Every business that operates in Nigeria is currently facing high operating costs. A lot of this is brought on by the country’s power supply. It’s unstable and the internet is not reliable either. On top of this, you also have a very fluctuating currency which is not good to say the least. This makes it very hard for businesses in the tech industry to thrive, but somehow, they are managing. One area in Lagos has adopted the name Yabacon Valley as a result.
The problem is that the ecosystem that is needed to support these thriving businesses is yet to reach maturity. Physical infrastructures are going to need to adapt and they are also going to need to adopt new ways of supporting the current economy. The country, in just over 30 years, is expected to surpass the population of the US and they are going to have 400m people by the year 2050.
Government Grants
You have to remember that governments or even grants are not going to solve the problems that are happening right now. The internet needs to be overhauled and there may even need to be some new regulations put into place too. Of course, when you look at sites such as NetBet you will soon find that they are thriving either way so this just goes to show that there is room for businesses to grow and that they are managing perfectly with the state of the economy right now. Of course, when you look at sub-Saharan Africa you will soon see that there was no indication of true venture capital. Private equity companies wanted to establish companies and part of this is because smaller start-ups are not able to access the resources they actually need to expand. Investment houses are now trying desperately hard to build pathways for start-ups to really grow and they are also trying to allocate capital accordingly.
The Market in Nigeria
At the end of the day, access to the market is just as important as access to money. The strength lies in working with companies at an earlier stage and then connecting them with investors who are down the road. If one was to overcome the expensive internet costs or even generational costs, then overheads would need to be lowered significantly. The cheque sizes are small when you look at Silicon Valley but you will soon see that they do have an oversized impact.
The Funds
The funds that the government have been working on have been a success. A Lagos payment platform has been successful and microtransactions are now booming. An influx of capital has opened up tons of new opportunities for Nigerian entrepreneurs and they are also trying to address deficits too. This includes healthcare and basic needs. Start-ups are the bottom rung of society and right now it looks like more needs to be done, but it’s certainly a good start to say the least.
Tech Start-Ups in Nigeria are Thriving even though Investors are Hard to Come by
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