I was privileged last week to join the closing gong event at the Nigerian Stock Exchange yesterday and to give a speech addressing the stakeholders of the Exchange. While we celebrate the inflow of foreign capital into local technology businesses, it is critical to consider both the long-term and short-term impact of this capital inflow.
Joining the Honourees to sound the closing gong ending Trading for the day 31st August 2018.
In the short-term, there is the supply of capital and the badly needed expertise/ non-financial support for technology businesses to thrive. This is critical especially in a market with poor infrastructure and a number challenges facing these businesses. Strategic counsel and expertise that comes with foreign capital are vital and necessary for the development of the local ecosystem.
The potential of Nigeria’s Digital Economy
Nigeria is Africa’s largest digital market and the 8th largest country in the world regarding internet users. More internet users than the UK, South Africa, Egypt, Portugal, Spain and Italy, obviously due to mobile penetration and the country’s population.
Nigeria is 8th largest Internet Country (by the number of Internet users) in the world. https://www.internetworldstats.com/top20.htm
This is both good and bad news. The good news is the size of the population/market with access to the internet while the bad is millions of unskilled/semi-skilled internet users with abysmally low purchasing power. Nigeria was recently crowned country with the world’s poorest overtaking India.
What does this mean? It’s simple when you look at the literacy & unemployment rate and the average age of our population; millions of poor uneducated people with access to mobile internet from Nigeria will be potential nuisance to a connected world…..this is a Medium publication for another day.
Let’s look at how the Nigerian digital economy is evolving.

From the above chart, Nigeria straddles Break out (Countries held back by infrastructure deficit though with huge potential to join the Standouts) and Watch out (Countries facing significant digitisation challenges). Nigeria has vast digital possibilities and with the right policies and infrastructure, the balance could tilt significantly raising millions out of poverty while moving Nigeria to the standout league.
The size of our digital economy or knowledge economy is enormous and potentially could be twice its current size within the next decade. The Nigerian economy of the future (a knowledge economy) should not be built with foreign capital alone; there must be a healthy mix of local and international capital.
Foreign Capital is building the Nigerian Tech Ecosystem.
Let’s look at the news headlines over the last seven days.
Last Tuesday, Paystack raised $8m from some investors including Stripe and Visa, on Thursday UK Government announced 70 million pounds fund for tech and innovative start-ups in Nigeria during Theresa May’s visit. Yesterday our president signed a $328m facility for ICT development from the Chinese EXIM Bank. Funding this digital evolution shouldn’t be with foreign capital alone, there is need for a hybrid of local capital from private investors, crowdfunding sources, local banks, government grants and foreign capital. The much bigger technology companies could get listed on the stock exchange reflecting the maturity of the industry and strengthening investors’ confidence.
While I do celebrate the good news received these past seven days, my favourite being Paystack (for obvious reasons), I cannot get past the fact that in one week over $406m in capital pledge is going into the technology sector from foreign sources.
Downside of building Tech Ecosystem exclusively from external capital.
Is there any potential downside to this?
Of course......

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https://yelakem.com/why-nigerias-tech-ecosystem-shouldnt-be-built-exclusively-with-foreign-capital/14255/