Largely off the back of Mpesa, the hugely successful mobile money-transfer system, the Kenyan capital has gained a reputation for technological innovation—and with it an influx of no-strings (or few-strings) development funding that has crowded out some of the private investment searching for tech startups to finance.
Now investors are looking to the other side of the African continent for results. Nigeria, with nearly 200 million people, a growing economy, and no shortage of local problems, stands out as an option. It’s slowly building up a tech sector of its own. The funding circuit is still small: probably no more than 10 companies investing money, says Kresten Buch, founder of the Nairobi tech accelerator 88mph (which has since expanded to South Africa).
The biggest difference between Nigeria and other major African economies is its sheer size. With roughly four times as many people as Kenya or South Africa, Nigeria is big enough to reward products and services that are domestic in nature.
One example of that is Obiwezy, a venue for selling used smartphones. Nigeria is primarily a pre-paid market, where customers pay the full cost of a handset up front. That puts most high-end devices out of reach for all but the very rich. But the aspiration to own a high-end Apple or Samsung handset remains, as it does elsewhere in the world. Obiwezy’s founders figure that a secondhand market—with warranties—is one way to sate that demand. They have tied up with MTN, a large telco, to offer the service.
Nigeria still has a big hole where investors willing to put in between $100,000 and $1 million should be. For now, investors are ensconced in Nairobi. But that might change as Nigeria’s companies grow larger, signaling opportunity to deeper-pocketed investors looking for returns.