In the last two weeks, we have examined how angel investors and venture capitalists can help bridge the startup funding gap in southern Nigeria.
The current narrative demonstrates the low influx of VCs and angels in the region. The reports further showed the importance of angel investors to the emerging ecosystem in the South and how they will be pivotal in bridging the idea-stage funding gap in the region.
The current article will be centered on the pivotal role that governments must play in redesigning the current narrative in the startup ecosystem in southern Nigeria.
Even with the advancements, there are still gaps in the amount of capital unlocked, the number of startups reached, the monitoring and evaluation process, and the bureaucratic obstacles. State-by-state in Nigeria, the government’s startup funding varied. Leading the charge in these matters has been Lagos State.
Startups in southern Nigeria have opened up new sights, produced innovative solutions, and created employment even in the absence of official assistance. Recent changes in the Nigerian startup scene make it abundantly evident that government backing will be extremely advantageous to businesses as well as the overall economy.
In Nigeria’s developing regions, startups are bringing value to society and helping the government achieve one of its main goals, which is to create jobs. Now imagine what they will achieve if given the right support to transform the economy and drive growth.
Makings of a Powerhouse
Lagos has emerged as a technological powerhouse in the region thanks to the government’s backing. Frequently, the government has established a conducive environment that can turn the state into a center for innovation. The state has paired laws that are business-friendly with significant investments in the technology industry.
Recognizing that finance is a critical resource for startups, governments need to provide several funding programs to support companies at various phases of development.
To enhance the entrepreneurial culture of Lagos State, the government has developed strategic initiatives aimed at luring creative startups and skilled individuals. Because of this, entrepreneurs and innovators from the south eagerly go to Lagos to expand.
To truly make southern Nigeria a thriving startup hub, governments must:
Build Beyond Funding
The best approach for the southern Nigerian ecosystem will be to be sensitive and responsive to the good work already going on and support it. There are good initiatives already going on in the South, so it is best to support rather than control.
Beyond funding, Southern governments must invest in research and development, financial aid for education, and systemic investments. It can also involve curriculum evaluations. Furthermore, there should be prizes for solving complex issues. The idea here is to invest in a future that is technologically driven.
Government-funded scientists and academics have spent years conducting groundwork for the largest startup ecosystems in the world. The cornerstones of an innovative ecosystem can be provided by forward-thinking governments in southern Nigeria.
Effective Incentives
Startups are more likely to thrive through financing. Financing becomes easier in an enabling environment. Incentives are key enablers of an enabling environment. Angel investors are drawn to these kinds of environments.
Beyond income taxes and tax incentives enjoyed by startups, governments can provide tax breaks to angels and local VCs in the region investing in local startups. A similar approach had been adopted by the UK through the Seed Enterprise Investment Scheme (SEIS).
Governments at the source can ally with startups. This way, startups can help solve unemployment problems in states while also creating internal revenue. In turn, the government will provide an enabling environment where startups thrive.
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