Nigeria is set to introduce a $40 million fund to support early-stage startups as a step to strengthen its tech ecosystem. This initiative is designed to reduce the reliance of young companies on private investors and provide a stable foundation for growth.
The fund will be jointly financed by the Japan International Cooperation Agency (JICA) and the Nigeria Sovereign Investment Authority (NSIA), which oversees the country’s sovereign wealth fund. According to Kashifu Inuwa Abdullahi, the director of the National Information Technology Development Agency (NITDA), the final agreement for the fund is expected to be signed within the next month.
Nigeria’s Startup Act
The new fund aligns with the objectives of Nigeria’s Startup Act, which was introduced in October 2022 to create a more favorable business environment for startups. The Act established a 10 billion naira (approximately $8.6 million) annual fund to provide financial assistance to certified startups through grants, seed funding, and loans. This legislative framework also includes tax incentives and other forms of support to help startups thrive. However, limited awareness of the Act’s benefits has prevented many startups from taking full advantage of these opportunities. To address this, the government plans to roll out a nationwide information campaign to improve outreach and increase participation.
Nigeria’s tech sector has long been a leader in Africa, attracting over $2 billion in investments between 2015 and 2022. Startups like Flutterwave, Andela, and Opay have achieved billion-dollar valuations, positioning Nigeria as a major innovation hub. However, the flow of investments has slowed significantly in recent years. Total funding dropped to $224 million in 2023, a sharp decline from $531 million in 2022 and over $1 billion in 2021. This downturn has created a funding gap, making government intervention crucial to sustaining momentum and encouraging new investment.
By introducing this fund, Nigeria aims to stabilize its startup ecosystem and attract more local and international investors. Providing accessible capital to early-stage companies will not only support existing businesses but also encourage the launch of new ventures. If successfully implemented, this initiative could position Nigeria as a stronger player in the global tech industry and restore investor confidence in its startup market.