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Growth of digital businesses in Nigeria

digital businesses

Some weeks ago, Jumai listed on the New York Stock Exchange to positive reviews. Of course, it was the first African-focused technology firm to list on the New York Stock Exchange. It also made history as the first African unicorn, i.e the first African start-up with a value of $1 billion and above.

Although Jumia operates in 14 African countries with70 percent of its business from Nigeria, some sceptics have questioned the Africanness of the company. This is because, besides being founded by two Europeans, it was filed as a German company on the NYSE, has its headquarters in Germany, its technology centre in Portugal and top management offices in Dubai. This, according to some critics, rules out Jumai as an African start-up because it is not legally African.

Regardless, with the many challenges facing African countries, the ubiquity of mobile phones and the potential to harness technology to solve some of these problems means that there is a huge space for African technology start-ups to play in and grow global brands.

One such truly Nigerian technological company that had redefined the payment system in Nigeria is Interswitch Nigeria Ltd, a company conceptualised and founded by Nigerians to revolutionalise the payment space in Nigeria and Africa. It is currently the foremost and leading payment, transaction switching and processing company in Africa.

At a time when sceptism about the viability and readiness of the Nigerian market to embrace electronic payment was quite high, and global brands such as Visa and MasterCard refused to come to Nigeria, and when previous attempts and initiatives at entrenching electronic payment in Nigeria had failed, the company, pioneered by young and enterprising Nigerians, bullishly rode against the storm and began to systematically change the landscape and attitude towards electronic payments such that by 2005 – just two years after it began operation – the company had issued out over 32 million payment cards and had become the leading revenue, tax and bills collector on its platform to a host of government agencies, utilities and corporate organisations country-wide and even internationally.

Currently, Nigerians consumers and businesses make more than 300 million digital transactions a month across a suite of Interswitch-enabled channels.

Crucially too, Interswitch is reported to be planning a global listing — which could value the company at as much as $1 billion, making it Africa’s next unicorn or Africa’s first unicorn for sceptics who refuse to recognise Jumia as truly African.

Although there are many promising start-ups in fintech, education, power and agriculture in Nigeria, there is room and need for many more of such digitally-driven innovations to help solve some of Nigeria and Africa’s intractable problems.

Thankfully, African start-ups have started enjoying greater funding. According to some figures, African tech start-ups reached a record $1.2 billion in 2018, double the previous year. However, this is still a fraction of that of other regions, say of Southeast Asia that attracted more than $10 billion in 2018.

It is sad that the Nigerian Stock Exchange is no longer a choice for listing for companies seeking to attract investments. Years of lack of IPOs and the disastrous performance of stocks over the years have not gone unnoticed. Urgent and genuine reforms are needed to improve Nigeria’s business environment to allow Nigerian start-ups grow into pan-African businesses from capital raised in Nigeria and from Nigerians.

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