Startups and entrepreneurs have the power to build technologies and creative solutions that can transform Nigeria and move us forward.
By Mohammed Jega
In Nigeria today, quitting jobs and starting one’s own business has become a new trend among youngsters. There are millions of entrepreneurs across the country offering new products and services. Innovation is happening everywhere and this cuts across various industries such as Medicine, Insurance, Transport, Finance, E-commerce and so on. This development has led to the establishment of tech and incubation hubs across the nation, some of which are supported by the Federal Government of Nigeria.
The dividends of these moves have paid off, with increased seed funding coming in from potential investors in the Diaspora. In 2018, Cellulant a fintech company, raised $47 million in series C funding. Many other startups also received lesser, but equally appreciable investor funding in the same year. LifeBank, a startup that seeks to solve the problem of the unavailability of life saving blood when it is needed and blood sample logistics management got $200,000 in investment.
Asoko Insights, a company that provides deep business insights and intelligence on Nigerian companies, got $3.6 million in funding. The experiences and sizes of investment vary depending on investor preferences. What is however obvious is that Nigerian startups are attracting the necessary attention that would take them to global reckoning.
Also, the Nigerian ecosystem has attracted increasing support from foreign tech giants like VISA, Google, Facebook by providing free internet service, training and development opportunities and grants to support startups and entrepreneurs in their early growth stages.
However, building a business in Nigeria has its challenges, as we have seen many startups shut down after a year or two in operation. The challenges cuts across funding, industry regulations, Nigerian market instability, inflation, and other unforeseen occurrences. There are many startups who are hamstrung by various issues, without which they could do far more than they are currently doing. I would speak to a few of these challenges.
- Educational Skills Gap: The vast majority of the most daring Nigerian startups are in the public tertiary institutions. Unlike before, when the environment stimulated innovation, it is becoming more challenging to produce self-motivated innovators in Nigeria. The sustained poor funding of education and lack of innovation in educational curriculum development is hampering the potential of many Nigerian youth. It would be unfair to say there are not interventionist efforts by various organizations and individuals, yet due to the uncoordinated ad-hoc interventions, the net result still falls below the expected mark.
- Lack of Mentoring: Many startups are sucked in with the bright promise of the potential success of their idea, and fail to invest in the right attitude and systems that can support their enterprises to overcome the challenges of the teething stages. The good side to this is that opportunities now abound for mentoring at little or no cost. There are various well-run Innovation Hubs all over the country. The Co-Creation Hub in Lagos, N-Hub in Jos, Startup Arewa Hub in Abuja, Blue Sapphire Hub in Kano, Genesis Hub in Enugu among many others provide veritable avenues for idealists to get mentored. It is also interesting that the government has also decided to establish innovation hubs across various parts of the country. If these hubs are run professionally, they would add immense value to the nation.
- Underdeveloped Startup Support Systems: Technology startups have not gotten the type of attention given to sectors like Agriculture and Mining. The Central Bank of Nigeria and Nigerian banks have not thought it necessary to provide low-interest loans to start ups to stimulate innovation and retain value within Nigeria. Professional services such as legal, accounting, image etc have also not developed micro products that can meet the need of startups. This seriously hinders growth and investment as necessary structures that make investment decisions easy to make are not in place.
The Office for ICT Innovation and Entrepreneurship (OIIE) under the National Information Technology Development Agency (NITDA) made an effort to draw up an ecosystem development framework which is meant to give clarity to the various stakeholders role in support of startups and hubs. We hope the necessary push would be given to the document to make it achieve its purpose. The Office of the Vice President inaugurated an Advisory Council on Innovation and Creativity which I am part of, the member’s committee comprises of successful startup founders, hub founders etc to help develop a framework that will serve as support structure for Startups in Nigeria.
We, at Startup Arewa have sustained the mission to discover, develop and expose innovative startups in the northern parts of Nigeria to global opportunities. Our efforts have increased awareness and has inspired many states to start implementing programs and projects that would increase the northern contribution to the innovation coming out of Nigeria.
Another challenge, that I have observed is that some entrepreneurs focus on short term gains rather than developing a long term strategy.
Some co-founders do not assess the risk of accepting some investors. When investors pull out their funds, most of them shut down. At VoguePay for instance, we will be 7 years old this year but it took her time to grow organically. We, of course, must have made some management or technical mistakes but have learnt from it, making the firm stronger and better as the years pass by.
Today, VoguePay can boost of having 4 operational offices, that is Nigeria, UK, Estonia and the most recent office in Bahrain. With over 100,000 merchants and millions of users around the world, Voguepay now serves the international market, but have achieved all these without external funding.
Startups can scale up through:
- Cash flow mgt
- Cost effective marketing strategies
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.