In the same week Nigerians woke up to news of the arrest of Abba Kyari, a deputy commissioner of police, over his involvement in drug trafficking, Flutterwave, a Nigerian-founded fintech company, announced it had raised $250 million Series D fund from investors.
While Kyari’s arrest by the National Drug Law Enforcement Agency (NDLEA) spotlights the bad image Nigeria continues to get globally as a result of corruption and fraud, Flutterwave with its record $3 billion valuation paints a different picture of a country with young people with bright minds rewriting the future.
The rise of the Nigerian tech ecosystem, therefore, is not only demonstrated in the growing number of foreign investors’ cheques chasing innovative startups, but it is also a story of new sets of global ambassadors with a laptop and their creative minds and pushing the image of the country away from corruption and poverty.
“Companies like Flutterwave help boost the ecosystem’s standing across various heuristics. Our ecosystem, despite the flurry of activities, is still very young,” says Odunayo Eweniyi, co-founder/COO, Piggyvest, noting, “So with the acquisition of Paystack, you had the West take notice. And with Flutterwave becoming a unicorn several times over, it catalyses action positively – partnerships, expansions and the most important, capital.”
Many years ago, the job of creating a positive image for the country was mostly shouldered by sportsmen and women. The prowess of the Super Eagles and sports, in general, used to be the counterbalance for Nigeria’s image of corruption around the world.
As many Nigerians who frequently travelled out reported, the country’s default image ambassadors were sportsmen like Austin Okocha, Daniel Amokachi, Kanu Nwankwo, Rashidi Yekini, Chioma Ajunwa, to mention but a few.
But the dwindling fortunes of sports in the country over the years alongside a persistent rise in corrupt vices has meant that there was a gap waiting to be filled. Nollywood and the music industry for all their growing popularity have not been able to fill the void. This is why the growth of the technology ecosystem in Nigeria has become a bragging point for many government officials when chasing foreign investment abroad.
The new image of Nigeria now has the pictures of innovators, founders and funders like Mitchell Elegbe of Interswitch; Olugbenga Agboola of Flutterwave; Shola Akinlade of Paystack; Iyinoluwa Aboyeji of Future Africa; Kola Aina of Ventures Platform; Odun Eweniyi of Piggyvest; Omobola Johnson of TLcom; Victor Asemota of AnD Capital, among many others.
“With Flutterwave’s Nigeria founders creating and leading the most valuable African startup now worth billions of dollars, we have seen newfound respect for Nigerian founders and Nigerian business people in general all over. The numbers Flutterwave has declared also show the magnitude of the Nigerian and African opportunities,” notes Victor Asemota, growth partner, AnD Ventures.
Ali Isa Pantami, minister of communications and digital economy, while speaking with BusinessDay in Saudi Arabia, during the LEAP22 Tech Conference, acknowledged using the popularity of the ecosystem in Nigeria to try to woo investors into the country.
According to him, many of the investors are eager to come because Nigeria is now a model for tech in Africa.
“When I came here, the first meeting we had they were surprised that today in Nigeria we have five successful unicorns and many are still coming,” he said.
On Tuesday, February 22, 2022, Pantami took the entire leadership of the Ministry of Communications and Communications including leaders of the Nigerian Communication Commission (NCC) and National Information Technology Development Agency (NITDA) to visit the offices of companies like Flutterwave and Treepz (former Plentywaka).
Collins Onuegbu, vice chairman of Signal Alliance Group, pointed out that Nigeria’s image laundering by the tech industry is driven by hard numbers; the amount of money raised by startups and the number of unicorns created.
“Nigeria is a big market that has underwhelmed the world for decades. The new generation of startups is perhaps our hope that we can create a productive economy not based on a rent culture and corruption that Nigeria has been known for,” Onuegbu said.
Beyond the impressive numbers, there are also countries jostling to tap talents from the ecosystem. This is seen in the rise in the number of countries creating visas to lure startups, the number of international accelerators, and early-stage investors who are choosing Nigeria in their African strategy.
In January 2022, Germany announced that it plans to attract 400,000 skilled workers from abroad each year to tackle both a demographic imbalance and labour shortages in key sectors that risk undermining the recovery from the coronavirus pandemic. The United Kingdom and Canada already have such plans and have been welcoming a lot of Nigerian tech talents relocating to their territories.
Tech companies in the United States and the United Kingdom have been actively poaching talents from Nigeria’s tech ecosystem. Some of these companies are Revolut, Microsoft, Facebook, Google, Amazon, Palantir, Delivery Hero, Uber, etc.
“This however heightens the competition for software engineering talent on the ground, with incumbent financial services firms often left with the short end of the stick,” said Adesoji Solanke, director, frontier, Sub-Saharan Africa Banks, and Fintechs, Renaissance Capital.
The talent recruitment from Nigeria also raises concerns that the country’s brain drain problem is increasing. Solanke has a different view.
“Growing digitization of the economy improves the government’s chances of taxing the informal economy, which helps improve their revenue to GDP ratios. What would be good to see is a reversal of the brain drain on the continent, which is largely a function of the quality of governance at the national level, as well as economic and monetary policy,” Solanke said.
During a presentation in 2021, Sundar Pichai, CEO of Alphabet, the parent company of Google, referenced Gidi Mobile, an edtech startup in Nigeria founded by Adetunji Adegbesan, as an example of innovative companies solving problems in Africa.
“A lot of VCs and angel investors are always wondering why the Nigerian ecosystem is growing fast and robustly at that,” says Adedeji Olowe, CEO of Trium, a venture capital builder, saying, “They are also very impressed with the value creation of Nigerian startup founders as well. We just deliver.”
Nigerian tech companies raised over $1.2 billion in 2021, making them the most attractive startups on the continent. Experts project that the numbers will be exceeded in 2022.
At a recent event in February, Abiola Gbemisola, assistant manager, Equity Research, FBNQuest, noted that the ecosystem in Africa had already seen over $500 million already raised in the market between January and February.
“If you look at this run rate at the end of the year, we will probably be looking at $10 billion for the African continent, which is two times more than what we have raised in 2021,” he said.
Again, Nigeria is expected to dominate investment this year on the continent. Flutterwave’s $250 million Series D is the largest funding raised so far in 2022 and the second-largest funding by a tech startup in less than one year. OPay, another Nigeria-founded company, still holds the record of largest investment by a startup with its $400 million funding last year that valued the company at over $1 billion and giving it a seat on the Nigeria unicorns table. The other unicorns – companies valued at over $1 billion – include Interswitch, Flutterwave, Andela, and Jumia.
Nonetheless, Olaoluwa Samuel-Biyi, co-founder of SureGroup, says the impact of the achievement by the ecosystem is not as visible to most Nigerians travelling abroad as should be expected. This is because the tech and venture community is still closed and not very mainstream.
“Nigerians still have a huge image problem to deal with abroad, and our success in technology and venture financing can only go so far to influence mainstream perception,” said Samuel-Biyi. “Our music industry has done much better in that regard.”
While taking an Uber in Riyadh, Saudi Arabia, Temitayo Daniel, a Nigerian tech professional, recalls hearing a song by Davido being played by one of the radio stations. Although it made him feel proud to be Nigerian, he says music has not had the same impact on Nigeria’s global image as the tech industry. Foreigners are not just admiring the growth of the tech industry, they are eagerly signing cheques to be part of the party. Nigeria also dominates global accelerator programmes like Silicon Valley’s Y Combinator and Toronto’s Techstars when it comes to African selection.
Read also: Demand for African developers by tech industry at all-time high – Google report
He also noted that the growth of tech startups in Nigeria has given them opportunities to own stages at global events like the Web Summit, in Lisbon and LEAP in Riyadh.
Back home, experts say the positive image is helping reshape the economy. The ecosystem is now one of the industries creating massive job opportunities for young Nigerians. They have also removed barriers to overseas investments as well as positioned businesses from the country to attract foreign capital. Adedeji Olowe adds that the tech industry has also created a new generation of wealthy Nigerians.
Nevertheless, there is still a lot of work to be done to ensure that the impact of the tech industry impacts more Nigerians. One of them will be to remove the friction between founders and government authorities.
“The relationship between tech players and government is still adversarial by default, and until that changes to something more positively symbiotic, there will always be that distance between stakeholders,” Samuel-Biyi said. “Tech has however succeeded at improving economic outcomes at the individual level, which inevitably translates to some degree of economic growth. If this can be channeled purposefully by the government, it could become a major driver of growth.”
