The Implications Of Nigeria Dropping Three Places In Global Startup Index

Declined investments in 2022 have accounted for why Nigeria has recently dropped three spots in the Global Startup Ecosystem Index 2023.

Currently, Nigeria is ranked 64 on the Global Startup Ecosystem Index but has fallen two spots in the African region, thereby bypassing Kenya and Mauritius. Consequently, the country is now ranked 4th in Africa.

An Overview of the Rankings by a Few States

According to the startup index curated by StartupBlink covering 1,000 cities out of 100 countries, Lagos maintained its place as the first and only African city in the global top 100.

Based on the index again, five cities out of Nigeria made it to the global top 1000 this year.

StartupBlink further stressed “Lagos maintains its place as the first and only African city in the global top 100.

“After years of massive increases in global rank, Lagos has registered a minor decrease of 1 spot to 82nd globally.

“As the top city in Western Africa, Lagos expanded its score gap with 2nd ranked Accra from 279.2 per cent to 386.1 per cent.

“Lagos has outstanding performance in fintech, where it ranks 38th globally.

“The second-ranked city, Abuja, showed a significant decrease of 114 spots globally.

“Two new cities joined the top 1,000 cities this year: Enugu, and Port Harcourt, increasing the number of ranked Nigerian cities from 3 to 5.”

It noted that the gap between the Lagos tech ecosystem and all other ranked Nigerian cities that were ranked below 500 was surprising and concerning.

According to StartupBlink, Nigeria’s large consumer market has made it a leading startup hub in Africa.

It stated that the country continues to top Africa’s unicorn charts with companies such as Flutterwave and OPay rapidly expanding regionally.

“As Nigeria is attracting international recognition with its success stories, it has the clear potential to secure Lagos’ leading status as the top regional hub.

“In the meantime, the government will have to do its part to address the infrastructure deficit and support smaller ecosystems to guide talented Nigerian entrepreneurs to success.”

The Implications of Nigeria Dropping in the Global Startup Index

Nigeria dropping three places in the global startup index can have several implications for the country's startup ecosystem and its overall position in the global market:

• Investor confidence: A drop in the global startup index may signal a loss of investor confidence in Nigeria's startup ecosystem. Investors often rely on indices and rankings to assess the potential and attractiveness of a country's startup scene. A decline in ranking could make investors more cautious and hesitant to invest in Nigerian startups, leading to reduced funding opportunities.
• Limited access to capital: A lower ranking could make it more challenging for Nigerian startups to secure funding. Investors may prioritize countries with higher rankings, perceiving them as having more established and promising startup ecosystems. As a result, Nigerian startups may face difficulties in accessing capital, which is crucial for their growth, expansion, and innovation.
• Reduced global visibility: A drop in the global startup index can impact the visibility and recognition of Nigerian startups on the global stage. A lower ranking may result in less international media coverage, fewer opportunities to participate in global startup events, and reduced exposure to potential international customers and partners. This can limit the growth and international reach of Nigerian startups.
• Talent attraction and retention: A strong startup ecosystem often attracts talented individuals who are eager to work in innovative and dynamic environments. A decline in the global startup index may reduce Nigeria's appeal as a destination for top talent. It could make it more challenging for startups to attract and retain skilled professionals, potentially hampering their growth and competitiveness.
• Policy and regulatory implications: A drop in the global startup index could prompt policymakers and regulators to reassess their strategies and policies. They may need to examine areas where improvements can be made to foster a more supportive environment for startups. This could involve reviewing regulations, streamlining bureaucratic processes, enhancing access to capital, and promoting innovation-friendly policies.
• Collaboration and ecosystem development: A lower ranking may also incentivize stakeholders within Nigeria's startup ecosystem to collaborate more closely. This can involve startup founders, industry associations, investors, academia, and government bodies working together to address challenges, share knowledge and resources, and build a more robust and resilient startup ecosystem.

Conclusion

It is worth noting that rankings and indices should be viewed as one measure of a country's startup ecosystem, and they may not fully capture the potential and vibrancy of the entrepreneurial landscape.

Despite a drop in the index, Nigeria's startup scene may still exhibit significant innovation, talent, and potential.

Efforts to address the challenges and capitalize on existing strengths can help in improving the ecosystem's performance and attracting renewed investor interest.