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Why Silicon Valley Has Its Eye On Nigeria

Lagos Nigeria Tech Scene

Facebook Founder Mark Zuckerberg visited sub-Saharan Africa for the first time in August, shining a huge spotlight on the growing tech center within Nigeria. Not only did Zuckerberg’s visit bring a boost to Nigerian startups, but it solidified that the tech scene in Lagos may be one to watch out for.

In this week’s edition of PYMNTS’ Weekly Tech Center Roundup, we take our first trip to Africa and check out the bursting tech ecosystem growing in Nigeria. Despite some recent hits to the country’s economy, the startup community shows no sign of stopping, and it's clear that global investors are taking notice.

Before we jump into the post, here are a few quick facts about Nigeria and its tech scene:

  • The country had an estimated population of approximately 5 million people as of 2014 and is considered to be the most populous nation in Africa.
  • Nigeria is often referred to as the "Giant of Africa" due to its large population and economy.
  • One of the country’s most notable startups is Andela, which trains software developers in Africa and has received financial backing from Zuckerberg and Google Ventures.
  • The country has quickly grown into one of the world’s largest economies and is predicted to have a GDP that exceeds $590 billion by 2020.
  • In 2015, two Nigerian companies, Paga and BitPesa, completed a total $14.4 million in funding.

 

Though some may underestimate the tech powerhouse potential in Africa, there’s one person who sees great promise coming out of the continent.

“The thing that is striking is the entrepreneurial energy. I think, when you’re trying to build something, what matters the most is who wants it the most. This is where the future is going to be built,” Facebook’s Mark Zuckerberg said during his recent visit to Nigeria.

The tech mogul praised the work being done with mobile money to build businesses and help communities throughout the continent. Zuckerberg met with engineers and developers, as well as visited innovation hubs, to get an inside look at the tech ecosystem in some of Africa’s most bustling cities.

Earlier this year, the Chan Zuckerberg Initiative made a multimillion-dollar investment in a Lagos-based startup called Andela that provides software developer training and assists with job placement.

Andela Director Seni Sulyman told CNNMoney: "Mark's visit demonstrates to all Nigerian developers and entrepreneurs that they've caught the attention of the tech world, and they are capable of succeeding on a truly global level.”

Just this week, a former Andela employee named Iyinoluwa Aboyeji joined Karen Webster to discuss his decision to depart the fast-growing accelerator to tackle one of the hardest problems in payments and potentially unlock Africa’s $380 billion payments opportunity through a new venture.

With offices in the U.S. and Africa, Flutterwave is looking to establish the digital payments infrastructure the continent needs to bring transactions beyond the realm of cash. The firm is building out its infrastructure using APIs to help enable payments across different options and, in a pan-African manner, stretching across Visa, ACH, cash tokens and eWallets.

Aboyeji stated that the API allows for users in Africa to send and receive money across the aforementioned conduits, a continuum that could be a boon to cross-border transactions. As much as half of the global workforce, said the executive, will be located in Africa by the end of the next two decades, opening the door for new and robust payments options, a necessity really in making sure that workers and firms are paid on time with speed and security.

 

Mobile Money Push

It may have had a slow start, but now, mobile money usage is on the rise in Nigeria.

Both financial institutions and telecom operators, as well as standalone companies, are working to make the deployment of mobile money services throughout the country a success, Quartz reported.

As Africa’s largest economy, there’s a huge market opportunity for mobile money, as well as the chance to access Nigeria’s increasing mobile and internet penetration, low credit card usage and fast-growing population.

“We want them to leverage our agents to roll out financial services to the mass market,” Tayo Oviosu, founder of payments company Paga, recently said in a Medium post. “We want to help individuals pay and get paid. We do not care if you are banked or unbanked. We do not want to be the bank.”

Paga just announced that it reached the significant milestone of 5 million customers, with an estimated 1 million active users of its peer-to-peer money transfer offerings.

Nigeria’s mobile money landscape is also expected to see a huge boost when Africa’s biggest eCommerce player, Jumia, launches its own payments solution, called JumiaPay.

 

Here Come The Hackathons

This October, tech company Brindocorp is challenging developers, tech enthusiasts and students in Lagos, Nigeria, with a meetup/software hackathon. The new event, named ISDEV (innovative software developers), will be taking place for the first time this year and is aimed at providing participants with support and training to create innovative software and applications.

Teams will have the freedom to build any type of solution they want — hardware, software or technology — across a variety of platforms. Projects will be judged on creativity, design, cleanliness, usefulness and technical difficulty, TechCabal explained.

At another recent hackathon hosted by IBM in Lagos, Team CogniBank walked away with the top prize for best software design. The goal of the “CogniHack Lagos 2016” coding competition was to prompt the software development community to collaborate on developing innovative solutions for the financial services sector.

Participants were encouraged to use IBM’s BlueMix development platform, Watson Developer Cloud and other IBM and third-party cloud-based tools, with the expectation that the projects created would be web- and mobile-ready.

Team CogniBank’s application looked to help financial institutions improve their customer satisfaction levels by utilizing information retrieval concepts to optimize and support the online and mobile banking channels. The solution was built around IBM’s Watson Artificial Intelligence platform, which allows for prompt and relevant responses to be used for customer questions.

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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