Lagos could shape up to be Africa’s Silicon Valley

November 4, 2015
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Originally Published on Spear’s
-3 November 2015

As commercially creative as it is chaotic, Lagos, with some UHNW help, is emerging as a sub-Saharan answer to California’s tech hub says Clementine Wallop.

Lagos could shape up to be Africa's Silicon Valley

I am sitting in a co-working space, busy with articles and emails. Around me, on primary-coloured chairs in a bright room with a games console and a sofa at its centre, young people are tapping away on laptops. On one wall, ‘We Code Hard’ is written in big, funky letters.

So far, so San Francisco. But if you got up and walked over to the window, the view you’d see is a world away from Silicon Valley. Low-lying houses, some in severe disrepair; wires hanging in chaotic bundles between buildings; corrugated iron roofs; and motorised tricycles pushing their way through traffic that gathers on potholed roads.

Welcome to Lagos, Nigeria’s megacity of some 20 million people, and to Yaba, the district that — through determination more than convenience — is transforming itself into the country’s technology hub. ‘The first time I went there I wondered if the driver was lost. Now every tech start-up wants to be based in Yaba,’ says Ory Okolloh, director of investments at Omidyar Network, the philanthropic investment firm set up by eBay founder Pierre Omidyar.

From outside, the building I’m working in doesn’t look like much. But inside is the Co-Creation Hub, where ideas-rich, tech-savvy Nigerians are working on start-ups they hope will transform life in Africa’s largest economy. The hub was the early home for BudgIT, which helps Nigerians understand how their money is being spent by the government — it now has more than twenty staff. Currently incubat- ing there are start-ups such as Mamalette, a discussion forum for mothers; with one of the world’s highest fertility rates, baby talk is big business in Nigeria.

‘We wanted it to be a social innovation centre where people could come with their ideas,’ says Femi Longe, one of Co-Creation Hub’s founders. ‘We are not interested in technology for first-world problems; we’re interested in local problems. We don’t want someone who can solve problems in Silicon Valley, we want someone who can solve problems here.’

Nigeria is not short of problems: a huge crude exporter that has to import oil products, glaring inequality between rich and poor and an overwhelming history of theft by government officials are just a few of the obstacles its people face. For all that, it’s also a country where industry and commercial ingenuity — a combination Nigerians call hustle — are highly valued.

‘This is about taking the hustle mentality and challenging it,’ Longe says. ‘We have been doing the traditional buy-and-sell since for ever, the making-a- quick-buck. We need to provide a breathing space where people take the idea of what they can get for themselves and transform it into what they can provide for other people.’

Co-Creation Hub, whose businesses are often supported by social or impact investors, is just one example of how a shift towards such investment and away from charity is benefiting Nigerians and supporting them in finding solutions to challenges.

‘The amount of money available for pure philanthropy is reducing and the amount available for impact investment is increasing,’ says Longe. ‘It’s clear after maybe 50 years that the pure charity approach is just not working the way it’s supposed to.’ Channelling money to the right entrepreneurs is, he believes, the key to Nigeria’s development, making impact investment all the more important as mobile technology encourages ideas among young people.

‘The plates are shifting, I can hear them,’ says Bilikiss Adebiyi-Abiola, chief executive and co-founder of Wecyclers, which works out of the Co- Creation Hub. Her company recently won a $55,000 (£35,500) investment from the Case Foundation and has seen support from companies including DHL and Coca-Cola. It collects recyclable waste from households using low-cost, bicycle-powered vehicles. It then rewards households with redeemable points based on the volume and quality of recyclables.

‘What we need is that seed capital,’ she says. ‘We have so many entrepreneurs with great ideas who are so smart, and what we need for them is the impact investment that’s willing to help with strategy and willing to help develop those ideas into solutions.’

The sheer size of Nigeria’s economy and population puts it front and centre of African social enterprise, according to investors. ‘Alongside Kenya and South Africa, Nigeria is likely to lead the way in tech innovation and the social enterprise sector in Africa,’ says Dr Loren Treisman, executive of Indigo Trust, a grant-making foundation that’s part of the Sainsbury Family Charitable Trusts. ‘Its tech and tele-communications space already reportedly contributes almost 10 per cent of the country’s GDP.’ Indigo has awarded £226,443 to organisations in Nigeria and £30,000 as an interest-free loan to Nigerian start- up Truppr, a social network that helps sports lovers find local participants for games.

Finding seed capital is the biggest challenge for start-ups, according to a recent survey from the Africapitalism Institute, the research and policy arm of the Tony Elumelu Foundation (Elumelu is one of Nigeria’s richest men). Just 3 per cent of respondents secured a bank loan, while 69 per cent had financed their businesses with personal savings. The survey showed 82 per cent of entrepreneurs found access to a start-up accelerator or resource centre like Co-Creation Hub very important. Still, it’s not smooth sailing running an incubator in a city like Lagos: in the 90 minutes Longe and I spend talking, the power cuts out twice, and he tells me the hub is spending thousands of dollars monthly in generator fuel.

Support to get this far has come from Omidyar, as well as other funders including Google, Indigo Trust and the Schmidt Family Foundation. While interest from US and UK investors is increasing, Nigeria’s homegrown HNWs are also awake to the appeal of impact investment.

‘The birth and popularity of a technology hub such as Co-Creation Hub is evidence that… NGOs are now investing in tackling youth poverty and unemployment in a more impactful and sustainable manner,’ says Rebecca Enobong Roberts, the Jim Ovia Foundation’s executive operations officer. ‘In the last five years, I have noticed a major shift from the handouts to [an] empowerment approach.’

In August Africa’s richest man, Nigerian Aliko Dangote, and the country’s former president Olusegun Obasanjo announced their support for African entrepreneurship in partnership with HRH the Duke of York. The African Entrepreneurship Programme (AEP) — an initiative between Pitch@Palace and the Global African Investment Summit — aims to develop the African private sector and stimulate innovation. The AEP will support African entrepreneurs to develop their businesses by giving them a chance to meet and present to potential investors.

Meanwhile, billionaire Elumelu has endowed the Tony Elumelu Entrepreneurship Programme (TEEP) with $100 million for distribution to 10,000 entrepreneurs across the continent over the next decade. ‘The programme was never intended to be seen as a charitable grant, but as a direct investment to catalyse the growth of aspiring African entrepreneurs,’ says TEEP chief operating officer Abimbola
Adebakin. ‘It is becoming more evident that all investments along the entire spec- trum of impact — social welfare, economic growth, sustainability, high return — are a necessity for the continent.’

Wecyclers has benefited from Elume- lu’s work, and Adebiyi-Abiola describes him as ‘one of the few putting his money where his mouth is’. Others, she says without naming names, could be doing more to drive Nigeria’s development. ‘There are all these people who have great ideas and all they need to make them happen is $5,000. There are people in Nigeria who would spend that on a night on the town.’

 

The Tony Elumelu Foundation