Businesses in Africa’s largest economy (Nigeria) face various challenges on a day-to-day basis and Tech/Fintech startups that exist in its ecosystem have their own share of difficulties. A Survey that shows the tough situations these tech/Fintech startups go through was conducted by two Washington-based organizations: ONE campaign, an international non-profit seeking to fight extreme poverty (especially in Africa), and the Washington think tank center for global Development.
According to this survey, more than half the respondents identified the lack of sustainable electricity supply as an extreme constraint. A major part of the startups reported 30 or more power outages every month. This only goes to show that many of the startups sustain the power shortages by investing in generators, that most likely cost a whole lot to run.
This investment in generators could have as well been put to other uses, as 60% of these startups also reported access to credit as another challenge. Annually, Nigeria features among the top destinations in Africa for startup investment, but much of the funding goes to already established businesses, that have foreign-trained founders or a high-profile. For many more without these features, the reality is much fiercer given the unwillingness of local banks’ to provide loans to startups, and even when they decide to, but with a very high-interest rate which the startups are not able to comply with. While there are wealthy Nigerians who might fund home-grown startups but they seem reluctant to do so. Other obstacles reported by entrepreneurs are political instability, corruption, multiple government taxes, and levies.
The Nigerian government points to the fact that it has improved its rank on the World Bank’s Doing Business 2019 report as it went from 146th last year to 131st as proof of its efforts to improve the climate of businesses. But it seems to be that as the World Bank’s report measures progress more by changes to policy rather than implementation, it could be indicated that it’s getting easier to do business in Nigeria only on paper.
These challenges that plague Nigeria’s business may be curtailed by the tech ecosystem itself. From off-grid energy companies that drive up electrification to Fintech startups looking to boost financial inclusion and access to credit, startups are struggling against and sometimes beating the odds.
Nigerian entrepreneurs always repeat this saying (borrowed from New York):
If you can make it here, you can make it anywhere.