Nigeria is home to one of Africa’s most dynamic tech ecosystems. However, a slowdown in funding is beginning to hinder the growth of startups. Through new initiatives, the government aims to stimulate innovation and provide essential support to emerging companies.

Nigeria plans to launch a $40 million fund to support early-stage tech startups, aiming to strengthen the country’s entrepreneurial ecosystem and reduce young companies’ reliance on private investors, officials said.

The fund will be equally financed by the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA), which manages the national sovereign wealth fund. Kashifu Inuwa Abdullahi, director of the National Information Technology Development Agency (NITDA), confirmed the final agreement would be signed within the next month.

The initiative is part of Nigeria’s Startup Act, adopted in October 2022, which aims to create a favorable environment for startups through tax incentives and financial support. The act established a 10 billion naira (approximately $8.6 million) annual fund to finance certified startups through seed funding, grants, or loans.

According to Disrupt Africa, Nigeria’s startup ecosystem attracted over $2 billion in investments between January 2015 and August 2022, positioning the country as Africa’s leader. Companies like Flutterwave, Andela, and Opay achieved multi-billion-dollar valuations. However, fundraising dropped to $224 million in 2023, down from $531 million in 2022 and over $1 billion in 2021. This decline highlights the need for government intervention to revitalize the tech ecosystem amid investor caution.

The new fund marks a significant step for Nigeria, which aims to foster local innovation. Currently, 12,948 companies are registered as startups, benefiting from a three-year tax exemption. Low awareness of the law’s benefits has prompted the government to plan a nationwide information campaign.

By facilitating access to funding, the initiative could strengthen support for existing startups and stimulate new tech ventures, reinforcing Nigeria’s position as a leading hub for digital innovation in Africa.

By Samira Njoya,

Editing by Sèna D. B. de Sodji