The services sector, including online businesses, accounted for more than 51 per cent of Nigeria’s Gross Domestic Product by the end of December 2014, according to findings from a study published by The Africa Report.
The report illustrated that the two previous mainstays of the nation’s economy, agriculture and oil, made up just 37 per cent.
It noted that online businesses had grown “massively” in the country because the financing ecosystems for young technology companies were better developed now than a few years ago.
Results from The Africa Report research showed that a substantial percentage of Nigerian start-ups in the last three to four years sought grants from indigenous foundations such as the Tony Elumelu Foundation.
“They (foundations) may give you up to $5,000 on fairly punitive terms – rights of first refusal on future rounds of equity financing, for example,” it stated.
It added that once a tech start-up almost had a product or service that was ready to be rolled out, there was the Lagos Angel Network, which could bring funding of $30,000 to $50,000, adding, “Beyond that, you have accelerators and early-stage venture funds to get to $200,000 to $300,000.”
A partner at Adlevo Capital, which invests in technology companies in Nigeria, Folabi Esan, said, “And once you get to the million-dollar range, you get players like us.
“We do $20m to $30 deals, with co-investors, putting in around $5m to $7m of our own. Beyond that, you reach the realm of the large private-equity funds such as Actis or Emerging Capital Partners.”
There has been a rise of successful technology companies in Nigeria. Jumia, an e-commerce service, was founded in 2012. It now sells about 50,000 products and has 100,000 visitors per day, and employs 500 people.