Decades ago, there was nothing like the Nigerian tech ecosystem. What Africa’s most populous country was the government as an employer of labour on one side and all sorts of businesses and SMEs on the other side.
Regardless, with a rise in mobile and internet penetration (51.44% in 2021) and an economic shift to technology, there has been a geometric rise in the number of startups. This has ultimately given rise to the Nigerian tech ecosystem. As a result, buzzwords like fintech, edtech, healthtech, agritech, eCommerce, logistics, automotive, propertytech, regtech, and legaltech have become more popular. All are leveraging technology to offer innovative solutions to some of the pressing Nigerian problems.
For example, Zwartttech, a Netherlands headquartered startup in Nigeria, provides remote IT jobs for Nigerians by connecting them to the global marketplace. The startup bridges the gap between the West with a shortage of senior software experts and Africa with great senior software talents. Through this, Zwarttech is not only tackling the unemployment challenges in Nigeria. It is creating a just, equitable, diverse, and inclusive world.
The exciting part is that young Nigerians at home and abroad are founding businesses in the different business sectors or verticals mentioned earlier. Also, foreigners have not been left out in the medley to get a slice of the Nigerian tech ecosystem.
As the Nigerian tech ecosystem continues to grow and evolve, the present trend is that many of these startups are raising pre-seed, seed, and different series of funding, running into millions of dollars from venture capitalists, angel investors, and private equity firms. And you know what, Nigeria now has three unicorns startups. Flutterwave raised $170 million to hit $1 billion, Andela raised $200 million at a valuation of $1.5 billion, and Jumia, an eCommerce firm listed on the New York Stock Exchange. There have also been mind-blowing acquisitions. One that particularly stands out is that of Paystack that Stripe acquired for $200 million.
Although the government has not played any significant role in the growth of the Nigerian tech industry, it has a role in regulating. This is part reason why the National Information Technology Development Agency (NITDA), the agency to oversee Nigeria’s technological transformation, is reviewing the 2007 bill establishing it.
However, some of the bill’s content has sparked fears among founders, investors, stakeholders, and policy analysts. They worry that the legislation may render the achievements of the sector fruitless.
According to TechCrunch, which has sighted the proposed bill, it states that NITDA wants tech companies operating in Nigeria to get a license, pay pre-tax profit levies, and sanction whoever (person or company) runs contrary to the new Act’s provisions.
In Section 13, NITDA proposes establishing a fund (The National Information Technology Development Fund) to carry out the country’s digital economy objectives. The fund will be financed by Grants-in-aid, fees, accrued money under administrative payments and levies charged from tech companies.
The bill states further that tech companies making an annual turnover of N100 million (~$200,000) will have to pay a levy of 1% of their profit before tax. In Section 20 of the leaked bill, NITDA says it will issue licenses and authorizations for tech companies regardless of their size. The licenses are classified into three sections: product, service provider, and platform provider.
If this new review is allowed to fly, then the Nigerian tech industry will be at the mercy of NITDA.
Conclusion
The future of the Nigerian tech industry is brighter than the sun and the moon combined. Startups will continue to raise funds and venture capitalists won’t stop investing. It might interest you to know that Nigerian startups raised $276.5m in the first seven months of 2021. The total amount raised in 2020 was $300 million. This is happening despite ranking 131 on Ease of Doing Business published by the World Bank. The sector only needs the support of the government to complete its robust cycle.
