The Nigerian Capital Market as a springboard for innovative/tech companies.
It gives me great joy to address the Nigerian Stock Exchange (NSE) on this MIPAD closing gong event at the NSE.
About a decade ago, the world’s top 10 largest companies, by market capitalisation were; Exxon Mobil, General Electric, Gazprom, Bank of America, Microsoft etc in that order with Microsoft being the only innovative Technology company on the list. Fast forward to 2018, world’s top largest companies by capitalisation are Apple, Alphabet (Google), Microsoft, Amazon etc. in that order. 5 out of 10 of the current world’s largest being technology businesses. On the strength of this interest in tech companies, the future economy of the world and that of Nigeria is going to be built around a knowledge economy.
Nigeria is Africa’s largest digital and tech economy, Nigeria is the eight largest country in the world with regards to the number of Internet users. With more Internet population than Spain, Portugal, Italy and the United Kingdom, the size of Nigeria’s digital economy could be one of the largest in the world in a decade or two. Foreign investors are keen on these opportunities and have been investing in our technology sector over the last ten years.
In 2016, $129m was raised by technology companies across Africa according to a report by Disrupt Africa. A year later (2017), Nigeria technology businesses raised $114m. At this pace, in less than a decade, technology companies in Nigeria will be attracting over a billion dollars annually. It is imperative the Nigerian Stock Exchange is instrumental at this incipient stage of digital evolution for the future knowledge economy.
Tuesday this week, Paystack an innovative business announced $8 million investment from International investors including Visa and Stripe. Paystack processes about 15% of all online payment in Nigeria. Also this week, Theresa May’s UK government announced a 70 million pound fund dedicated to innovative SMEs. These all happened in one week - a clear indication of foreign interest and the possibilities in our technology ecosystem.
I must applaud the efforts of the Nigerian Stock Exchange for the introduction of a capacity building initiative X Academy; to empower professionals in Nigeria and improve awareness of the capital market.
The introduction of the Alternative Securities Market (ASeM) is also a commendable step towards supporting SMEs to go public and raise funds to remain competitive. Unfortunately, the process and awareness of these possibilities is low, especially among technology startups.
As a venture capitalist and CEO of a thriving and innovative digital business, I have seen missed opportunities that can be addressed. With attendant risk of profit repatriation, local IP domiciled in other jurisdictions and inherent risk of mortgaging our future knowledge economy to foreign stakeholders, the future potential and size of this digital economy should not be funded by foreign capital alone. There is need to create multiple funding channels for the ecosystem and provide exit opportunities to innovators, investors and shareholders.
How do we change this?
- The NSE and its partners must actively participate and be visible within the innovative/tech ecosystem while showing strong support for startups and entrepreneurs. This will stir interest, create awareness about listing possibilities and encourage eligible businesses to list.
- The NSE could waive or discount listing fees for tech firms desirous of listing on the NSE. This could be over a window period of say 24 months and open to businesses that meet the capitalisation benchmarks.
- Investor education and engagement is also key, to enable these firms to understand and appreciate the opportunities in the local market.
- On the part of the government, a commendable step was the inclusion of technology businesses and startups among the list of companies eligible for tax waivers and tax holidays.
These activities will further propel the Nigerian Stock Market as an attractive listing destination for technology businesses following its impressive year ending result as one of the top five global stock markets for 2017.
Thank you, ladies and gentlemen, it’s been an honour.