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Lagos, Nigeria’s financial capital, is dwelling to 23 of the nation’s 28 corporations on this 12 months’s Monetary Instances rating of the fastest-growing African companies.
Odunayo Eweniyi, co-founder of fintech start-up PiggyVest, says corporations flock to Lagos partially due to its measurement. The quickly rising metropolis is without doubt one of the largest cities on the earth and the biggest in sub-Saharan Africa, with some estimates placing its inhabitants at 20mn, accounting for 10 per cent of Nigeria’s whole.
“Should you’re huge in Lagos, then you definately’re huge in Africa,” Eweniyi provides. “You have got a right away scale and it’s place to check and scale your product.” She factors to successes that she argues have made Lagos the “fintech capital” of Africa.
The latest of those was a $110mn funding round for fintech group Moniepoint (ranked 16 this 12 months based mostly on 2023 revenues) in October, which gave it “unicorn” standing with a valuation of at the least $1bn — a uncommon vivid spot given the current gloomy funding marketplace for African expertise corporations.
Different examples are PalmPay (ranked 2), Paystack, the funds processor that was acquired by Silicon Valley group Stripe in 2020, and competitor Flutterwave, which achieved a $3bn valuation three years in the past.
These and different successes noticed Lagos ranked because the world’s high rising tech hub in a current survey by Dealroom, a worldwide supplier of information and intelligence on tech and start-up ecosystems.
Brian Odhiambo, associate at Novastar Ventures, a enterprise capital fund, says Lagos presents an “lively angel funding community” that gives an early lifeline for corporations nonetheless determining their product and technique. “You see corporations change into larger quicker right here due to the size,” he says. “There’s an ecosystem right here [in Lagos] that helps corporations develop and our strategy as buyers is to be near the market.”
Iyin Aboyeji, a serial expertise entrepreneur and investor, who has been instrumental in constructing two profitable start-ups, together with Flutterwave, agrees. “Lagos makes it simple for folks to construct enterprise,” he says.
Aboyeji factors to the “density” of Lagos, the place all main monetary establishments are positioned shut to one another within the enterprise districts of Victoria Island and Marina, which makes it simpler to arrange conferences. He contrasts this to the break up between Johannesburg and Cape City in South Africa.
But Lagos’s crown is displaying indicators of slipping. The funding rush that bankrolled the earliest Nigerian start-ups has slowed — in keeping with the remainder of the continent. The variety of enterprise capital offers into Nigeria fell 7 per cent final 12 months, though the nation regained its place as Africa’s high funding vacation spot, boosted by signature offers resembling Moniepoint’s capital elevating.
Begin-ups in different sectors have additionally struggled to attain the size fintechs have in Lagos. However Odhiambo says that’s solely to be anticipated and that monetary service suppliers are the “enablers’ in a metropolis the place “there are nonetheless monetary inclusion gaps that should be plugged”. He provides: “Solely after you resolve this may you construct different industries.”
However the largest situation in Lagos is the town’s poor infrastructure, given its measurement and international ambitions. Aboyeji laments the absence of “infrastructure for data work”, declaring that cities resembling New York have services just like the World Commerce Middle.
“There’s no campus of 5,000 capability,” he says. “You’d wrestle to seek out wherever in Lagos that might take 3,000 folks in a single go.” He’s now investing in a 72,000 square metre expertise enterprise park on the outskirts of Lagos to handle the hole he sees out there, his most formidable mission but.
“Lagos has accomplished a barely competent job of creating enterprise occur,” Aboyeji provides. “There’s primary safety and a few social infrastructure and habitable components of the town. However I at all times really feel it might be higher . . . it’s positively not punching above its weight.”
The transport infrastructure can be struggling to deal with Lagos’s fast-growing inhabitants, with residents usually caught in site visitors. A current bridge closure for upkeep work led to chaos on the roads, inflicting extreme disruption for these commuting to the enterprise districts of Victoria Island and Ikoyi for hours.
With the nation dealing with its worst financial disaster in a era, many younger, expert Nigerians are searching for higher alternatives overseas. “Tech is dropping numerous its expertise due to how tough it’s to stay right here,” says Eweniyi. “Distant work [in Lagos] helps, however most individuals simply wish to transfer overseas.”
Eweniyi spent 18 months working from the UK earlier than returning to Nigeria as a result of she discovered the gap made it nearly unattainable to run PiggyVest. However she acknowledges her case doesn’t apply to staff exterior high administration.
“There are sacrifices I’ll make as a result of I consider there’s one thing right here. However I’m the founder and so I can’t inform folks to not transfer as a result of they don’t should bear the identical alternative prices that I’ve. They’ve a unique imaginative and prescient for their very own lives . . . so how will we hold the expertise?”
