Of the dozens of tech start-ups based in Nigeria, the best known among them, sites like Jumia, Konga, Wakanaow, are just the tip of the iceberg. In 2015, Seedstars World, a major startup competition active in dozens of emerging markets, made Lagos its headquarters. Startup incubators are popping up to groom and launch promising ideas. Deals are flowing too, with major venture capital firms and private equity firms (PE) becoming increasingly active.
Also in 2015, the second DEMO Africa conference was held in Lagos. TBY was present and witnessed dozens of startups converge on the Eko Hotel in search of contacts and funding. Also present were people with the collective ability to invest hundreds of millions of dollars in fast-growing African firms. From a personal wealth manager for a Lebanese-Nigerian fortune of over a billion to European venture capital firms, the world seems keen to invest in Nigeria’s growth.
The crowd at DEMO is a good example of the advantage that Lagos has over other destinations in the region. It has capital due its status as the commercial center of Africa’s largest economy. It has well trained professionals working at banks and telecoms based on Victoria Island, and there is a young and growing population of smartphone wielding Africans.
In Lagos, customers can already have their groceries and meals delivered by motorcycle. They can shop online and have it delivered to their doorstep the next day and pay for it by card. Most of these industries are currently fragmented, although some are quite advanced. For example, Konga and Jumia compete intensely for market share, but many competitors are chasing their success. Yudala has made inroads, and there are rumors of international online retailers entering within the next two years.
The feeling among investors and many in the tech scene seems to be that Nigeria is on the cusp of a revolution. Currently, a small but rapidly increasing proportion of Nigerians have smartphones. As Chinese brands force the cost of the devices down and expected reforms tie banking to phones and allow the nation’s over 100 million telecoms customers to transfer and spend money, tech will have a massive importance. Currently, there are far more Nigerians using mobile phones than there are Nigerians with bank accounts, which will undoubtedly remain the case, but the ratio may improve.
Already, the major banks are in a race to roll out e-payment technology ahead of their competitors. Diamond Bank, which is chaired by Pascal Dozie, who was interviewed by TBY and also chairs the Nigerian branch of MTN, has debuted a service wherein MTN customers can open a bank account via text message. They can subsequently access a range of services, the same available to any banking customer. As such schemes multiply across the industry and the CBN takes a clear stance on mobile banking, payments will become much easier.
The African continent has long been recognized for its ability to “skip“ the development steps that other nations had to climb. The United States had established retail spaces far before it developed e-commerce. In Nigeria retail space is slow to construct and expensive to illuminate and service, while after only five years, Konga has a valuation of around $400 million.
Nigeria is at the center of the region’s tech boom and its companies are growing quickly. Technology is reshaping the way that Nigerians shop, eat, find deals, and do everything else. The difference between West Africa and the Western world is that the potential for parallel growth in the economy and tech is massive. As income’s rise, technology will become increasingly important, and increasingly valuable.