WHY TECH TALENTS ARE ABANDONING THEIR REGIONS FOR LAGOS
Nigeria, with 210 million people, accounts for at least 20% of Africa’s population which is expected to exceed 400 million by 2050. Nigeria also has a 42% internet penetration rate, translating to 86 million internet subscribers in Nigeria, a growing middle class accounting for approximately 23% of the population, and a combined purchasing power exceeding $28 billion. Half of Nigeria’s population is under the age of 20 and are fairly educated and tech savvies.
Mobile telephony is used by about 63% of the Nigerian population. Approximately 48% have internet access, primarily through mobile devices. According to Disrupt Africa: Nigeria Startups Ecosystem Report 2022, the country also has a GDP of over $101 billion and is the highest oil exporter on the continent currently has at least 481 startups active across the country as of August 2022. Along with Egypt, Kenya, and South Africa, it is one of Africa’s “big four” startup ecosystems.
According to the report, Nigeria is the most popular investment destination on the continent. Between 2015 and 2022, 383 technology startups raised a total of $2,068,709,445 – more than any other country. As of August 2022, 107 Nigerian startups had raised funding, accounting for roughly one-third of all funded startups on the continent this year. The country’s running total for 2022 is $747,908,000, which is close to the annual record total of $793,790,000 set last year. Earlier this year, Nigerian fintech Flutterwave received a $250 million Series D round, reflecting both the increasing maturity of the Nigerian ecosystem and its prowess in the fintech space.
There are several reasons why Nigeria is the top startup ecosystem in Africa. Its sizable population presents a sizable market opportunity for tech entrepreneurs. It also has one of Africa’s largest startup cities, Lagos State, which has a growing number of engaged international investors.
THE LAGOS TECH STARTUPS ECOSYSTEM
Lagos is the heart of Nigeria’s startup ecosystem, and it vies with Cape Town and Nairobi for the title of leading startup city on the continent. It is home to more than half of the country’s startups and tech talents. It was named the best startup ecosystem in Africa in 2019.
The state which is Nigeria’s commercial capital city is regarded as a startup city for a variety of reasons, including the large number of startups based in the state, the high population density, and the opportunities that come with it, among others. Yaba, a small but vibrant section of Lagos, is at the epicenter of the city’s technological development, with clusters of tech startups, educational institutions, and tech communities. As a result, it is known as Nigeria’s Silicon Valley, the “Silicon Lagoon,” or simply “Yabacon Valley.” Aside from Lagos, other major startup cities include Abuja, Ibadan, Abeokuta, Kaduna, and Port Harcourt.
Nonetheless, Lagos has produced some of the continent’s most successful startups and remains a highly appealing hub for both local and global investors. According to StartupBlink’s Global Startup Ecosystem Index, Lagos is the top startup city in Africa. It is ranked 122nd in the world, up 5 spots from 2020. It is also the African city with the highest ranking on any industry list, ranking 42nd in the world in eCommerce & Retail and having the most startups in Africa.
SOME LAGOS-BASED TECH STARTUPS
Additionally, Interswitch, Paystack, and Flutterwave are all headquartered in Lagos. Other successful startups in Lagos include Paga, Piggyvest, Bamboo, Helium Health, Cowrywise, and Kuda, as well as global tech giants such as Facebook and Google. Furthermore, Lagos has served as an incubator for some of the continent’s most successful startups, including the e-commerce platform Jumia. The ever-bustling city is also a popular funding destination for local and foreign investors looking for the next big thing to come out of Africa.
Lagos has long been a leader in Africa’s acceleration and incubation spaces, with more active programs than any other country, with the possible exception of South Africa. There are approximately 150 private and public incubator and accelerator programs available to startups in Nigeria, most of which are concentrated in Lagos but are also located – or at least accessible to startups located – throughout the country. Many of these programs are stand-alone offerings, while others are run by organizations such as CcHub.
WHY TECH TALENTS ARE LEAVING FOR THE SILICON LAGOON
There is a massive brain drain cutting across all the states and regions in the country. This is due to a lack of jobs and opportunities in these regions for young talents to put their knowledge to use. Job opportunities are scarce, resulting in a void in these regions’ tech ecosystems. As a result, talented young people frequently relocate to places like Lagos, where there is a higher concentration of startups and, consequently, opportunities. Some people prefer to leave the country rather than stay. As a result, these other states only serve as a breeding ground for talent, which rarely stays within.
Furthermore, the majority of angel investors are based in Lagos, so startups, their founders, and techies are compelled to relocate to Lagos to gain visibility and opportunities for growth.
Also, the high concentration of tech activities in Lagos puts other cities across the country at a significant disadvantage because the incentives offered by the Lagos tech ecosystem cannot be matched by these other cities, causing them to lose talent to the Lagos market, where there is a high demand and high reward for these skills.
The various state governments must gain a better understanding of what the tech ecosystem is and how to protect it. This will assist them in developing policies that will drive rather than stifle growth in the regions. This is one of the reasons why investors are hesitant to invest in these regions region because there are rather not attractive.
There is also a lack of external awareness of the presence of startups in most states across the country, hence the need for synergy between industry practitioners in these regions with tech journalists for favorable coverage.