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Lagos, Nigeria’s financial capital, is dwelling to 23 of the nation’s 28 corporations on this yr’s Monetary Occasions 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 greatest cities on the earth and the most important in sub-Saharan Africa, with some estimates placing its inhabitants at 20mn, accounting for 10 per cent of Nigeria’s whole.
“When you’re huge in Lagos, then you definately’re huge in Africa,” Eweniyi provides. “You may have a direct scale and it’s an excellent place to check and scale your product.” She factors to successes that she argues have made Lagos the “fintech capital” of Africa.
The newest of those was a $110mn funding round for fintech group Moniepoint (ranked 16 this yr primarily based on 2023 revenues) in October, which gave it “unicorn” standing with a valuation of a minimum of $1bn — a uncommon shiny spot given the latest 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 prime rising tech hub in a latest survey by Dealroom, a worldwide supplier of information and intelligence on tech and start-up ecosystems.
Brian Odhiambo, companion at Novastar Ventures, a enterprise capital fund, says Lagos presents an “energetic angel funding community” that gives an early lifeline for corporations nonetheless determining their product and technique. “You see corporations turn out to be greater sooner right here due to the dimensions,” he says. “There’s an ecosystem right here [in Lagos] that helps corporations develop and our strategy as traders 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 individuals to construct enterprise,” he says.
Aboyeji factors to the “density” of Lagos, the place all main monetary establishments are situated 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 — according to the remainder of the continent. The variety of enterprise capital offers into Nigeria fell 7 per cent final yr, though the nation regained its place as Africa’s prime funding vacation spot, boosted by signature offers akin to Moniepoint’s capital elevating.
Begin-ups in different sectors have additionally struggled to realize the dimensions 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 must be plugged”. He provides: “Solely after you remedy this may you construct different industries.”
However the greatest concern in Lagos is town’s poor infrastructure, given its measurement and international ambitions. Aboyeji laments the absence of “infrastructure for data work”, stating that cities akin to New York have amenities just like the World Commerce Middle.
“There’s no campus of 5,000 capability,” he says. “You’d battle to seek out wherever in Lagos that might take 3,000 individuals 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 challenge but.
“Lagos has performed a barely competent job of creating enterprise occur,” Aboyeji provides. “There’s fundamental safety and a few social infrastructure and habitable components of town. However I at all times really feel it might be higher . . . it’s positively not punching above its weight.”
The transport infrastructure can also be struggling to deal with Lagos’s fast-growing inhabitants, with residents usually caught in visitors. A latest 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 technology, many younger, expert Nigerians are in search of higher alternatives overseas. “Tech is shedding a number of its expertise due to how tough it’s to dwell 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 space made it virtually unattainable to run PiggyVest. However she acknowledges her case doesn’t apply to workers outdoors prime administration.
“There are sacrifices I’ll make as a result of I imagine there’s one thing right here. However I’m the founder and so I can’t inform individuals to not transfer as a result of they don’t must bear the identical alternative prices that I’ve. They’ve a distinct imaginative and prescient for their very own lives . . . so how will we maintain the expertise?”
