Nigeria has been identified as one of the countries receiving the most funding in Africa, especially in the area of Fintech.
This is as contained in a report titled Nigeria’s Integrated National Financing Framework (INFF).
The report ranked Kenya, South Africa, and Nigeria as first, second, and third on the list of top early-stage investment locations by VC deal volume.
It however observed that Nigeria currently has a difficult business environment, making it a challenge for small businesses to access finance.
“Based on recent statistics, Nigeria is one of the top three most prominent VC hubs in Africa, attracting the bulk of the VC investments in the continent, especially in fintech. In Nigeria, access to finance is a challenge for new and emerging businesses. VC and angel investment will go a long way toward reducing the financing gap. VC and angel investment opportunities also have great potential to attract foreign (and diaspora) capital.
“Investors are faced with regulatory restrictions such as multiplicity of taxes, multiple foreign exchange rates, limitations on access to FOREX, and difficulty in repatriating funds abroad, among others. Furthermore, insecurity is widespread across the country which makes it less attractive for investment. Currently, most VC investment goes to Lagos despite the significant potential in other parts of the country.”
The report advised that the Nigerian government formulate policies that would attract BC investment and funding.
“The government will develop new and innovative schemes targeted at diaspora investment to encourage VC and angel investment. The government could also come up with policies to encourage VC investments in areas that improve the socio-economic condition of women and children. These incentives could perhaps be linked to the government’s priority agenda based on the socio-economic impact of such sectors.“
There is a need for the Nigerian government to review the current incentives granted to encourage VC and angel investment to ensure they are well designed and effective in achieving the desired goals. Tax incentives for companies located in IT parks could be considered to attract VC and angel investment,” the report said.