Nigeria on Tuesday unveiled a $672 million fund to aid the internet and creative industries for young investors who find it difficult to raise money in the biggest economy in Africa.
The fund, which caters to individuals between the ages of 15 and 35, is launched at a time when locals are worried by the collapse of U.S. startup-focused lender SVB Financial Group, which had previously sponsored businesses in Nigeria.
Only Chipper Cash, a startup in cross-border payments, has so far claimed to have $1 million in SVB. Jumia, an online retailer, and Flutterwave, a fintech company with an emphasis on Africa, both among the largest startups, said they had no contact with the bank.
The $672 million fund was introduced by Vice President Yemi Osinbajo in the federal capital Abuja as part of the Digital and Creative Enterprises Plan (DCEP).
With no less than 180 businesses, Vice President Yemi Osinbajo claims that Nigeria’s digital ecosystem accounts for close to 30% of funded initiatives in Africa.
At the official launch of the Investing in Digital and Creative Businesses (iDICE) Program and unveiling of the iDICE logo on Tuesday at the State House Banquet Hall, Osinbajo made this statement.
According to the vice president, the iDICE is a government programme that encourages innovation and entrepreneurship in the creative and technological sectors, with a focus on job creation.
The overall amount of the fund, in his estimation, is $618 million, of which the AFDB contributes $170 million, the Agence Française de Development $100 million, and the Islamic Development Bank (IsDB) with co-financing of $70 million.
The African Development Bank would contribute $170 million, Agence Française de Développement will contribute $116 million, and the Islamic Development Bank will contribute another $70 million.
While the private sector has pledged $271 million, the government would release $45 million through Bank of Industry Nigeria.
“DCEP is a government initiative to promote innovation and entrepreneurship in the digital tech and creative industries and especially targeted at job creation,” Osinbajo was quoted as saying at the launch of the fund.
“I think it is important to mention that private capital has usually been ahead of government effort, the last few years have seen a consistent rise in venture capital investments in Nigeria’s technology ecosystem.
“According to Disrupt Africa’s 2022 Tech Funding Report, Nigeria was the best-funded country in Africa for the second year running, with a minimum of 180 startups.
“Making up approximately 30 per cent of Africa’s funded ventures, raising approximately one billion dollars – substantially ahead of all other countries on the continent on both counts.
“This influx of private capital has enabled startups to expand operations and create new jobs while contributing significantly toward overall Gross Domestic Product (GDP) growth of the country.
“There are of course thousands of startups that have used private funds or debt that goes unrecorded.’’
Organizing all stakeholders to coordinate efforts to scale up investments and create programmes that encourage innovation, he said, had become essential to start a coordinated approach to innovation across the continent.
Nigeria boasts the biggest number of startups in Africa – largely in tech and fintech – which have garnered money from outside banks and venture capital firms.
But the majority of companies still have trouble getting capital because banks need collateral, which they do not have.
Nigeria’s Startup Bill was enacted into law as the Nigeria Startup Act in October 2022 by President Muhammadu Buhari.
According to Osinbajo, the Act will create a legal and institutional framework for the growth of startups in Nigeria and create a favourable climate for their development.
