Nigeria’s tech ecosystem has witnessed remarkable growth over the past decade, fuelled by an influx of innovation and talent. The emergence of local tech startups has been a beacon of hope, driving the nation’s progress and opening doors for a brighter future. However, this promising trajectory comes with significant challenges, particularly in the realm of funding. Here, I will explore the current state of tech funding in Nigeria, shedding light on the importance of investors in nurturing the country’s burgeoning tech ecosystem.
Nigeria’s tech funding landscape has been evolving rapidly, with Fintech leading the charge. According to data from Disrupt Africa, Fintech has consistently attracted the most funding year after year, making up a significant portion of total investments. In 2022, this sector alone secured an impressive $507 million, accounting for 67.8% of the year’s total funding of over $1billion. This substantial growth in fintech funding has been evident over the past few years, with the total amount now surpassing the half-billion-dollar mark.
One of the most striking aspects of Nigeria’s tech ecosystem is its ability to attract investors. Disrupt Africa reports that between 2015 and 2022, over 641 entities made equity investments in Nigerian tech startups. To put this into perspective, Nigeria outshined its African counterparts, such as South Africa and Egypt, which saw involvement from 382 and 203 investors, respectively, during the same period. This investor interest clearly illustrates Nigeria’s dominant position in the African tech landscape.
Nigeria’s tech startups have not only attracted investors but have also raised substantial funds. According to Disrupt Africa, at least 383 Nigerian tech startups raised a combined total of $2,068,709,445 in funding between January 2015 and August 2022, surpassing other African nations. The growth in funding has been especially noteworthy in recent years. In 2020, 85 startups secured funding, followed by 161 in 2021. By August 2022, 107 startups had already raised funding, indicating continued growth.
Although the complete picture for 2023 is yet to be revealed, as the fourth quarter has not yet ended, the tech funding landscape in Nigeria has faced challenges in 2023. Reports from Marketing Edge highlight a 26% decrease in funding during the year. Ventures Africa also points out that Nigeria ranked fifth in funding volume behind Kenya, Egypt, South Africa, and Rwanda in the first half of the year, despite closing more deals. They however also stated that “the sector contributed 19.54% to Nigeria’s GDP in the second quarter of 2023” indicating further that “Nigeria’s tech sector is becoming a stronger support for its economy”.
Despite the challenges faced in 2023, there is hope for a resurgence in tech funding in 2024. The appointment of Bosun Tijani as the Nigerian Minister of Communications, Innovation, and Digital Economy signals a positive development for the industry. Mr. Tijani is a well-known force in the Nigerian tech space and with his vast experience in the Nigerian tech sector, there is optimism that Nigeria will reclaim its position as the highest-funded African nation.
Local funding competitions, like Naija Tech Brain, also play a pivotal role in funding and ultimately nurturing homegrown startups. These competitions act as a stepping stone for local tech entrepreneurs, providing them with the support and capital needed to bring their innovative ideas to life. Importantly, they pave the way for foreign investors to enter the market, fostering a prosperous and innovative future for Nigeria.
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Nigeria’s tech ecosystem has come a long way, with impressive funding figures and investor interest. Despite this progress, the challenges faced in 2023 serve as a reminder of the importance of local investors. By supporting local startups, these stakeholders can not only bolster the tech industry but also pave the way for a more prosperous future for Nigeria. As we look forward to 2024, there is reason to be hopeful that Nigeria will continue to shine in the African tech landscape.
The stronger the support from African VCs and investors for their local startups, the greater the attraction for foreign investors to become integral contributors to our economies. This collaborative effort holds the potential to drive sustained growth and innovation in our regions. A strong and supportive local startup ecosystem can be a catalyst for broader economic involvement and investment from international parties.
Pepple is the Chief Coordinator of Naija Tech Brain, an independent organisation powered by a consortium of UK and US based business professionals and experts.
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