Why Nigerian startups succeed where global giants fail

When global ride-hailing giant Uber entered Lagos in 2014, industry experts predicted the end of local transportation startups. Their forecast? No local company could compete with Uber’s technology and billion-dollar war chest.

Today, the reality tells a different story. Local players like Indriver, have captured significant market share, while homegrown logistics startups continue to thrive. This pattern isn’t unique to transportation – it repeats across multiple sectors, from fintech to e-commerce.

The conventional wisdom suggests that global giants, with their vast resources and proven playbooks, should dominate emerging markets like Nigeria. Yet time and again, we see local startups not just surviving but thriving against these goliaths. Why? The answer lies in the ability to read and respond to the unique psychology of the Nigerian market.

Through my years in commercial strategy, I have observed three critical patterns that explain this phenomenon. These patterns reveal why being smaller and local often proves more advantageous than being bigger and global.

First, consider what I call the “trust proximity effect.” Nigerian consumers tend to trust brands that feel culturally proximate, regardless of their size. This isn’t mere patriotism – it’s about understanding our unique communication patterns. Local startups naturally speak the language of their customers, both literally and figuratively. They know when to be formal and when to inject humor, when to push and when to pull back.

A perfect example emerged during the 2020 lockdown. While global e-commerce platforms stuck to their standard operating procedures, local startups quickly adapted to Nigeria’s unique circumstances. They understood that in our market, delivery isn’t just about logistics – it’s about trust and relationship building. They implemented features like “pay on delivery” and real-time WhatsApp communication with delivery agents, addressing deep-seated trust concerns that their global counterparts often overlooked.

The second pattern revolves around what behavioural economists call “contextual innovation.” Global companies typically try to replicate their successful models from other markets. But Nigeria isn’t just a different market – it’s a different context. Local startups excel because they build solutions around existing behaviours rather than trying to change them.

Take the case of payment solutions. Global fintech companies entered Nigeria with models designed for high credit card penetration markets. Meanwhile, local startups-built solutions around existing behaviours like USSD transactions and agent banking. They didn’t just launch products; they created ecosystems that worked within Nigeria’s unique financial infrastructure.

The third and perhaps most crucial pattern is what I term “friction fluency.” Nigerian startups better understand which frictions matter to local consumers and which don’t. While global companies often try to eliminate all friction points (based on their global experience), successful local startups know that some frictions build trust in the Nigerian context.

For instance, in e-commerce, global players push for fully automated, zero-human-interaction transactions. But local startups understand that Nigerian consumers often prefer some human interaction in their digital transactions – it builds confidence and trust. This isn’t inefficiency; it’s cultural intelligence.

Research from the Lagos Business School supports these observations. Their 2023 study on market adaptation showed that companies allowing for human interaction in digital processes saw 47% higher trust ratings from Nigerian consumers compared to fully automated services.

The implications extend beyond startups and tech companies. Any organization looking to succeed in Nigeria must understand these patterns. It’s not about being local or global – it’s about understanding the psychological and cultural nuances that drive Nigerian consumer behavior.

For business leaders, the lesson is clear, success in Nigeria isn’t about importing global best practices. It’s about developing “next practices” that align with local realities. The future belongs not to the biggest players, but to those who best understand and adapt to the unique psychology of the Nigerian market.

As we look toward 2025, we are likely to see more global giants entering Nigeria. But their success will depend not on their international experience, but on their ability to think and act locally. In the end, the Nigerian market teaches us that understanding people matters more than perfecting processes.

The question for every business leader then becomes – Are you building for Nigeria, or are you just building in Nigeria?

Ifedolapo Ojuade is a Commercial Strategy Leader who combines marketing psychology and consumer behaviour patterns across African markets to help professionals and brands to succeed in the African market.