The Federal Government of Nigeria has set its sights on raising a $5 billion total investment target for startups by 2027.
This was disclosed by the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, on Monday in a document titled, ‘Accelerating our Collective Prosperity through Technical Efficiency: A Strategic Plan for the Federal Ministry of Communications, Innovation & Digital Economy.’
Dr. Tijani expressed how access to capital was a major challenge for several startups in the country, which he noted is a critical component for a strong digital economy.
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He further stated that the primary objective of the ministry as regards the raising of funds for startups, will be to stimulate their growth and sustainability, with a specific focus on those developing innovative solutions for critical sectors of the economy.
In his words,
“Recognising the critical role of patient capital in the growth of startups, we are committed to increasing the local availability of patient capital. We intend to create an environment for startups to raise the funding they require to thrive locally and promote the domiciliation of startups within our nation.”
He further declared that the ministry would establish an active sandbox environment to encourage and empower innovators and entrepreneurs to develop unique solutions for sectors considered to have limited exposure to technological innovation.
Mr. Tijani also noted that the country is hoping to increase the domiciliation of local technology startups from 1 percent to 25 percent by 2027, increasing their benefits to the economy.
According to him, “Digital transformation and innovation are fast becoming a catalyst for economic progress,” and the “intersection of a strong digital economy and our innovative and youthful population presents us with a unique opportunity to chart a course towards prosperity, inclusion, and global relevance.”
Despite a -29% decline YoY, Nigeria remained the largest market by far in Africa in terms of startup funding, with over 286 $100k+ deals (+14% YoY ) during 2022 and an estimated $1.2 billion in funding, outperforming other countries in the region.
With at least 481 startups active across the country as of August 2022, Nigeria is one of Africa’s “big four” startup ecosystems alongside Egypt and Kenya.
Nigerian startups have access to extraordinary levels of ecosystem support, with almost half the 481 companies having undergone some form of acceleration or incubation since they were formed.
However, there is so much to accelerate in the Nigerian startup ecosystem. In comparison to other leading African startup ecosystems, Nigeria has seen relatively little support from its Federal Government, and an unpredictable regulatory terrain has often served to hinder the development of the ecosystem.
The Nigerian government must understand that funding is essential for startups in the country, as it provides them with the financial resources necessary for growth, innovative market entry, and resilience in a competitive business environment.
Notably, access to capital enables startups to achieve their goals, create jobs, and contribute to economic development in Nigeria.