’s tech scene are substantial, both now and in the future.
Copyright @Omogbai Martins, TheTechiePriest
Copyright @NaijaTechRoom
