The Nigerian government is set to launch a $40 million fund aimed at bolstering support for early-stage technology startups. This initiative marks a significant step in the country’s efforts to support entrepreneurs, who have historically relied heavily on private investors.
Half of the funding will be provided by the Japan International Cooperation Agency (JICA), the Japanese government’s overseas development assistance arm. The remaining half will be matched by the Nigeria Sovereign Investment Authority (NSIA), according to Kashifu Inuwa Abdullahi, the head of the National Information Technology Development Agency (NITDA).
“We are going to sign the final agreement next month,” Abdullahi stated in an interview with Semafor. “Everything has been agreed.”
This fund is a key component of Abuja’s commitment to investing in the nation’s startup ecosystem, as outlined in the 2022 Nigeria Startup Act. The NSIA, which manages Nigeria’s sovereign wealth fund – with assets exceeding $2 billion – will oversee the $40 million fund, as mandated by the startup law, Abdullahi explained.
Nigeria’s startup scene had already shown significant growth before the passage of the startup law. Between 2015 and 2022, more than $2 billion was raised by Nigerian startups. According to data compiled by Disrupt Africa, an Africa-focused tech publication, this figure surpasses the total raised by any other African country during that period. Companies like Paystack, the fintech firm acquired by Stripe, along with pan-African startups such as Flutterwave, Andela, and Opay – all of which achieved billion-dollar valuations largely due to their operations in Nigeria – had already become prominent brands on the continent before 2022.
The legislation and the associated investment fund were designed to incorporate lessons from the past decade into a dependable framework. This framework aims to assist new entrants in the sector to achieve growth and replicate success. The establishment of the new fund represents a major step in fully implementing the startup law, which was developed by local investors, entrepreneurs, government agencies, and international advisors. The law has already led to approximately 13,000 businesses registering as startups, meeting NITDA’s criteria. This accreditation provides these new ventures with a three-year income tax exemption, and investors in these startups are also eligible for tax credits on their investments.
Abdullahi also noted that raising awareness of these new law benefits remains a challenge. “We have a target to go across the country before the end of this year to ensure each of the 36 states and Abuja is carried along,” he said.
Government venture capital is essential for startup ecosystems because it “provides patient capital and useful product feedback without fixating on financial returns.”
