Femi Longe: Nigerian tech ecosystem – Depth first, exits later (Y! Policy Hub)

by Femi Longe

Femi Longe (Y! Policy Hub)

Of the 10 best startups in Nigeria in 2010 according to techblog www.techloy.com, none has gained major traction since then and most have died. This could be ascribed to the age old stat that majority of new businesses world-over die in their early years of operations or could be blamed on the budding nature of the Nigerian tech scene and how the market was not ready for these “visionaries”.

This is 2013 and even though the tech startup scene has started to pick up momentum, it is still a long way from being the ideal ecosystem required for tech-driven entrepreneurship to thrive.

While there is eagerness for the big exits that characterize the glamour of Silicon Valley, such outcomes will not happen if we do not focus first on building depth of the ecosystem and quality of the startups that emerge here.

 

The very early days

The very early years of the local tech startup scene (circa 2006 – 2010) was characterized predominantly by attempts to clone tech successes from the global scene with scant regard as to whether the need that was being solved were the real needs of the Nigerian customers who were the target audience.

You couldn’t step into any of the tech talk-shops that sprung up at the time without being confronted by a guy building Nigeria’s Facebook, Nigeria’s Google or Nigeria’s Twitter etc. Their unique selling point was “It’s by Nigerians for Nigerians” but that obviously did not satisfy Nigerian internet users who trooped to the originals not minding their origin. This also did not satisfy the investors who did not swoop in to save the day as we had been told to expect from the Silicon Valley fable.

Smelling the coffee, the developer behind these platforms gradually packed-up shop and moved to other things.

 

Building for our market

The last years, since around 2011 has seen a gradual shift to focusing on solutions that address OUR OWN problems.

This has led to the rise of services that seem better placed to demonstrate the potential of technology-based businesses as key drivers of the Nigerian economy by unlocking customers from the mass of economically active Nigerians.

The market is still virgin and with the scale of problems that exist in Nigeria across all spheres of life and all economic bands, the opportunities for tech-driven solutions are near endless.

But this is a long game and the space is only really for the bold and the patient.

In the absence of investor money with which to play, Nigerian tech entrepreneurs need to master the art of bootstrapping and building businesses that generate revenue from day 1.

The best practices of brick and mortar businesses need to be brought in to create the foundation of ventures that are structured for value-creation, sustainability and success. Critical business systems need to be put in place to develop value at the right quality to ship to a critical mass of customers, many of whom are still wary of the faceless nature of online transactions.

Financial records will have to be impeccably kept even if revenue is only coming in trickles at this stage. Traditional marketing and sales will be the main focus despite the lure to throw it all into digital marketing with clear understanding that majority of potential customers still make purchase decisions though physical interaction with a salesman or offline marketing channels.

There is need to recognize that the technology market here is still in infancy and the customers we are currently attracting are the early adopters.

The mass either doesn’t trust enough to join the tech game fully or do not have access to the infrastructure (internet access, fulfillment, payment etc) to fully play. There is therefore need for a focus of energy at this stage on crossing the chasm to get to the mass of customers collaboratively.

Co-opetition should be the priority of all players in the tech ecosystem right now.

 

All hands on deck

We need to focus on building the foundation of a market environment that will make it easier for tech entrepreneurship to pay. Right now, Nigeria is far from this.

If the mass of Nigerians get online today, they still have very limited options of optimally-designed, locally-relevant services to engage them to meet their every needs. Building these services in anticipation of the floodgate should be our priority.

Working with relevant stakeholders including government to break down the barriers keeping most Nigerian consumers from the game should be our focus.

The recent approved national broadband policy is a step in the right direction, which I have written about previously. The CBN’s cashless initiative, with all its challenges, should shift focus to ensuring the infrastructure for electronic payment gets the attention required to make it seamless. It should also hopefully, reduce the skepticism of many Nigerians towards electronic payment and shopping online.

Our fulfillment systems need upgrading and it is heartwarming to know that the Federal Ministry of Communication Technology is working with the management of NIPOST and EMS to make them more geared to serve the e-commerce sector. The net effect of this hopefully will be felt beyond ecommerce.

A number of larger tech startups are also currently lobbying the government for tax holidays through its pioneers status scheme and this is getting good traction. This effort should filter down not just for the big players but across the industry to cover all tech startups as is it gives them some shelter in the early days while trying to work their business model. It also gives added motivation to get registered and to start building the right corporate governance structures early enough.

Pools of funds like the Tony Elumelu Foundation-CcHub Grant Scheme which was recently expanded to provide pre-seed grants of $5000 to up to 50 tech startups with social impact provide the first level of financing required for more potential innovators to start the journey by building the first working version of the technology to drive their enterprise and to pilot their business model. More local investors are required to provide options of financing at every stage of the entrepreneurship continuum.

 

Winning Together

On the whole, the scale of what we have to overcome to make this place a thriving market for technology-enabled commerce is huge and that should engage the bulk of our energies. Different parts of the elephant need to be tackled and different players should be tackling their own part of the giant synergistically.

That is the only way we can create a sustainable industry that would add value not just to a few key players, but across board.

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Femi Longe is a co-founder and Director at Co-Creation Hub Nigeria (CcHub), an uber-cool social enterprise dedicated to co-creating innovative solutions to social and commercial challenges in Nigeria using technology. He is a learning experience designer, facilitator and social enterprise consultant. Follow him on twitter @femilonge and he blogs at www.femilonge.com

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

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Comments (2)

  1. I highly doubt Number 1 Gbenga. Sometimes the is nothing to learn from a. Failure who failed due to stupidity. Sometimes we exaggerate the true utility of ‘failing forward’

  2. Thanks Femi. I think it’s important that everyone appreciates 3 clear things:

    1. The successes of today’s projects are built on the failures, near-successes or noiseless successes of yesterday;
    2. The big picture means that anyone can only contribute a portion of what’s needed, at best;
    3. Today’s known efforts are a foundation for the eventual ecosystem that everyone will talk about.

    Also, if something is not being done, instead of asking folks working to add to theirs, it’d be easier to do such.

    We’ll get there…

cool good eh love2 cute confused notgood numb disgusting fail