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Startups head to Lagos’s Silicon Valley

Startups head to Lagos’s Silicon Valley

Yaba bus stop in Lagos is a hive of activity: bus conductors shouting destinations; second-hand clothes sellers haggling with buyers; rushing feet in a hurry. But amidst this noise in Yaba, a northern suburb of Lagos, something different is happening: technology companies are taking root.

They are changing the residential community into a hub for technology. This has made some call this area Yabacon, or Yaba Silicon Valley. In 2014, Lagos was named as one of the five most promising startup cities in emerging markets.

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This blooming technology district is in Yaba Local Council Development Area, which was carved out of the old Lagos Mainland Local Government Area. Some high-storey buildings line the Sabo and Alagomeji axis of Yaba but most of the other parts remain bungalows and duplexes for residential use. Yet in the past five years, developers say more houses have been sold for commercial use by technology firms. But what attracts technology companies to Yaba?

At Yaba bus stop, there stands a towering statue of Tai Solarin, a renowned Nigerian educationist. Yaba is known for its many institutions of higher learning. Yaba College of Technology is a leading school for technology and the first institution of higher learning in Nigeria, established in 1947. The University of Lagos is known for its research. The Federal Science and Technical College, a leading technical and vocational institution, is also not far away. Many secondary schools also dot the Yaba landscape. This sheer mass of academic institutions provides a pool of fresh talent waiting to be explored.

Founder of Entrepreneurship website, Enterprise54.com, Oyeniyi Adegoke, who graduated from the University of Lagos in 2008, says that the high number of tertiary institutions in the area has always made it a hub for young people. After graduating, he remained there.

“Yaba has always been known as a centre for youth, many of them doing interesting things with technology. And the technology renaissance we see now is a spin-off of the fact that Yaba is a confluence of young people.” Oyeniyi adds  that technology incubators, the first being Co-Creation Hub (CcHUB), nurtured technology in the area.

Femi Longe, co-founder of the pioneer technology incubator CcHUB, says Yaba was a second option. “We were initially going to use Lagos Island but there was no property there. The only property we found was at Yaba; it was then we realised that it was an ideal location. It is against traffic. It has proximity to the Island. And it is not too expensive. We realised that it will be easier for our members to come to Yaba than to come to Lagos Island,” Longe says.

Initially it occupied one floor of a six-storey building but now the hub has expanded to all the floors, offering various services that cushion the effects of a harsh economy on growing startups. This includes the provision of power, high speed internet, business support and financing advice. Since September 2011, when CcHUB opened for work, 70 startups have passed through it.

“We work with them from when their ideas are very young. We help them with strategies to get their ideas off the ground. We also provide for them a place to work out of with internet access, power and everything that a young business needs,” Longe says.

With over 100 technology hubs, digital renaissance in Africa is closely related to incubator hubs, the World Bank states.

In Yaba, these hubs are attracting young technology enthusiasts from various parts of Lagos. They are also bringing in funders from various parts of the world and attracting tech companies from everywhere to run workshops in the area.

Oyeniyi, who worked from the hub for his first year in business, says that it also provides a necessary ecosystem for his work. “The 30,000 naira [$290] I paid every year for space, solid internet and power is unquantifiable. It also positioned me at the nexus of tech activity. I forged useful relationships. I learnt a lot just being there,” he says.

Easy internet access

Since the early days of CcHUB, other incubator centres like iDEA Nigeria, a hub for startups run by the Nigerian government, and Passion Incubator have sprung up.

Over 30 tech companies, foreign and local, have moved to Yaba since 2011. Konga, the e-commerce site, moved to Yaba in 2014. Africa Internet Group moved six of its tech firms to Yaba in 2014. When BudgIT, the first startup to be weaned off CcHUB, looked for office space in early 2015, they found one in Yaba’s Alagomeji area.

Young people may be attracted to the hubs but what attracts technology businesses?

By working in Yaba, entrepreneurs say unnecessary costs are reduced. Rent is relatively cheap compared to other parts of the city such as Victoria Island, although it is increasing because of the changing business landscape. It is also where they find talent to execute their work. There is an accessible internet connection. In September 2013, telecoms company MainOne, in partnership with Lagos State government, initiated the laying of the fibre-optic cable that covers 27.014 km in the area.

Olufunbi Falayi, who manages iDEA Nigeria, says access to the internet may not be cheap but it is accessible.

“We pay as much as N20m [$190,000] a year for internet. You can imagine if we cut that down to monthly payments and if it is just one startup, how much it will pay. Last month, our electricity bills rose to N143,000 [$720] a month from N80,000 [$400],” Falayi adds.

Lagos’s huge population of 20m presents a market where technological solutions to problems will thrive.

Yet there is more that needs to be done to take Yaba to that place that technology innovation centres across the world reach – that point from which they influence not only their own society but the world at large. That point from where Facebook and other tech companies domiciled in Silicon Valley transform the world.

For Yaba to be that technology centre in the future, three things – talent, internet and power – are needed. Certain government policies around these three would nurture the ecosystem: tax holidays for technology companies in their first five years; an Independent Power Plan for the area which also includes a no-power-cut period; and a commitment to technology companies who employ directly from the tertiary institutions around.

“The government could create a scheme where if a tech organisation hires directly from those schools, the government will match what they are paying the students. We can use that to help students build their work experience. By hiring them, there will also be investment in training – this will go a long way in reducing unemployment,” Longe says, adding that the higher institutions also need to collaborate with their research in a way that will have impact on the growing technology ecosystem.

CcHUB is working to turn these potentials into reality with the i-HQ Project, which aspires to build a hot spot for creative ventures with much-needed adequate infrastructure, resources and an enabling environment in Yaba.

In the next five years, Falayi sees a different Yaba: “Every tech company, no matter where they are, will have at least a service desk in Yaba. That’s how much it will grow. It will grow from being a residential place to a commercial place. I see situations whereby it will spill into Surulere and into Ikorodu.”

Yaba may still be far from that future but one right policy at a time, one new technology company at a time, and the future could be closer.

Temitayo Olofinlua

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Written by African Business Magazine

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