Nigeria is Africa’s top destination foreign direct investment in technology start-ups. Between 2015 and 2022, Nigerian tech startups were funded total value just over 2 billion US dollars. This is the highest amount of funding recorded by any country in Africa.
The “big four” country of Nigeria, Egypt, South Africa and KenyaLeading Africa start up stage. They currently make up about one third of the continent’s incubators and accelerators, and receive 80% of FDI for tech startups entering Africa.
This is highlighted by the announcement that tennis legend Serena Williams’ venture capital firm recently retired, Serena VenturesTo be donate Nigerian data and insights company Stears in a $3.3 million seed round led by MacC Ventures. This means that Serena Ventures has partnered with institutional investors MaC Venture Capital, Melo 7 Tech Partners, Omidyar Corporation and Cascador invested $3.3 million in Stears.
What is attractive?
The “big four” countries attract more start-up FDI than other African countries because of their large economies and large populations.
Nigeria, for example, with GDP about 440 billion dollars and population about 211 millionis predicted to be the third largest country in terms of population in world in 2050. Similarly, Egypt, Kenya and South Africa boasts some of the largest economies in Africa, with GDPs of $404 billion, $110 billion and $420 billion, respectively.
Investors are attracted by the large market in these countries and the potential of the technology companies in them to expand across Africa.
Why did Stears get Serena’s nod
There are several explanations for Stears’ investment Stunning. It has get a raise at around 6.5% monthly since 2017 and has doubled the number of users from last year. Corporate clients, mainly employees working in various financial-related institutions across Nigeria, now provide more than 75% turnoverincrease from 45% in 2021.
This makes it a rare paid wall subscription success story in Nigeria, where the general consumer do not want to pay websites for information.
Stears has also positioned itself as an African data collector and analyst for international organisations. Its client including the European Investment Bank, the United Nations Development Program and the UK Office of Foreign Affairs, Commonwealth & Development.
Stears uses his data and analytical skills to create interactive visualizations and create First real time election tracker in 2019 general election cycle
Company speak it plans to use the new seed funding to expand its geographical coverage by establishing a presence in east and south Africa and by expanding its product offering.
Corruption is still a problem
Due to corruption, Nigeria, unlike other oil producing countries like Norway and Qatarwas not able to benefit from soaring global oil prices. It used to be Africa’s largest oil producer but lost this position to Angola this year.
The growing importance of Nigerian tech startups is in line with the global reality. With threat of climate change and potential transformation away from fossil fuels, Nigeria’s oil industry is likely to suffer.
While the good news is that Nigeria continues to attract investment in tech startups, urgent action is needed to tackle corruption. This will attract more investment into the country and help reduce poverty. Furthermore, tech startups can help fight corruption, and they can secure investment while doing so.
Our research highlight the workings of such a case. BudgITis a Nigerian NGO that has secured $400,000 from Omidyar . Network in 2014. In 2016, it can secure an additional $1.4 billion from Bill & Melinda Gates Foundation.
BudgIT delivers technology products that empower people by providing access to budget data often hidden in secret. Like Stears, it pioneered open and active citizen participation in favor of transparency regarding the budgeting process in Nigeria.
Stears did something similar with real time election tracker. This technology product has earned Stears a reputation in the tech industry. It also helps to improve electoral transparency in Nigeria.
Such activities can help promote accountability. This will give foreign investors more confidence when investing in African countries and highlight the value of such companies.
Everything could be better
Technology company to be source of employment for millions of people on the planet and their activities are changing nature of work. Nigeria needs this sector to succeed, if only to help unemployment problem.
To do this, political stability, lower production costs and good infrastructure (especially power, communication and transportation) can help. Liberal foreign direct investment policies that do not restrict investment and free capital flows would also be beneficial.
Crucially, Nigeria’s tech startups would attract more capital if Nigeria were less corrupt. Their activities can help secure investment and reduce corruption in the country.
Quote: Serena Williams’ investment shows that Nigeria’s tech sector is attractive — but things could be better (2022, 2 November) retrieved 2 November 2022 from https://techxplore. com/news/2022-11-serena-williams-investment-nigeria -technology.html
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