Experts in the tech sector have stressed the importance of attracting both domestic and foreign investors in order to boost the growth of Nigeria’s tech industry. They noted that while foreign investment is vital, local investors can play an essential role in the sector’s development by providing funding, knowledge, and access to markets. Local investors can also create a more favorable environment for startups and tech companies to flourish.
Speaking at the DETAIL Private Equity and Tech Business Series, experts discussed the legal reforms that are needed to further encourage tech investment in Nigeria. They emphasized that Nigeria is an attractive destination for tech investment in Africa, but that there is a need for legal reforms to promote innovation, protect intellectual property, and create a level playing field. Government and private sector collaboration is key to ensuring the success of these reforms.
The experts included Yvonne Johnson, co-founder of Indicina; Olufemi Shobanjo, head, broker dealer regulation department, NGX Regulation Limited; Mobolaji Adeoye, managing partner, Consonance Investment Managers; Tomiwa Aladekomo, chief executive officer, Big Cabal Media; and Ladi Asuni, partner, Emerging Technology, Data & Analytics, KPMG.
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They identified several trends that have had an impact on the Nigerian tech landscape, including funding and capital cycles, changing customer expectations, and evolving regulatory frameworks. These trends have led to new opportunities for innovation and growth, such as the rise of agency banking. They also highlighted the implementation of the naira redesign policy as a key development in the sector.
The experts also discussed the future outlook for the Nigerian tech sector. They noted that the sector is expected to continue to grow at a rapid pace, driven by the increasing demand for tech-enabled solutions
At the panel discussion moderated by Temidayo Ajayi Bello, Partner at DETAIL Commercial Solicitors, five key pillars were identified as essential for creating a robust tech market in Nigeria. These pillars are human capital, social capital, real assets, digital infrastructure, and financial services. It was emphasized that these pillars are necessary for attracting and retaining investment in the tech sector.
The panellists emphasized the importance of investors setting clear standards for startups in their portfolios. These standards should include financial reporting, risk management, and board oversight. It was noted that these standards will help startups to stay on track and mitigate risks. Additionally, investors should invest in the capacity of local businesses to meet these standards.
The panelists stressed that Environmental Social Governance (ESG) is an important factor for startups in Nigeria, particularly the governance aspect. They noted that startups operating in a challenging environment need strong governance to ensure their long-term success. This includes establishing clear policies and procedures, and implementing robust risk management and oversight. Without strong governance, startups may be at greater risk of failure.They also noted that ESG overall will help to advance the Nigerian tech industry.
The launch of the NGX Technology Board was highlighted as a positive step for the tech sector in Nigeria. This board provides a less stringent regulatory environment for tech startups, making it easier for them to access capital and grow.
The panelists noted that while current foreign exchange policies have been challenging for tech startups, there are opportunities for growth. They noted that by focusing on global markets and developing products and services that are not regulated, startups can mitigate some of the risks associated with the current environment.
According to the panelists, one strategy that tech startups can use to expand their global footprint is to form strategic partnerships with international organisations. These partnerships, they said,can help to expand the reach of the startup’s services, and provide access to new markets. They noted further that providing service products such as software-as-a-service (SaaS) can help to increase revenue and reach a global customer base.