Sabriyya Pate is the Franklin Williams Intern with the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations.
The United States has Silicon Valley, Germany has Silicon Allee, and one day, Nigeria may have its very own Silicon Lagoon, right in the heart of the country’s oil-rich south.
On July 17, Nigeria’s Minister of Information and Culture, Lai Mohammed, revealed a government initiative to inspire entrepreneurship and innovation among talented young Nigerians. Several investors will contribute to a one million dollar venture capital fund announced at the Creative Industry Financing Conference in Lagos.
The initiative is part of an effort to create one million jobs in three years, though the government has yet to release details on the fund. This news comes as the International Monetary Fund projects the Nigerian economy to grow faster than South Africa’s in 2018.
As the most populous country in Africa, Nigeria boasts a diverse entrepreneurial space where the telecom and film industries are contributing more and more to GDP every year. Past Gallup surveys have found that 67 percent of Nigerians have considered starting their own businesses compared to 1 in 5 African youth who plan to do so. Meanwhile, an investment vehicle for entrepreneurs, the African Business Angel Network, has emerged as a way to get more people excited about future investments in the continent as it continues to diversify away from extractive industries and agriculture.
Unfortunately, investments can also promote kleptocracy in Nigeria. Private contractors have been known to create fake businesses or exaggerate the costs of their projects to make a profit for both themselves and the corrupt government officials. As specifics of the one million dollar venture capital fund announced by Lai Mohammed are released, it will be important to take this into consideration and design safeguards against corruption.
Nevertheless, as Silicon Valley venture capitalists look abroad to Berlin, Stockholm, and London for their investments, startups in Nigeria by and large remain virtually invisible to angel investors and internationally recognized venture capital firms. There are, of course, notable exceptions as Nigerian entrepreneurs continue to seek and await funding for their ideas. Nigerian online retail companies, travel sites, and e-commerce platforms have attracted South African, Swedish, and French investment.
Despite a poor and unreliable infrastructure in Africa’s most populous country, Nigeria has the talent pool to prove critics wrong. While some entrepreneurs have cautioned against relying on venture capitalists in Nigeria for funding, these firms have the potential to offer entrepreneurs more than just money. Traditional venture capital firms can also offer access to successful innovators and financiers.
Internationally recognized venture capital firms could provide necessary cash flow, network, and mentorship to Nigerian entrepreneurs. Such entrepreneurs could eventually compete with the tech industries of the U.S. and Germany. International and domestic financiers of those ambitious Nigerians with hazaka (a Hausa word for wit) could promote innovative solutions to water insecurity, poverty, and other issues facing Nigeria, West Africa, and the continent at large.
Venture capital investment into Nigeria has the prospect of strong returns for investors. Between the one million dollar public-private partnership for the venture capital fund and increasing diversification of industries contributing to Nigeria’s GDP, the ball is already rolling. Attention from more venture capitalists will serve the burgeoning Nigerian startup scene—and the country—well.