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Nigeria, recognized as a leading hub for Africa’s technology ecosystem, is taking strategic steps to support early-stage startups as the sector faces a significant funding slowdown. To mitigate the impact and reduce dependence on private investors, the government is set to launch a $40 million fund aimed at fostering startup growth and innovation.
Strategic Partnership to Drive Funding
The fund will be co-financed by the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA), which manages the country’s sovereign wealth fund. According to Kashifu Inuwa Abdullahi, Director of the National Information Technology Development Agency (NITDA), the final agreement for the fund’s launch is expected to be signed within the next month.
Alignment with Nigeria’s Startup Act
This initiative aligns with Nigeria’s Startup Act, enacted in October 2022, which aims to enhance the startup ecosystem through tax incentives, funding opportunities, and regulatory support. The act established a ₦10 billion ($8.6 million) annual fund to provide certified startups with access to seed funding, grants, and loans, further strengthening the regulatory framework for emerging businesses.
Funding Decline Highlights Urgent Need for Intervention
Nigeria has historically been a leader in African tech investments, attracting over $2 billion between 2015 and 2022. However, recent years have seen a sharp decline in funding:
- 2021: Over $1 billion invested
- 2022: $531 million invested
- 2023: Dropped further to $224 million
This downward trend has intensified calls for government-backed financial support to sustain startup momentum and innovation.
Boosting Awareness and Startup Participation
Currently, 12,948 companies are registered under the Startup Act, benefiting from a three-year tax exemption. However, limited awareness of these incentives has prompted the government to launch a nationwide campaign to educate entrepreneurs on the available benefits.
Strengthening Nigeria’s Digital Economy
By enhancing access to funding, Nigeria is reinforcing its commitment to fostering digital innovation and ensuring long-term sustainability in its tech sector. This initiative is expected to drive regulatory compliance, support risk mitigation, and promote RegTech solutions that will solidify the country’s position as Africa’s premier digital hub.
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