Nigeria, Africa’s biggest economy, moved up by two places to overtake South Africa, the continent’s most industrialised nation, and Kenya, to clinch the first position on start-up investment deals last year, according to a 2018 Africa Venture capital report by WeeTracker Research.
WeeTracker is a global tech media platform with a marked focus on the African technology and start-up ecosystem.
BusinessDay analysis of the report shows that Nigeria, which was in the third position in 2017, outperformed all other locations with a total of 136 deals in 2018.South Africa, the number one location of start-up investment deals in 2017, came in the second with 107 deals, followed by Kenya, the second-place winner in 2017, came in third with 73 deals.
Ayo Akinwunmi, head of research, FSDH Merchant Bank, attributed Nigeria’s improved ranking to the country’s recovery from recession, stable economic economy and current exchange of the naira that enables foreign investors to mobilise large amounts of the local currency to invest locally.
“The changes in the economic environment occasioned by the current exchange rate regime where you have high exchange rate has created a lot of opportunities for some small companies and start-ups to pick up and then making some foreign products attractive in Nigeria again,” Akinwunmi said a telephone interview
Akinwunmi further said that a lot of young innovators are picking that as a challenge to bridge that gap in Nigeria. “The growth of Information Communication Technology solutions companies is also encouraging a lot of entrepreneurs to develop applications and innovative products to solve problems which are attracting investors,” He said
The tech and innovative companies in the continent are fast becoming an attractive destination for investors as $725.6 million was invested across 458 deals, a 300 percent huge leap in total funding amount and over 127 percent increase in the number of deals as compared to 2017.
“During our multiple conversations with the stakeholders of the ecosystem last year, it turned out that Africa is fertile for any kind of business to prosper. The demand for traditional business is as high as technology-driven enterprise, but when both are combined, what we get is an exceptional business,” the report stated.
Ibrahim Tajudeen, head of research at Chapel Hill Denham, believes that Nigeria’s demography is what is really attracting such start- up investments into the country.
“For instance, if you are doing business in Africa and you are not in Nigeria then you are missing a lot of opportunities. Nigeria is the biggest country in terms of economic size and population,” Tajudeen further said
Finance and funding are a major aspect of starting or setting up a business. In Nigeria, funding is one of the major problems especially if an entrepreneur does not have enough to kick-start the business.
Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers noted Nigeria’s performance is a positive development to the economy. “The small and medium-scale enterprises are usually regarded as the engine of growth for the economy and that they constitute a thigh proportion of the informal sector where majority of the population are involved in productive activities.”
