A recent report has highlighted the significant potential of Nigeria’s burgeoning tech start-up scene, but also outlined a series of limitations that need to be addressed for the segment to emerge as a true engine of the country’s recovery from Covid-19.
As OBG has explored, Fourth Industrial Revolution technologies have taken root across sub-Saharan Africa, with many states leveraging digital solutions in order to drive their coronavirus recoveries.
Nigeria is a frontrunner in this regard. For example, Lagos is home to one of the three most important tech clusters in the region, with the other two being in Nairobi, Kenya, and Cape Town, South Africa.
Indeed, according to a recent report by fDi Intelligence, a division of the Financial Times, the Nigerian city has the highest number of start-ups in Africa.
Published in April, the inaugural African Tech Ecosystems of the Future rankings put South Africa in first spot in terms of its overall tech ecosystem, as well as in many individual metrics, among them economic potential, start-up status and business friendliness.
Nigeria was ranked sixth overall, with the report also highlighting various challenges that remain to be surmounted if the country’s start-up scene is to become globally competitive: “Although Lagos is renowned for its start-up ecosystem, there is a significant disconnect between the city’s tech ecosystem, its surroundings and the wider country, which suffers from chronically poor infrastructure and education, and recurring political instability and security issues.”
There are also certain regulatory hurdles to overcome.
For example, many of the country’s most prominent start-ups operate within the financial technology (fintech) space, partly in consequence of the limited formal banking facilities available; Nigeria was the leading country for Bitcoin and cryptocurrency adoption last year, according to statistics firm Statista.
However, in recent months the Central Bank of Nigeria has been cracking down on cryptocurrency, despite stating that it is not moving towards an outright ban.
This was intended to bring the booming market under control and prevent the technology’s misuse. But critics have said that it will stifle innovation and limit the potential of tech start-ups.
Despite such hurdles, there are encouraging signs that authorities are serious about boosting the Nigerian digital sector.
At the end of 2019 the Ministry of Communications was rebranded as the Ministry of Communications and Digital Economy. This was followed in early 2020 by the launch of the National Digital Economy Policy and Strategy 2020-2030.
This signal document lays out eight pillars that will be used to transform Nigeria into a leading digital economy. These are: developmental regulation; digital literacy and skills; solid infrastructure; service infrastructure; digital services development and promotion; soft infrastructure; digital society and emerging technologies; and indigenous content development and adoption.
Meanwhile, a 5G network is set to be rolled out across the country, following successful trials in the cities of Lagos, Abuja and Calabar.
While the onset of the coronavirus pandemic came shortly after the launch of the new policy, it would seem that the vision it enshrines is already yielding results: in the fourth quarter of 2020 the Nigerian digital sector grew by 40.7%, a trend that continued into the first months of this year.
A further incentive to growth of the digital sector is that – in common with many oil-producing countries – Nigeria is seeking to limit the prominence of hydrocarbons in its GDP mix, following a very troubled year for oil prices. An increase in the GDP contribution of digital companies could stand to pick up some of the slack when it comes to diversification.
While much work remains to be done, there are already countless success stories of innovative start-ups that are changing the face both of Lagos’ tech ecosystem and Nigerian society as a whole.
For example, in one of the biggest pieces of Nigerian tech news in 2020, local fintech start-up Paystack was acquired by US-based giant Stripe in October, in a deal that was reportedly worth more than $200m.
Founded in 2016, Paystack processes more than 50% of payments made in Nigeria, and will now spearhead Stripe’s African expansion.
Elsewhere, Arone – based at the Roar Nigeria Hub of the University of Nigeria – builds drones that deliver medical supplies to more remote regions. This is particularly useful in the case of certain Covid-19 vaccines, which must be kept at low temperatures.
But the potential applications of drone technology go beyond health care. As Emmanuel Ezenwere, CEO and founder of Arone, recently told OBG, “drones can broadly improve logistics in places with high traffic congestion, such as Lagos and other big cities in Nigeria, as they can bypass traffic jams and deliver goods, household items and food supplies within 15 minutes. This will have a great impact on e-commerce.”
This is a prime example of how the increased digitalisation effected by coronavirus is being leveraged post-pandemic to drive innovative approaches to business in general.
Meanwhile, Nigerian start-ups are also driving renewable energy, a key component of the world’s “green recovery” from Covid-19.
At the start of last year Lagos-based company Rensource Energy raised $3m in equity investment from Proparco – a development finance institution partly owned by the French Development Agency – with the support of the EU, under the Africa Renewable Energy Scale-Up facility.
The funds will contribute to Rensource’s plan to develop, build and operate over 100 mini-grids, providing clean and affordable electricity to 250,000 small and medium-sized enterprises, and saving 30,000 metric tonnes of CO2 emissions every year.
TeamApt Transactions Hit N1.4T In May
Nigeria’s one of Nigeria’s leading fintech companies, Teamapt said it transacted N1.4 trillion ($3.5billion) value in 68 million transactions volume in May 2021 on its agency banking platform.
The data sourced from the monthly report of Shared Agent Network Expansion Facilities (SANEF), an initiative of the Central Bank of Nigeria (CBN) to promote agency banking and mobile money in the country, shows that Teamapt controls 74 percent of the total agency banking operations within the period.
The company which is currently leading Nigeria’s agency banking industry provides financial services for the underserved mass market through Moniepoint – its financial access product, and Monnify – its payment gateway infrastructure.
At a media briefing on Thursday in Lagos, officials of Teamapt revealing more of its transaction figures and financial performance for the past months said in less than two years, the company has grown rapidly to operate the largest agency banking platform with a network of over 100,000 agents.
In March 2021, it hit a milestone of transactions worth over N1trillion ($2.4bn) for the first time. In May, the value increased to N1.4 trillion ($3.5bn) with 68 million transactions in volume, and between April 2020 and April 2021, the total value of transactions processed has gone up to $16 billion.
Speaking on the company’s plans to transform financial services in Africa, CEO and founder of TeamApt, Mr. Tosin Eniolorunda said “To achieve our mission of providing financial happiness for all, we started out by building working infrastructure and distributing this in every of Nigeria’s 36 states.
“So far, Moniepoint has served over 25 percent of the 48 million banked Nigerians, previously underserved by the financial system. This is a great feat but we still have a lot of work to do. Many Nigerians are still underserved, and with this pain not exclusive to Nigeria but shared among Africans, we intend to scale into more regions of the continent.
“We remain focused on innovating, and we expect that in the future, through Moniepoint, we will reach more people across Africa and build their trust in the financial system and processes. We look forward to empowering our agents with the facilities to offer other financial services directly to customers, beyond deposits and withdrawals,’’ Eniolorunda added.
TeamApt reiterated its commitment to transform financial services in Africa, the company was founded in 2015 and started out by building infrastructure for tier-one financial institutions.
SEC Plans to Launch Regulatory Incubation Programme For Fintechs
The Securities and Exchange Commission (SEC) has announced plans to launch a regulatory incubation (RI) programme for fintech operating or seeking to operate in the Nigerian capital market.
According to a circular published on the commission’s website on Wednesday, June 16, it says that the initiative will be launched in the third quarter of 2021 and will operate by admitting identified fintech business models and processes in cohorts for a one-year period.
The RI program comprises two phases of participation – an initial assessment phase and the regulatory incubation phase.
The SEC said that the categories to be admitted into each cohort will be determined based on submissions received through the fintech assessment form and communicated ahead of each take-off date.
The circular read: “Review of completed Fintech Assessment Forms will continue on an ongoing basis. FinTechs who consider that there is no specific regulation governing their business models or who require clarity on the appropriate regulatory regime for seeking the authorization of the Commission, are encouraged to complete the Fintech Assessment Form.”
The commission maintained that it designed the RI program in order to address the needs of new business models and processes that require regulatory authorization to continue carrying out full or ancillary technology-driven capital market activities.
It will serve as an interim measure to aid the evolution of effective regulation which accommodates the innovation by fintech without compromising market integrity and within limits that ensure investor protection.
Truecaller Launches Smart SMS Feature in Africa
Truecaller, the world’s most trusted and accurate Caller ID and telephone search engine, is rolling out a new feature to further augment the user experience.
The new feature Smart SMS has been introduced based on user feedback and is designed to cater to the evolving needs of our consumers. It offers a host of new services to make day-to-day communication a lot more convenient.
Smart SMS is powered by state-of-the-art machine learning models that adapt based on the feedback you give it. It supports users with important messages from banks, billers, travel companies, delivery companies and so much more.
Smart SMS also helps users stay protected from spam and fraud. Only the essential information within an SMS is highlighted and all SMS messages are categorised and easily accessible. From keeping track of your expenses to last-minute changes to your travel, Smart SMS is the future of SMS that will make life a whole lot easier.
Commenting on the new addition, Zakaria Abdulkadir Hersi, Director of Business Development & Partnerships Africa at Truecaller said: “Roughly 80% of SMSes one receives daily are from businesses, disengaging users from important/useful messages. To combat that, SMS apps need to become smarter by filtering out spam and categorising useful information.
“At Truecaller, we constantly strive to offer the best user experience by adding unique features that fit in with our core mission: to make communication safer and more efficient for everyone. Truecaller has evolved into a powerful communication hub and for the people who wish to use the app to its fullest, we want to streamline the experience as much as possible for an efficient calling and messaging experience for our end user.”
Truecaller uses the same powerful algorithms used to identify spam callers in SMS as well. The SMS intelligence is built into the app itself and it can work offline – nothing leaves your device, including all OTPs, bank SMSes and financial information.
The feature also offers a Smart Inbox that identifies unknown SMS sender numbers and SMS sender IDs are resolved to business names with logos.
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