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Nigeria’s economic capital, Lagos is the Finance Times ranking of the fastest growing African companies this year, with 23 of 28 companies.
Odunayo Eweniyi, co-founder of Fintech Start-Up Piggyvest, says that because of its size, the companies will flock to Lagos. The fast-growing metropolis is one of the largest cities in the world and one of the largest cities in sub-Saharan Africa, with some estimates of population 20mn, accounting for 10% of Nigeria’s total.
“If you’re big in Lagos, you’re big in Africa,” adds Ewenii. “You have an immediate scale, and that’s a good place to test and scale your product.” She points to the success of claiming that it has made Lagos the “fintech capital” of Africa.
These latest ones gave “unicorn” status at a valuation of at least $1 billion in the $110 million funding round of Fintech Group Mony Point (which ranked 16th in the year based on revenues in 2023) in October.
Other examples include Palmpay (rank 2), PayStack, payment processors acquired by Silicon Valley Group Stripe in 2020, and Flutterwave, a competitor that achieved a $3 billion valuation three years ago.
These and other successes have made Lagos ranked among the world’s top emerging technology hubs in a recent survey by Dealroom, a global provider of data and intelligence on technology and startup ecosystems.
Brian Odhiambo, a partner at Venture Capital Fund Novastar Ventures, says Lagos offers an “active angel investment network” that provides early lifelines for businesses that still know their products and strategies. “Because of the scale, we’re seeing companies get faster here,” he says. “We have an ecosystem here (in Lagos) that helps businesses grow and our approach as investors is to get closer to the market.”
Iyin Aboyeji, a serial technology entrepreneur and investor who has worked hard to build two successful startups, including Flutterwave, agrees. “Lagos makes it easier for people to build businesses,” he says.
Avoeji refers to the “density” of Lagos. In Lagos, all major financial institutions are located near the business districts of Victoria Island and Marina, making it easier to set up meetings. He contrasts this with the division of Johannesburg and Cape Town in South Africa.
However, the Lagos crown shows signs of slipping. The surge in funding for early Nigeria startups has been slower, in line with other parts of the continent. The number of venture capital transactions in Nigeria fell 7% last year, but the country has regained its position as Africa’s top investment destination.
Startups in other sectors are also struggling to achieve the scale that Fintech has in Lagos. But Odhiambo says that is only expected, and that financial service providers are “enablers” for cities “there are still financial inclusion gaps that need to be plugged in.” He adds:
However, Lagos’ biggest problem is the urban poor infrastructure given its size and global ambitions. Aboezi lamented that there is no “infrastructure for knowledge” and points out that cities such as New York have facilities like the World Trade Center.
“We don’t have a campus with a capacity of 5,000,” he says. “Anywhere in Lagos, 3,000 people will have a hard time finding the place they need at once.” He is currently investing in a 72,000-square-metre technology business park outside of Lagos to address the gaps he sees in the market, the most ambitious project of all time.
“Lagos did a barely competent job of making business happen,” adds Aboeji. “Cities have basic security, some social infrastructure and some livable parts, but I always feel that might be better.
Transportation infrastructure is also struggling to deal with Lagos’ rapidly growing population, and residents are often caught in traffic. The recent bridge closure for maintenance work has caused disruption on the roads and serious disruption for those commuting hours into Victoria Island and the Ikoyi business district.
As the country faces the worst economic crisis of a generation, many young and skilled Nigerians are looking for better opportunities abroad. “Technology is losing a lot of talent because of how difficult it is to live here,” Ewenii says. “While remote work is helpful (in Lagos), most people just want to move abroad.”
Eweniyi worked in the UK for 18 months before returning to Nigeria. Because she found that distance made it almost impossible to perform piggybest. However, she admits that her case does not apply to employees other than top management.
“There’s a sacrifice I make because I believe there’s something here. But I’m the founder, so I can’t tell them not to move because I don’t have to pay the same cost of opportunities as I have. They have a different vision of their lives.
