Nigeria’s Missing IPO Tech Companies and the Message for NGX Technology Board

PwC Nigeria has a new publication – Growing the Nigerian Technology Ecosystem through the Capital Market – and the message is clear: “The future of countries, businesses, and individuals will be more dependent than ever on their adoption of technology. Economic vibrancy and wealth creation in developed countries have been associated with technological advancements and digital innovation & transformation.” The publication posits that Nigeria could benefit if some of our tech startups list in the capital market.

As a nation, this call is necessary because Nigeria evolves economically every decade. The 1990s brought the decade of new generation banks. At a time those banks led the capital market in the Nigerian stock exchange. In the 2000s, the telcos took over as MTN, Glo and other telecom companies changed the economic structures of the nation. Some of those companies like MTN and Airtel are leaders in the stock exchange today. Of course, the dance of the telcos extended to the 2010s when mobile internet came at scale.

Today, we’re entering a new phase in our entrepreneurial cambrian moment and tech startups are to lead the design. The question is: would they list in Nigeria to refresh the old companies and sectors as they fade? Indeed, if Nigeria’s greatest companies of today cannot make Nigeria’s capital market home, Nigeria will have a massive economic disintermediation which will cripple its economic destiny.

The NGX Technology Board seems like a good playbook and we need to have many IPOs (initial public offers) therein. The NGX Technology Board was born to fix this paralysis, and tech startups must consider the home nation for IPOs.

• “Nigeria is one of the continent’s more established startup ecosystems, with firms like Interswitch dating as far back as 2002. The country has produced five out of seven unicorns in Africa: Interswitch, Flutterwave, Opay, Andela, and Esusu.
• “It is interesting to note that besides Andela, all other unicorns are in fintech. The fintech sub-sector has the biggest share of the number of Nigerian tech start-ups at 36%, with payments and consumer lending being the focus of almost half of the sub-sector.
• “Insufficient banking services (particularly in rural areas), a young population, increasing smartphone usage, and regulatory efforts to increase financial inclusion, created advantageous openings for fintechs. Fintechs have jumped at the chance to provide improved propositions across the value chain to address problems with affordable payments, quick loans, and flexible savings and investments, among others.”

More work remains:

• “Home to over 400 tech startups and ranked 61st out of 100 countries worldwide in the start-up ecosystem index, Nigeria also ranks number 1 in Africa in terms of venture capital investment destination, leading in both funding and number of equity rounds.
• “It accounted for 23% of all equity funding and 27% of the total deal count of US$1.2 billion raised in 202210, portraying the country as the preferred investment destination in Africa. Despite these impressive performances, the Nigerian capital market does not optimally reflect the activities of the sector,” PwC said.

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