But can this encourage businesses to set up in Nigeria and capitalise on new talent?
Andela, jointly founded in Nigeria and the US, offers a salaried four-year fellowship programme that places software developers with major international companies such as Microsoft and IBM. With a 0.6% acceptance rate, Andela is harder to get into than Harvard University[i]. Chief Operating Officer Christina Sass says that Andela was founded on the idea that “brilliance is evenly distributed, but opportunity is not”. It’s a business plan that makes sense when you realise that Nigeria, the eighth most populous country in the world[ii]; it is home to 186 million people – 2.5% of the world’s population – and the median age in the country is just 18.3 (it is 46.8 in Germany).[iii]
Nigeria’s population, of which almost 20% falls within the 16 to 24 year-old age bracket,[iv] is ideal for tech start-ups like Andela, which has hand-picked the best of the best by screening more than 45,000 people. Sass says: “Companies know they’re getting someone good. We deliver master’s level training and develop the skills companies want – business soft skills, attention to detail and the ability to manage complex stakeholders.”
The Andela model is not short of fans. GV (formerly Google Ventures) is a backer, while in June 2016 Facebook founder Mark Zuckerberg invested $24 million through the Chan Zuckerberg Initiative he set up with his wife, Priscilla.
But is this a sign that Nigeria is on the up as it seeks to rebalance its economy, or that foreign investors are making a land-grab for the next natural resource they can exploit?
Oil may need to step back from top spot. Low prices, sabotage and oil thieves have taken their toll on the industry, which has contributed to an economic slump in Nigeria. Crude oil production fell from an average daily production of 2.2 million barrels per day (mbpd) in 2015 to a low of 1.1 mbpd in August 2016[v]. This is by no means a small dent to an industry that accounts for more than 90% of export revenues[vi]. In addition, the Central Bank of Nigeria gave in to market pressure to devalue the naira. All of these have had negative multiplier effects on the economy, pushing Nigeria into recession.
A number of sectors are showing resilience in the face of these economic challenges. As Grant Thornton Nigeria partner Uchenna Okigbo says: “We know first-hand from our client work that the agricultural sector is benefiting from incentives and investment as the government diversifies from oil. Also, in construction, capital expenditure is taking a greater proportion of the federal government’s budget with a major focus on infrastructure development.”
But it is technology that catches the eye. On many levels, 2016 was a year of firsts for the Nigerian tech sector – besides Zuckerberg’s investment, FinTech start-up Paystack announced seed investment of $1.3m, Andela co-founder Iyin Aboyeji launched online payments company Flutterwave and American seed accelerator Y Combinator paid a visit to Nigeria.
What is also clear is that there is an interest in creating and developing technology products. Nigerians are taking the learnings from Andela and implementing this into businesses across the country to make them a success. Okigbo says: “There are creation centres (or laboratories) across the country where software developers are groomed, incubated or explored. There has also been a surge in the number of successful ICT companies in Nigeria, many of which are benefiting from Grant Thornton’s experience in the sector.''
In terms of Nigeria’s most successful ‘tech’ brands, some of the most prominent are MainOne Cable, Paga, Konga, Jumia, Jobberman, eTranzact and Interswitch. These companies offer services that range from internet connectivity to ecommerce and electronic transactions. There is also increasingly high demand for technology products and services.
It is also encouraging to see that some of challenges facing businesses operating in the country are easing – the military is winning the war against terrorism in the north-east region and the government is taking a stance to crack down on corruption. Already, Transparency International ranks Nigeria in 136th place globally[vii], which makes it markedly less corrupt than in previous years.
The Nigerian government is also in the process of harmonising its start-up focused programmes and is considering a review of the functions of agencies like the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Board for Technology Incubation (NBTI).
In the growth area of mobile money, however, Nigeria lags behind neighbour Kenya. While the Kenyan government adopted a telecom-led model, Nigeria adopted a bank-led model.
According to Okigbo: “Nigeria will need to change some of its existing laws or modify existing regulations to make the mobile money industry more attractive to investors. If the Central Bank of Nigeria (CBN) would agree to license telecom companies to operate mobile money, the trend would change and Nigeria would surpass Kenya in a few years’ time.”
Perhaps Andela offers a model for change. After a six-month induction, Andela graduates work remotely for Fortune 500 companies and start-ups around the world. Towards the end of their four years they will enter an exit path, a strand of which will be geared to entrepreneurship with Andela all set to invest in the next generation of start-ups.
Sass says: “Our campus is a real tech hub and people are keen on this as a career path. When we first started, we did not even have a website. We told everyone we hired that we’d tell the entire world about the calibre of their talent and the moment Zuckerberg walked in it became incredibly real to them.”
The fact that Nigeria is attracting this kind of interest highlights the international awareness of the country’s nascent technology sector. It also bodes well that so many talented Nigerians are picking up experience of working at major global brands.
Okigbo says: “The wealth of talent generated by initiatives like Andela highlight the need to capitalise on this with investment in Nigeria. But what’s clear is that the remarkable events of 2016 supported a tech surge and 2017 is on course to be another memorable year for the tech community in Nigeria.”
To find out more about the potential for growth – across all sectors in Africa’s most populous nation – or find out how you could tap into this talent pool – contact Uchenna Okigbo, the IT Partner of Grant Thornton Nigeria.