Major Challenges the Nigerian Tech Ecosystem Suffered in 2019
The Nigerian tech scene has had an impressive 2019. The ecosystem’s growth was immense. Startups received record-breaking funding rounds, churned out a youthful and vibrant developer community eager to forge technological innovations, and made giant strides.
However, these growths came amidst several challenges that have bedeviled the space. These challenges crumbled startups who were not able to find their way around them, and stunted the growth and impact of some others.
Highlighted in this post are 4 of the major challenges that the Nigerian tech ecosystem encountered this year.
This has been an issue that has bedeviled startups in Nigeria from the beginning of time and this infrastructural deficiencies are yet to end. The most obvious is electricity.
According to a recent survey of the Nigerian tech space, a majority of startups report about 30 or more power outages every month. Considering how important power is for their operations, this means a lot of revenue goes into running generators. This alongside other issues like poor infrastructural development in the telecoms space – which is stunting the growth of internet penetration in the country – and a dearth in education, continues to impede the growth of the tech ecosystem.
Proper government policies are very important
Although more startups keep springing up to address major issues battling the country and the tech ecosystem, an aspect that can still not be overlooked to support their growth is the role of government – and this is largely non-existent.
Although there was a visit by Vice President Yemi Osinbajo to various tech startups and establishments last year, giving glimpses of hope for the space, there has been no clear difference.
There are several lapses in frameworks to support startups, little or no government incentives, grants and safeguards to support early-stage and established startups alike. And, in some cases, government policies stifle growth, such as the case of Lagos state’s proposed annual license for bike hailing startups, and the various issues surrounding Right of Way (RoW) stunting broadband penetration.
Access to good financing still an Issue
Although there was an increase in the amount raised by startups in funding rounds this year, there’s still this issue of access to credit – especially early stage startups. Most of the funding raised this year were by already established startups from foreign VCs, a huge percent going to Chinese backed startups like Opay and Palmpay.
This leaves out the early stage startups, making it difficult for these founders to secure funding – Pre-Seed or Series A, locally. And securing a loan from banks is pretty expensive – due to their interest rate – and difficult to secure also. As such there’s a huge gap for more local early stage-focused ventures/investors.
Harassment by security agencies
A common practice by the rogue police unit, Special Anti-Robbery Squad (SARS), is the unlawful arrest, attack and illegal extortion of young individuals seen with laptops and other sophisticated tech gadgets. All under the guise of apprehending internet fraudsters.
Several players in the tech community have fallen prey to this stereotype, creating fear and uncertainty within the space. In response, stakeholders in the tech community had to come together to launch a campaign, #StopRobbingUs, to put an end to the common practice. Although the immediate effect of this campaign is still not visible, it shows how important solving this issue is for the ecosystem.
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