Lagos, Nigeria, should be the preferred destination for technology startups in Sub-Saharan Africa, and the Global Startup Ecosystem Report (2023) highlights key factors behind its choice.
The report, conducted by Startup Genome, a leading innovation policy advisory and research firm, underlines the city’s tax incentives, robust government backing, and a pool of tech-savvy talent as compelling reasons for startups to set up shop in the commercial nerve centre of Nigeria.
A significant catalyst for the growing tech startup ecosystem in Lagos is the robust tax administration and tailor-made incentives offered by the Nigeria Startup Act 2022. The act provides startups with a four-year tax exemption and additional tax relief amounting to five percent of taxable profits for up to five years for qualifying startups.
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Moreover, the investment tax credit, equivalent to 30 percent of investments made in qualifying startups, and the 35 percent individual income tax exemption for startup employees for two years or more add to the appeal for tech companies planning to establish their presence in Lagos.
Financial technology companies like OPAY, BRANCH, Flutterwave, and Glovo have already witnessed remarkable financial success in Nigeria, especially in Lagos. The report urges startups to view these success stories as motivation and consider Lagos not just as a city to call home but also as a promising hub for their ventures.
The state government’s dedicated support for tech startups is another crucial aspect highlighted in the report. The Lagos State Employment Trust Fund (LSETF) plays a pivotal role in increasing access to finance and markets for emerging companies.
By fostering entrepreneurship, improving the business environment, and providing programmes to support founders and startups, LSETF has become instrumental in nurturing a thriving startup culture in the city.
Despite challenges such as the “Japa” phenomenon, which saw many individuals leaving the city, Lagos has taken proactive measures to increase the number of tech talents.
The report emphasises that the large youthful population in the state has facilitated collaboration between the state government, the Federal Government, and the private sector to provide relevant tech skills training for Lagosians.
With the median age in Nigeria being 18.1 years and the nation housing 82 percent of the continent’s telecom subscribers, Lagos has emerged as a magnet for tech talent seeking promising career opportunities. As a result, global firms are turning to Lagos to bridge their talent gaps.
It said, “The Africa Developer Report 2021 from Google and Accenture notes that Nigeria added 5,000 new software developers from 2020 to 2021, for a total of 89,000.
“Tech talent flocks to Lagos for career opportunities. As a consequence, global firms are increasingly looking to the city to fill their talent gaps.”
Moreover, Iyinoluwa Aboyeji, co-founder of Andela, is contributing to this growing tech ecosystem by developing Talent City—an initiative aimed at creating an ideal work environment and community for startups.
The report noted in conclusion that the confluence of tax incentives, government support, and the large pool of tech-savvy talent has transformed Lagos into a top choice for technology startups.
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