For many years, Lagos with its unwieldy noise and patience-sapping traffic, has been the first port of call for many entrepreneurs launching a dream tech business in Nigeria for obvious reasons.
It is the commercial capital of Nigeria boasting over 20 million people. It has one of the most extensive road infrastructure (not the best) in the country; a middle class with more liquidity than most in other states; good internet; a functional international airport; fairly stable electricity and access to quality technical talent and software developers.
Importantly, the economy of Lagos alone is bigger than that of the whole of Kenya, East Africa’s most dynamic country, with a nominal per capital income of more than $5,000, more than double the Nigerian average.
But Lagos may also represent a nightmare for many startups in other ways; the state is unexplainably – if not undeservedly – expensive; multiple taxes and many points of extortion; unending traffic gridlock; fear of SARS and flip-flop economic policies.
While it attracts the most investments – about 95 percent of total investments in the tech ecosystem in Nigeria, Lagos is also responsible for a sizeable number of dead startups. Many of them did not see their third year birthdays.
Notwithstanding, Lagos remains the most viable city any startup can hope to make the big times.
While other cities are not in the league of Lagos, there are quite a number of them that have shown promise in terms of providing support and creating an enabling environment for startups to thrive. These states are already attracting the big names in Nigeria’s tech ecosystem.
In 2019, Sim Shagaya, founder of Konga, founded a new startup uLesson, an education tech company. Rather than make Lagos the headquarters of the company, Shagaya moved the operations centre to Jos. There is a Lagos office which caters to the company’s software engineers and the company’s marketing unit.
This is becoming an increasing trend in the tech ecosystem as founders begin to pay more attention to burgeoning operating cost.
Ibadan, Jos, Ogun, Akwa Ibom, Kaduna and Cross River are gradually emerging as viable alternatives for startups. Enugu, Abuja, and Port Harcourt are also said to be showing some promise for start-ups and developers.
Three of the states particularly gets our attention:
Ibadan
While Seyi Makinde of Oyo State is considered one of the most progressive-thinking governors in Nigeria, tech cluster development in the city of Ibadan predates him. Prior to his arrival in the government seat, a good number of tech clusters had begun to spring up in the capital city of Oyo.
For instance, Wennovation Hub, located on the 3rd floor, Alpha & Omega Building, Queen Elizabeth Road II, Mokola Ibadan, was established in 2011. The hub is considered a pioneer innovation accelerator in Nigeria. As of 2018, the hub has supported over 300 startup teams and well over 6000 youths physically with as much as $2.5 million.
Other hubs in Ibadan include LPI Innovation Hub; ALF Tech Hub; iBridge Hub; Ecco Hub (Ibadan’s first incubation hub was founded in 2016); and SteinServe Hub.
Apart from a very active state government, Ibadan also has the advantage of being one of the major beneficiaries of the new Lagos-Ibadan railway, which is near completion. When completed, it will become easy for people and products to access Lagos markets and developer community within a shorter and safer route.
“Access to developer and start-up community is critical as well,” said Adedeji Olowe, CEO of Trium Networks. “While a lot could be done online, physical meetups still have an allure that online can’t match.”
Adewale Yusuf, co-founder of TechPoint Africa, describes Ibadan as the best place to move a startup’s engineering team because of “better electricity supply; cinemas, supermarket, etc; rent is affordable; no crazy traffic; university for hackathon; 1.30hrs drive to Lagos; and food is cheaper.”
In 2018, TechPoint Africa took a tour of several cities outside Lagos to understand the level of development of the startup ecosystem.
Jos
The city once known for its scenic topography and Europe-like weather, has in recent times been linked with herdsmen and farmers’ restiveness. But Jos is a lot more than that. To the startup founder it could be a haven of cheap taxes, low cost of living with a high quality of life that is comparable to other cities, and quiet environment to help the mind create new ideas.
Sim Shagaya adds that Jos with its about 3 million population provides the media and technology space, talent needed to build the business.
“We also found that the climate and little to no traffic lends the city to creativity,” he told BusinessDay. “That said, our commercial team is based in Ikeja, Lagos, as that state remains incredibly important from a commercial point of view.”
While uLesson is the first Jos and northern-based startup to close funding of over $3 million, it is not the only success story in the city.
nHub, founded by Daser David, is the first technology hub to emerge in the Northern region of Nigeria. With a capacity to house 200 to 300 people, the nHub was created for freelancers or in-house developers and designers. Jos is also the state with the first ICT Development agency.
Kaduna
Kaduna has a lot going for it at the moment which has also caught the attention of tech entrepreneurs. While the rest of the north battle with different levels of terrorism, Kaduna enjoys relative peace. There are still herdsmen and farmers clashes every now and then to worry about.
Kaduna enjoys one of the most steady power supply in Nigeria. The cost of living is low and there is basic infrastructure. The government under Nasir El-Rufai has also prioritised education by dedicating 40 percent of the state’s budget to the sector. It is the largest of any state in Nigeria and also bigger than the 6.7 percent the federal government plans to spend on education.
Ahead of Ibadan, Kaduna has a railway line linking it to the new state-of-the-art Abuja international airport.
Some of the hubs that have made Kaduna home include CoLab, Kaduna’s first innovation hub and co-working space. There is also Kaduna ICT hub, Cloud10 and Alpha hub.
When moving to a city outside Lagos, Shagaya agrees there are boxes to tick. Apart from availability of broadband, cost of living, air transport linkages and availability of talent to drive the decision, the business model also really drives choice of location.
“Startups are inherently fraught with uncertainty. It is important to at least minimize the uncertainty that arises from your location and some states simply have less uncertainty than others,” he said.
