In Africa, young Nigerians are taking the lead in what we call a brave new world. They are deploying technology to provide solutions to everyday problems, and in the process creating stupendous wealth.
With little institutional support, smart Nigerian entrepreneurs are emerging to seize the technology space. While at it, impacting many lives by creating job opportunities, improving the well-being of people and attracting significant foreign direct investment into the country.
The tech startup scene in Nigeria is vibrant and growing rapidly due to its large population, youthful demographic, increasing connectivity, and growing middle class which have created an attractive market for technology-based solutions to various social, economic, and political challenges.
While it can boast of the largest number of startups in the Africa tech ecosystem, there are also significant challenges that startups face in Nigeria.
This article will highlight the challenges and opportunities that are present in Nigeria’s tech startup.
Challenges Faced by Tech Startups in Nigeria
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Regulatory environment:
A number of promising tech startups in Nigeria with the potential to immensely drive profit to the nation’s economy stopped operation due to the government’s inconsistent approach to policies that relate to tech support. For instance the freezing of the bank accounts of six Fintech companies for 180 days, alleging that they were complicit in operating without a license. It is more disheartening to know that these companies have licenses from Nigerian authorities to operate as digital platforms. In 2020,Lagos state government banned Gokada, Opay, and other bike hailing platforms overnight.
Pay stack were banned by the CBN from offering bank verification number validation services.
Also, the ban on Crypto currency that sent shock waves through the system and saw the immediate death of many startups tech companies.
Infrastructure deficit:
According to the International Monetary Fund(IMF), Nigeria’s infrastructure stock remains far below the 70% international benchmark. Nigeria’s infrastructure deficits, especially in power supply, internet connectivity, transportation, water, and pipelines pose significant issues for startups operating in the country.
Power failure in Nigeria has often contributed to the endemic corruption, inefficiency, poor technical expertise, and poor planning that characterize the public procurement process in Nigeria. Tech startups suffer operational consequences when they spend a fortune on alternative power sources. If there’s no demand or low purchasing power of willing consumers due to the high cost of products or services a startup is providing, then that startup won’t be around for long.
Despite the fact that Nigeria has the largest number of online users in Africa, the quality of internet services in the country is still poor. The reason for the penetration of internet services across the country is that there is an increase in the number of those who use mobile data over broadband users. While mobile data can work effectively for an individual, it cannot serve large organizations or businesses that require a lot of people online at the same time.
Access to funding:
Securing funding remains a major hurdle for most startups in Nigeria. Funding a tech company is capital intensive, and the best way most owners can acquire enough money is through loans.It is no news that the banks in Nigeria are always reluctant about loaning to small enterprises for fear of bad loans, this makes it tougher for startup tech firms to convince the banks that they are trustworthy. Also, most investors prefer to invest in more established businesses, leaving many early-stage startups struggling to raise capital.
Opportunities in Nigeria Tech Startups
Financial Technology(Fintech):
This is the biggest tech startup sector in Nigeria. It has received more Venture Capital(VC) funding than any other sector in Nigeria. Fintech companies in Nigeria are driving real change for consumers as well as businesses. They are unbundling financial services that used to go through the banks by providing more efficient and streamlined services.
Market Analysis
- Average annual growth rate: 21%
- Projection: Nigeria’s fintech market is estimated to reach $543 million by 2025.
Successful Entrepreneurs in FinTech
Olugbenga Agboola: The CEO of Flutterwave, an online payment company that helps African companies and creatives make and collect payments anywhere in the world.
Ladi Delano and Jide Odunsi: The founders of Moove,a mobility fintech startup which coordinate vehicle ownership in Africa by providing revenue-based vehicle financing to mobility entrepreneurs.
Shola Akinlade(the company CEO) and Ezra Olubi(the company CTO): The founders of Paystack, it makes online payment easier and more consistent for businesses and consumers.
Tayo Oviosu: The founder of Paga, a mobile payment company that is tested, reliable and quick even without an internet connection.
Mitchell Elegbe: The founder of Interswitch, a commerce company with integrated digital payments and focuses on businesses in Africa.
Joshua Chibueze, Somto Ifezue, and Odunayo Eweniyi: The co-founders of PiggyVest, one of the best platforms for saving.
Big FinTechs and their Unique Selling Proportions
Flutterwave
Its ability to process payments across multiple currencies and channels, including debit/credit cards, bank transfers, and mobile money.
It has partnered with over 40 banks across various African nations.
Moove
It offers mobility entrepreneurs access to revenue-based financing in markets with lower level of credit access.
It focuses on affordability, flexibility, and convenience, with no hidden costs or long-term commitments.
Paystack
Its smooth integration with popular e-commerce platforms, as well its partnerships with major banks and card networks.
It allows businesses to accept payment both online and offline.
Paga
It enables users to make transactions, pay bills, and transfer funds using their phone numbers.
Its widespread accessibility, as it can be used by anyone with a basic mobile phone, even without access to the internet.
Interswitch
It is a leading provider of payment processing solutions in Nigeria, offering a range of services such as card issuance, payment switching, and ATM deployment.
Its extensive network of partners and, merchants, which includes over 30 banks and thousands of retailers and businesses.
PiggyVest
It helps users save money at an interest rate higher than that offered by traditional banks.
PiggyVest features like flex dollar that enables users to save in dollars, earn interest and transfer dollars to anyone on piggyVest.
Its gamified approach to saving, with features like challenges, bonuses, and rewards that encourage users to save more and achieve their financial goals.
Digital Healthcare Startup:
The Nigerian digital health startup industry has been steadily growing over the years. Digital healthcare will help in improving the quality of life, reduce the total cost of a healthcare, and make healthcare efficient and easily accessible.
Market Analysis
- Average annual growth rate: 12.6%
- Projection: Nigeria’s digital healthcare market is expected to reach $47 billion by 2025.
Successful Entrepreneurs in Digital Healthcare
Temie Giwa-Tubosun: The founder of LifeBank, one of the top digital health startups in Nigeria. In bid to largely contribute to the health sector and save the lives of people out there, this platform deals mainly in the speedy transmission of blood from labs nationwide to patients and doctors in hospitals.
Owobu Emmanuel Osayi, Charles Akhimien Immanuel, and Raman Anurag: The founders of Omomi, a web and mobile-based childcare service developed to help improve the health of younger children by providing parents with ample opportunity to monitor their children’s health easily.
Adeloye Olanrewaju and Cletus Ajibade: The founders of SaferMom, an innovative platform that deals with high maternal and infant mortality crises in Nigeria.
Emeka Onyenwe: The founder of Find-a-med, a mobile directory that gives pertinent information on the closest health and medical centers around its users.
Femi Kuti, Ope Olumekan, and Matthew Mayaki: The founders of Kangpe, a mobile application that allows patient from Nigeria and other countries of the continent to interact with and seek sound advice from seasoned medical practitioners in less than 10 minutes.
Adham Yehia and Chibuzo Opara: The founders of Drugstoc, a health tech startup that helps licensed hospitals, pharmacies, and medical experts obtain authentic pharmaceutical and healthcare products directly from certified distributors nationwide.
Unique Selling Proportions
LifeBank Nigeria
Its mobilization of blood donations from individuals, taking inventory of the blood available nationwide, and transmission of blood in the right condition to the exact hospitals/locations it is currently needed.
Report shows that this platform has served more than 500 hospitals, transported more than 12,000 products, synergized with nothing less than 6,000 donors with 2,000+ lives being saved.
Omomi
Parents can easily track the immunization status of their kids, manage diarrhea at home via a responsive and interactive DIY platform.
It has served more than 30,000 mothers up to date, and the platform offers a lot of cool features to help parents make excellent health decisions for their children.
It has an interactive section where parents can interact with parents from other parts of the country who have had similar experiences in time past. It also comes with a “chat-a-doctor” feature that gives parents access to a doctor for as low as N600 per week.
SaferMom
It provides expectant/nursing mothers with timely and personalized health information via a two-way SMS system and prerecorded voice services, basically in the dominant native languages.
This platform also delivers health campaigns about malaria prevention, HIV/AIDS, tuberculosis control and more, all through low-cost mobile technologies.
Find-a-med
It provides turn-by-turn directions to the nearest medical health facilities and services to its users, ranging from hospital, clinic, pharmacy, dental care, eye care, diagnostics, therapy, laboratory, to name but a few.
The app features more than 5,000 registered medical centers, showing how large its database is.
Users don’t have to sign up or log in before they can use the app and there is a catalog of reviewed hospitals on the app to help you make informed decisions as to which medical health facility to visit.
Kangpe
This app helps users to get in touch with doctors who can provide relevant answers to questions that involves their health.
Some of the intriguing features offered on the platform include-“Find a Doctor”, “Book appointments”, “Health tips”, “Featured questions”, among others.
Drugstoc
This health tech startup currently serves over 3,000 doctors and pharmacists in Nigeria, and it leverages on the globally accredited end-to-end traceable supply chain to help guarantee the genuineness of its pharmaceutical and healthcare products.
It is also ISO certified.