Nigeria's Technology Industry: The New Economy - African Business Magazine
Nigeria’s Technology Industry: The New Economy

Nigeria’s Technology Industry: The New Economy has become something of a talisman for the Nigerian technology sector. An online retailer similar to the global giant Amazon, its rapid growth since its foundation less than two years ago has given it international recognition.

Its founder, Sim Shagaya, a former soldier, followed it up with DealDey, a daily deal site that follows in the footsteps of Groupon. Shagaya is not finished yet. In March, he told the Economist Nigeria Summit that the next step was to create a platform for Nigerian businesses to streamline their sales process and join the e-commerce revolution – a Nigerian eBay.

Shagaya’s journey is a demonstration of the promise and the direction of Nigeria’s technology industry. The country’s economic rebasing in 2014 demonstrated how far the technology industry has come. Driven by the rise of ICT and telecoms, the new baseline for the economy showed that the service sector was 240% larger than under the previous estimates.

The sheer numbers are incredible: Penetration of cellphones in Nigeria is 68% and around a quarter of Nigerians have a smartphone. There are nearly 130 million active mobile connections in the country, up from less than 90 million in 2010 and only a handful at the start of the millennium.

With a growing, urbanising population of nearly 170 million people and GDP growth predicted at more than 6.5% per annum for the next four years, the potential commercial opportunity is huge, particularly considering the current gaps in the market. Internet penetration is only around 33%, and just 9.1% of households have internet access directly. Despite the huge appetite for technology, the price of bandwidth is yet to come down to affordable levels for many Nigerians. The arrival of four large fibre-optic cables, including the huge Main One and Glo-1 cables that connect Nigeria’s coast to global communications infrastructure is changing that. The dramatic increase in bandwidth could, analysts say, release the latent potential in Nigerian technology.

Some global companies are already positioning themselves to take part. IBM has created innovation hubs in the Lagos and Calabar, joining the search engine giant Google. Perhaps more exciting, however, is the rush to create working spaces for new, Nigerian-owned and founded companies.

In Anthony Village, Lagos, Spark, an incubator created by the founders of the online Nollywood distribution platform, iRokoTV, plays host to startups offering hotel bookings, rental listings, drinks retail and computer games. In Lekki, 88mph, an innovation hub, has expanded from its bases in Cape Town and Nairobi to join the Nigerian market. In Yaba, the Information Technology Developers Entrepreneurship Accelerator (iDEA) sits right next door to CCHub, both home to startups and training courses for budding entrepreneurs.

At iDEA, Tomi Davies, a serial entrepreneur and technology expert who has worked for FTSE 100 companies and major government departments, mentors young developers who have created projects for the domestic and international markets. The accelerator is a joint venture between the Federal Government, private sector and the University of Lagos, and Davies works with all three to ensure that their policies and priorities are aligned.

The current government, he says, in particular the ministries of Communication Technology and Industry, Trade and Investment, have been supportive of the technology industry’s efforts, providing them with real estate and financial incentives. Although he acknowledges that it may not be possible to actively create a new Silicon Valley in Nigeria, it is possible to set up the environment in which it could flourish.

“It’s the fashion of the moment, and my job is to make sure that the approach is strategic, rather than tactical,” he says. “I engage with federal and state governments on policy and infrastructure. The reason I’m sat here today [at iDEA] is due to the fact that I was able to go to the Lagos State Government a year ago and say: ‘This is the infrastructure of the future, you have to find a way for it’. And they gave a waiver to Main One to put fibre in to Yaba. The whole idea is to grow the tech ecosystem here as a result.”


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Written by African Business Magazine

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