Country Profile: Nigeria

Published 21 March 2023
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Nigeria, Africa’s largest economy, with a population of over 210 million, has, over the past few years, experienced a tremendous surge in investment in both technology firms and venture capital. This country profile takes a look at the tech landscape in this West African tech hub from 2019 to Q1 2023.

Since our last profile of Nigeria, there has been a huge rise in funding for tech start-ups, especially for early-stage businesses. According to data from the Nigerian Bureau of Statistics, Nigeria’s tech industry grew by 86% in 2020, despite the COVID-19 pandemic. This growth was driven by a significant increase in funding for startups and early-stage ventures.

Aside from blazing a trail in funding, Nigeria is also pioneering in creating a supportive environment for tech to flourish. In October 2022, Nigeria became the third African nation to enact a Start-up Act, following Tunisia and Senegal, and in March 2023, was the first African nation to approve guidelines on open banking.

Currently, of the 35 start-ups to complete The Baobab Network’s accelerator programme, 12 hail from Nigeria. These start-ups focus on a variety of sectors including FinTech, logistics, HealthTech, and EdTech. You can check out our portfolio here.

Fig. 1– Nigerian tech start-ups backed by The Baobab Network

Nigeria has not been an exception as Africa has consistently broken financial growth records year after year. From less than $300 million USD raised by Nigerian tech startups in 2018, funding surged by more than three times, to slightly over $1 billion USD in 2019.

Fig. 2– Amount raised and number of deals by Nigerian companies since 2019

Understandably, there was a dip in 2020, as the world faced the COVID-19 pandemic, but Nigeria’s impressive streak continued in 2021 with $1.8 billion raised in an epic year.

FinTech is king

As is the trend across Africa, FinTech has dominated in the number of funding rounds garnered in Nigeria, with 156 deals being closed by start-ups offering financial services between 2019 and 2022. The next sector was transport and logistics, with 64 deals, 41% of the FinTech deals.

Fig. 3- Proportion of funding rounds in Nigeria since 2019, by sector

Since 2022, Nigerian FinTech start-ups closed almost half a billion dollars in funding, over 38 rounds. By comparison, in Egypt FinTech start-ups raised $353 million USD over 13 rounds, South African FinTechs closed $223 million over 16 rounds and in Kenya, just $31 million USD over 14 rounds.

Fig. 4- Map of Nigerian FinTechs, by category, that have raised funding since 2022

As seen above, the offerings within the financial services sector vary, with many innovators in the space. It is no surprise, therefore, that of the 9 African unicorns, 3 are FinTechs originating in Nigeria; FlutterwaveInterswitch, and OPay.

Breaking down West Africa

In the West African region, Nigeria unsurprisingly led in funding, by quite a margin, but other countries within the region have picked up over the years. In 2022, Ghanaian start-ups closed $37 million USD over 8 rounds, Côte d’Ivoirian start-ups scored $25 million USD over 3 rounds, Senegalese start-ups closed $14 million over 4 funding rounds, and Mali had one round amounting to $500,000 USD.

Fig. 5– Investment into West Africa, by country

Start-ups in the West African region as a whole, raised $845 million USD in 2022, over 101 disclosed funding rounds, but less than 10% of funding went to countries other than Nigeria, and just 16 of those rounds went to other countries in the region.

Early-stage investment

According to our report on early-stage investment in Africa, done in partnership with Tech Cabal and Future Africa, Nigeria led in the number of early-stage deals in 2021, and the trend has held since with over $110 million USD raised over 58 early-stage funding rounds in 2022. Comparatively, Egyptian early-stage tech start-ups raised just under $100 million USD over 44 funding rounds last year.

Who is investing?

The top disclosed investors supporting Nigerian tech include Voltron Capital, alongside accelerators like ourselves and Y Combinator.

Fig. 6– Institutional investors in Nigeria with over 2 disclosed rounds in 2022

Overall, while Nigeria’s economy has faced challenges over the past few years, the country’s tech ecosystem has continued to thrive, driven by government support and billions of dollars in investment. With a young and tech-savvy population, Nigeria is certainly set to maintain its title as a leading tech hub in Africa.