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Context for the country’s current state and startup potential
Wow! Nigeria is a big surprise for me. We arrived on a holiday weekend for Eid-el-Kabir. We experienced very little of the chaos that most people rant about their visit to Lagos. We arrived at the old terminal and while it is dated, it is fine. The road into the city on the Third Mainland Bridge is in good shape (currently free from construction). We are here to meet founders (apply here for Renew Venture Lab), get time with our team and understand the startup ecosystem.
Though in a bit of a downturn, Nigeria continues to be a major player in the global startup ecosystem. With its market potential, impressive capital raises, supportive policies and a mature fintech sector, the country offers fertile ground for innovation and growth.
1. Massive Market Potential - Nigeria's population, at 219 million in 2022, is expected to nearly double to 377 million by 2050, making it the 3rd or 4th largest country in the world. Despite a GDP slowdown and challenging economic times, the IMF expects improvement, signaling a positive economic trajectory.
2. Leading in Startup Investments - Nigeria has raised the highest amount of capital among African startup ecosystems over the past five years, totaling $4.65B. The country has attracted 29% of Africa's total startup investment since 2019 and Nigeria remains a top destination for venture capital, despite a recent slowdown. Nigeria boasts the third-highest number of startup exits in Africa since 2019, following South Africa and Egypt.
3. Supportive Regulatory Environment - Enacted on October 19, 2022, the Nigeria Startup Act fosters a conducive environment for startups with provisions like the National Council for Digital Innovation and Entrepreneurship, a special startup legal designation and various incentives. Nigeria boasts more than 90 accelerators, incubators, coding bootcamps and tech hubs, complemented by the highest number of active angel networks on the continent.
4. Maturing Fintech Sector -
- Fintech Dominance: Nigeria’s fintech sector constitutes one-third of Africa’s fintech market, leading the "Big Four" countries (Nigeria, South Africa, Kenya, and Egypt) with a 32% market share and over $1B in venture capital raised between 2021 and 2023.
- Success Stories: Notable Nigerian fintech successes include Jumia, Flutterwave, Paystack, Interswitch and OPay, setting a foundation for future growth.
- Second Generation Companies: New businesses are building on the infrastructure established by early successes and failures, enabling quicker launches and broader service offerings.
5. Final thoughts…
- The fear of Nigeria is outdated and overhyped. Don’t be swayed by how outside people talk about Nigeria. Lagos is great. Get on a plane and come see.
- There’s value in maturity. Fintech and the startup ecosystem in Nigeria is maturing. Sectors such as healthcare, agriculture, entertainment, etc. show great potential in Africa’s most populated country.
Nigeria’s combination of market potential, investment potential, regulatory support and fintech prowess makes it an exciting hub for startups and investors alike.
Go Deeper on Nigeria?
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
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