3 Lucrative Industries in Nigeria for Tech Startups to Step Into
With a population of 170 million, mobile penetration of 75% percent and IT contribution of 10% to the GDP, Nigeria is fast becoming Africa’s go to economy for new tech startups to step into. A lot of opportunities can be found in every sector, but there are several industries where tech startups can really thrive nowadays.
Oil dependency and the need to boost the economy
Nigeria has predominately been an economy that depended on its significant oil reserves to earn revenue. However, the tumbling global oil prices, over recent years, have been encroaching on Nigerian revenues.
In an effort to move away from oil dependency and revamp its economy, the Nigerian government has been taking steps, small as they may be so far but steps nonetheless, to an economy that’s driven by innovation and technology.
The Emerging Nigerian Tech Startup Ecosystem
With a population of nearly 170 million people, mobile penetration of approximately 75% translating into 130 million mobile connections – Nigeria is well on its way to marking itself as a hotspot for tech startups. It is the largest mobile market in Africa and the 24th biggest economy in the world.
A 2013 report by McKinsey consultancy showed that of the almost $500bn Nigerian economy, only 1.5% of it took place online. This shows the immense untapped potential for tech startups.
Although, the country is still facing countless challenges in terms of infrastructure, government corruption and security. Nevertheless, the huge success of Konga shows that Nigeria is a lucrative economy for technopreneurs to thrive in, despite those challenges. Konga is Africa’s first hugely successful online retailer, the African answer to the global giant Amazon. It was launched in 2012 and since then it has seen rapid growth and earned international recognition.
Top 3 lucrative industries in Nigeria
With Nigeria still working hard to bridge the gap between technology and the population, there is tremendous untapped potential, in every niche, for tech startups to take advantage of. That being said here are the industries whose problems have yet to be solved efficiently (through technology) and thus, are a perfect market for tech startups to enter:
- Finance (E-Payments, Lending etc)
Considering the recent emergence of the startup ecosystem, Nigeria’s financial sector hasn’t been able to provide the answers to many financing challenges at the pace that is necessary to support the economy.
The launch of BVN has played an integral part in encrypting and securing online financial information, opening the gates for startups to innovate and provide financial solutions, securely.
In 2014 alone, Nigerians made N35 million e-payment transactions, but there simply aren’t many efficient, cheap and secure e-payment solutions to meet the rising demands. Paystack realized the opportunity it presented and quickly developed a solution tailored towards Nigerian merchants.
A new tech startup, Aella Credit, has the potential to disrupt the lending monopoly of Nigerian banks. Aella Credit aims to lend Nigerians money instantly, responsibly and without any collateral.
As a plan to keep diversifying the Nigerian economy, President Buhari’s administration vowed to promote agriculture in the country. That being said, most of the farmers in Northern Nigeria are small scale growers who cannot implement irrigation methods and depend mainly on rainfall. With the rainfall becoming increasingly irregular due to harsh climate changes, the farmers are facing unpredictable yields which erode their already minor profits.
To tackle this challenge, the government is trying to introduce precision farming. Precision farming is a technology dependent method which relies on GPS, remote sensors, geographic information systems and yield monitors.
These agricultural challenges are a hotbed of opportunities for any startup willing to innovate and provide solutions through technology.
Out of all the students who sat for the West African Senior School Certificate Exams (WASSCE), only 44% of them managed to pass with a credit grade or above. Like every other sector in Africa, education needs a lot of improvement, perhaps the most – considering the fact that education is the backbone of every developed country.
The high percentage of failure does not mean that Nigeria’s or Africa’s students are not intelligent; it shows the lack of learning avenues, where the students can prepare for their exams.
In that vein, startups like Pass.ng and PrepClass have become successful because they recognized the shortage of high quality learning and tutoring opportunities for students. But neither are full tech solutions. Virtual classrooms complete with online assignments and tests have the potential to be even more successful than home tutors and online tests.
Any startup willing to take up the virtual learning mantle is sure to find huge success in Nigeria.
Nigeria, a country full of possibilities
Nigeria has many challenges, but for today’s successful and savvy technopreneur that just means endless possibilities. That being said, the biggest opportunities for Nigerian tech startups lie in finance, agriculture and education. Any startup willing to solve the sectors problems through technology can find the required support and boost from the many venture capitalists, angel investors and startup accelerator programs cropping up in Nigeria.