There is a significant surge in attention and accolade being given to the technology start-up ecosystem in Nigeria. One of the more recent being the Global Start-up Ecosystem Report which estimated the Lagos start-up ecosystem as $2 billion; making it the most valuable in Africa.
If market size is anything to go by, there is indeed a strong justification for why attention and investment should shift towards building the Nigerian technology ecosystem. There is immense value waiting to be created amidst the chaos and weak infrastructure.
Reflecting on how we got here and what is responsible for the innovative activities driving the attention and investment, I decided to apply the ‘framework for sectoral systems of innovation’. The approach focuses on three main elements (knowledge and technological domains, Actors & networks, and Institutions); this post is an attempt to evaluate the contributions of these elements to the current state of the ecosystem.
1.Knowledge and technological domains: a sector according to this approach is characterised by a specific knowledge base and specific technologies and inputs needed for research, production, and distribution.
Reflection: a strong attribute of weak start-up ecosystems, in my opinion, is lack of depth in know-how and technological domain. Whilst technological knowledge involves a varying degree of specificity, complexity, and independence; the local start-up ecosystem in Nigeria can hardly lay claim to any technological domain of expertise. The growth being experienced in the sector can thus not be linked to this attribute. There is a strong disconnect between our tertiary institutions and knowledge requirement of the sector. According to the Talent Gap Analysis conducted by CcHUB, while youth unemployment in Nigeria is 45.65% and most industries are laying off workers, the tech industry in Nigeria has a different problem, it is struggling to find employees to fill vacancies. Technology company executives are reporting difficulty in recruiting talent with the relevant technical skills.
Knowledge (technical) in the sector is being powered by highly unstructured and unsustainable mechanisms that lack the ability to deepen competencies.
2. Actors and networks: a sector is composed of agents that include companies, non-company organisations (e.g universities, financial organisations, industry associations) and individuals (e.g consumers, entrepreneurs, scientists). Innovation within a sector is thus considered to be a process that involves systematic interactions among a wide variety of actors for the generation and exchange of knowledge relevant to innovation and its commercialisation.
Reflection: similar to most evolving start-up ecosystems, this is the strongest attribute of the emerging start-up ecosystem in Nigeria. The last 7–10 years has seen amazing networks, cliques, and communities in several parts of the country. While the general assumption is that actors within the ecosystem don’t collaborate, value-based demands and uses of technology are instigating unlikely collaborations amongst players within the sector. Organic and genuine relationships are being built which are bound to deepen the strength of the ecosystem and its ability to enable innovation. Imagine the potential value we can unleash if we sustain the current excitement from the financial sector in technology innovation and collaboration with the start-up ecosystem — more PiggyBank, Alat, Flutterwave, Paystack etc. This is clearly a market-driven collaboration but it is the sort of sustainable collaboration a sector requires to build its competitiveness. The FINTECH movement though global is an exciting one that’s bound to deepen the start-up ecosystem in Nigeria — with initiatives like the Union Bank Innovation Challenge partnership with CcHUB, Stanbic’s soon to be launched innovation challenge and Access Bank Africa Fintech Foundry (happy days!).
In the same vein, recent announcements from Facebook, Google and Accion Microfinance are nothing but a recognition of the importance of the Nigerian market. Nigeria is probably the least sexy place to do cool things for PR but the potential of the market, when understood, can hardly be ignored. These actors taking a bet on the ecosystem will continue to deepen its ability to power exciting businesses and innovation for real economic gains.
The ecosystem in the last 24 months also witnessed increased recognition and interest from foreign acceleration programmes, Nigeria probably now takes a decent share of the African start-up slots in top American acceleration programmes. This was largely off the back of efforts from individual actors who built bridges between the ecosystem and the Silicon Valley. While this may come at a cost, the interaction between local actors and foreign ones from more sophisticated ecosystem will facilitate a better transfer of knowledge and best practices that we can rejig to fit the reality of our own market.
The emergence of strong start-ups and technology businesses such as Interswitch, Konga, Jumia, Iroko, Andela, Paga, Flutterwave, Hotels.ng, BudgIT, Paystack, Piggybank, Lifebank and much more is a strong signal for the quality of what the ecosystem can sustain. The individual support structure of these companies will go a long way in strengthening our ability to spot, support and scale successful technology businesses and innovation. Andela’s contribution alone is a case worth studying.
In parallel, the support structure for technology innovation and entrepreneurship is also being built by committed actors. CcHUB is arguably one of the reputable and constantly evolving innovation hubs on the continent. Lagos Angel Network and the Africa Business Angel Network are also strong platforms with a presence in Nigeria. Venture Platform, Colab, MEST, Seedstars and many other emerging platforms across the country are also beginning to deepen our ability to spot and discover exciting innovation and entrepreneurs.
I guess I can do an entire post on actors and networks within the start-up ecosystem in Nigeria. This, without a doubt, is by far the strongest attribute of the current technology story emanating from Nigeria.
3. Institutions: the actions and interactions of agents are influenced by what is referred to as institutions, which include norms, common habits, established practices, rules, laws, and standards. They may be more or less binding and more or less formal (e.g patent laws or specific regulations vs. traditions and conventions).
Reflection: institutions represent the underlying attribute of a sector and drive its ability to create and sustain superior value. The strategic investment in knowledge and domain expertise and an enabling environment for actors to collaborate successfully relies on strong and purposeful institutions — policies, regulations, and laws. More than ever, dynamic institutions are now required for any sector or economy to stay competitive in an increasingly borderless world. Our institutions which are largely out of sync appears unable to catch-up with the pace of development within the global technology and start-up ecosystem. The random approach to appointing public officials is a major set back for the future of technology in Nigeria.
We tend to be more reactive than proactive and focus on policies are often placed mainly on sectors and trade with high opportunity for rent-seeking. As our ecosystem is still in infancy, I suspect we won’t enjoy the necessary attention required to accelerate the development of the tech start-up ecosystem in Nigeria.
The future of technology in Nigeria excites me. Our tech start-up ecosystem is being built on honest hard work — far from PR in any way. The technology PR machines don’t find our story fun to tell — they only need to be reminded of ‘419' stories to look away. As weak as most reasonable people will perceive it, the growth is being built on a strong local effort with respect and support from strategic foreign partners.
However, there is an urgent need for actors in the field to bind together to define and seed the foundation for S&T (Science and Technology) to help us carve a clear knowledge and technological domain(s) for the sector. Institutions — policies, regulations, and laws need to reflect our ambition by not only providing an enabling environment for innovation to thrive today but also prime us for competition; tomorrow.
We need to think EXCELLENCE — while proliferation provides us with a large pool, focus and excellence will help us build a sustainable foundation upon which we can pitch a flag!
The FUTURE is bright!