Africa

Global Anti-Corruption Effort Would Benefit Nigerian Startups


The Silicon Valley in the United States may be in the midst of a very public crisis at the moment, but the start-up tech entrepreneur scene in Nigeria has been quietly flourishing. According to Disrupt Africa’s latest report, African tech startups raised over $129 million in funding in 2016, with Nigeria being one of the premier destinations for tech investors. Mark Zuckerberg stopped by Lagos—the economic capital of Nigeria and the “Silicon Valley” of this West African country—late last year to meet with entrepreneurs at the Co-Creation Hub (CcHUB) to discuss his own interest in investing in the country. Despite the progress that the Nigerian startup scene has made over the last several years, however, corruption and the resulting lack of infrastructure, as well as the rise of Boko Haram have hampered the industry and prevented it from reaching its full potential. In order for Nigeria to flourish, a global effort to tackle corruption must be undertaken.

Image courtesy of the Chatham House, © 2015.

Currently, Lagos is home to many of the country’s leading startups, including iRoko (a film streaming service), Jumia (an online retailer), and the IDEA Hub accelerator. Lately, though, Abuja, the political capital of Nigera, has also been attracting entrepreneurs, as have other, less expensive cities like Ibadan, Enugu, and Port Harcourt. Much of the country seems to have been swept up in tech startup hype, with events such as Lagos Startup Week, Aso Villa Demo Day, and StartUp Friday fueling the fire for innovation and disruption. In total, estimates indicate that Nigeria is home to 23 tech hubs and received $46.5 million in startup funding in 2016. Admittedly, this is a couple million less than their 2015 funding level of $49.4 million, but a larger number of startups received funding in 2016 compared to 2015. Crucially, this funding has come from both local angel investors and from international backers, which gives these startups more legitimacy and capacity.

President Muhammadu Buhari, who came into power in May 2015, should receive some of the credit for the growing tech startup economy. One of his first acts as president was to launch an anti-corruption drive, and a little over a year into his term his government announced that they were in line to recover over $10 billion in cash and assets. Buhari has put several senior-level politicians on trial for graft and corruption, pressured army officers to declare their assets, and encouraged greater transparency in the budget, all of which has helped to cut down on the “fantastic” corruption that plagues the country. He has also encouraged the international community to contribute to his campaign, requesting that the UN cooperate with his efforts to track down money that has been secreted abroad by signing a convention against corruption.

President Buhari has made significant efforts to combat corruption and enlist the help of the international community, but still has a long battle ahead. One recent report indicated that Nigeria’s economy would be 22% larger if their levels of corruption were somewhat lower, and suggested that by 2030 the cost of this corruption would be almost $2,000 per person, a significant drain. The money that disappears through corrupt practices in Nigeria takes away from funds that could be devoted towards infrastructure, education, health, and basic necessities, as well as startups and entrepreneurs. Ory Okolloh, a well-known tech investor from Kenya, pointed out that lack of access to these essentials is hindering African startups, despite the “fetishization” of entrepreneurship. Many African entrepreneurs are focused on solving problems such as lack of access to electricity, poor schools, and impossible-to-navigate roads, while entrepreneurs in countries like the United States rarely have to worry about similar issues. Coming up with “African solutions for African problems” is one thing, but reducing corruption would certainly benefit the industry, as well as the population as a whole.

In order to effectively cut down on corruption and return to a growth path, Buhari will need help from abroad. It isn’t just the tech sector, education, healthcare, and infrastructure that have been touched by this corruption, after all: Nigeria’s military was, for a long time, not equipped to handle Boko Haram, which has been a major destabilizing force in the region, and many of the funds that have been siphoned off over the years have likely gone to support the insurgency. Targeted global efforts to counter graft and theft could serve as a force multiplier for the work Buhari has accomplished so far, reduce funds that go to support Boko Haram, and improve the country’s domestic situation. No matter how many disruptive startups pop up in Lagos, Abuja, and other cities, it’s impossible to innovate out of bad government policies.

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