Nigeria: three unicorns take on Africa, By Théophile Simon (Le Point)


This Wednesday in February 2022 is a day of celebration at Flutterwave, a Nigerian start-up marketing online payment solutions. « We have just raised $250 million, which makes us the most valuable start-up in Africa and will enable us to strengthen our expansion on the continent, » says Olubenga Agboola, the founder, from his offices in the upmarket districts of Lagos. The majority of the capital invested comes from America and confirms the trend: Nigerian « unicorns » [technology companies valued at more than one billion dollars, editor’s note] have the means to conquer their ambitions. Nigeria is a populous country, but it still holds the world record for the number of people living below the poverty line and has an economy the size of Ireland. A domestic market that is too small for its technology start-ups to attract the favour of foreign investors who, rightly or wrongly, perceive Africa as a homogeneous whole.

A dynamic of expansion
« We are present in 34 countries in sub-Saharan Africa, more than any other African start-up, which gives us extra value, » says Olubenga Agboola. And it doesn’t matter if the presence sometimes consists of a simple local partnership. The expansion dynamic is crucial for investors, as it guarantees a balance between risk and country, » explains Claude-Stéphanie Ngningha, a London-based banker who closely follows Nigerian tech. For example, the Nigerian economy is very dependent on oil price fluctuations, so it makes sense to counterbalance this with a presence in other countries with different strengths. While some companies need very little logistics to move from one country to another, like Flutterwave’s software, others have to move mountains with each new locationThe realities on the ground

« In Europe or the US, a start-up can rely on pre-existing infrastructure and public services to grow. But here, nothing like that: if you send a greeting card by post, it will arrive two years later! At Jumia, the African e-commerce giant that became Africa’s first « unicorn » in 2016, this ability to adapt has been taken for granted.

Online payment remains a challenge. In Nigeria, cash is still king. Many startups are successfully tackling this issue. Two of them are already valued at over a billion dollars.
« We had to create our own payment and logistics methods in the eleven countries where we operate. It wasn’t easy, but it now gives us a real competitive advantage, so much so that we have turned these two skills into a fully-fledged business », says Sacha Poignonnec, the co-founder. A capital-intensive effort, however, and one that is demanding on shareholders’ nerves: before the general stock market surge caused by the Covid-19 pandemic, Jumia had lost nearly 75% of its IPO value in April 2019. « Our revenues were still below our variable costs, that was expected, but it generated questions. Africa is a continent where you have to have a very long-term vision, » says Sacha Poignonnec.

Huge challenges to be met
The long term is a horizon that Mitchell Elegbe, founder of Interswitch and patriarch of the Nigerian tech scene, masters particularly well. Starting from scratch in 2002, the entrepreneur has democratised the use of cash cards in Nigeria and created a payment system that is now used by hundreds of other start-ups across the African continent. « Successful start-ups like Interswitch are important because they pave the way for other entrepreneurs to tackle the same issues, sometimes more effectively than we do ourselves. This creates a very healthy emulation, » says the impeccably dressed 40-year-old. Despite the company’s presence in twenty-six countries in sub-Saharan Africa, the conquest is far from complete: « There are still several virgin markets, such as the Democratic Republic of Congo, which is a huge country, but very backward. That’s our next target, » he says. The African economy has not finished hearing about Nigerian unicorns.