African tech: Nigeria’s Yabacon Valley shows startups the road to success
To coincide with The Africa Report's debate at the Mo Ibrahim Governance Weekend in Abidjan today, we revisit the Nigerian tech hub of Yabacon Valley.
[From our archive]
To the uninitiated, the young men and women eating lunch from noon onwards at the White House – a teeming restaurant in the Yaba area of Lagos – are simply chattering about boring work routines.
Step closer, and you will hear the high-tech jargon more often heard 12,500km away in the San Francisco Bay area. Many of these people are the interns and junior staff of the establishments powering a revolution in Africa’s second-largest economy.
Nearby Cafe Neo hosts those higher up in the hierarchy. Most of its patrons work in the young startups that have congregated in the area now designated as Yabacon Valley (after Silicon Valley) or Yaba Right (a nod to a psychiatric hospital that has been nicknamed Yaba Left).
While low oil prices sink the naira, the country is counting on other sectors to diversify the commodity-dependent economy. Yaba’s tech scene is in its early days, but the results are already promising.
Big names like Konga, an online retailer, arrived in 2013, while Africa Internet Group transferred six of its companies to Yaba in 2014. In the late 1990s, Bosun Tijani was recruiting European developers for tech businesses owned by returnees in Jos and Abuja.
More than a decade later, he teamed up with partner Femi Longe to create Co-Creation Hub (CC Hub) Nigeria, the country’s first technology hub and incubation space, in Yaba in 2011.
With investment and support in cash and kind from organisations such as the Indigo Trust, Omidyar Network, MainOne Cable Company and the Lagos State government, it soon gained momentum and proceeded to install a fibre-optic-powered information superhighway.
“This is where you have all the ingredients for innovation,” says Tijani. Like Silicon Valley, the area is home to half a dozen tertiary institutions, including the University of Lagos and Nigeria’s finest art and design school, the Yaba College of Technology.
“Yaba isn’t as expensive as [Victoria] Island. You can easily get to the airport. It’s a no-brainer,” he explains. In 2011, former banker Seun Onigbinde co-founded BudgIT, a fiscal transparency project, on the third floor of CC Hub’s six-storey building in Yaba.
As one of the first early-stage startups to benefit from CC Hub’s incubation drive in 2011, it received $5,000 of its $90,000 seed funding from billionaire businessman Tony Elumelu.
Onigbinde explains the role CC Hub played in the company’s early days: “I met my co-founder at the hackathon [it] organised. A lot of organisations in the early stage struggle with infrastructural costs, but CC Hub shared spaces with a heavy discount, making it possible to focus on delivering impact.”
BudgIT has since blossomed into an intercontinental force to reckon with. Early success and cheap bandwidth attracted other Nigerian startups, showing the cluster effect at work.
A rich network of businesses can attract foreign investors, too. Last June, Andela – a Nigerian-founded talent accelerator for programmers that has campuses in Lagos, Nairobi and New York – received $24m in investment from the Chan Zuckerberg Initiative.
Facebook chief executive Mark Zuckerberg put his mouth where he had already put his money two months later, when he visited Nigeria, including Yabacon Valley, and met with President Muhammadu Buhari.
“Mark’s visit is a much-needed recognition and a sign that the nation is on a path to becoming a contributor to technology advancement,” says Tijani, who took the Facebook chief on a tour around Yaba.
Top brass from the Silicon Valley-based Y Combinator, often referred to as the world’s most powerful startup incubator, also visited the cluster in September.
For Shola Adekoya, chief executive of Konga, the visits are a long-overdue endorsement for what the tech industry in Nigeria has been pushing quietly in the background.
“My hope [is] that as a nation we begin to pay particular attention to the importance and potency of technology,” he tells The Africa Report.
As in most of Lagos, nearly everyone in Yaba is in a hurry. The area’s soundtrack is a non-stop orchestra of drivers honking, shrill cries of frenzied bus conductors and calls for prayers blazing from speakers.
From the rooftop of CC Hub, the colonial architecture of Yaba arches above the chaos below. To one side is the 11.8km stretch of the majestic Third Mainland Bridge. On the other is Herbert Macaulay Road, where fibre-optic cables are buried.
Perhaps unsurprisingly, the very challenge of Lagos traffic has driven the diversity of products and services that these techies are responsible for.
“Problems are the reason why we exist,” explains CC Hub’s Tijani. “We’ve seen people come with just an ordinary idea and watched them build a proper organisation that can make money out of it.”
From a smartphone, you can upload business card designs to Printivo’s website and await delivery in three working days. Or you can set up an online shop on 500Shops.com using Paga, the mobile-money service provider.
You can also have the waste in the trash can picked up by WeCyclers and get paid for it.
A number of startups including Iroko – the biggest digital retailer of Nollywood worldwide – and Paystack, an alternative e-payments company, have offices outside the cluster but still intermingle with those from Yabacon Valley.
There is a running joke in some circles that anytime two ‘repats’ – as Nigerians who return to the country are called – meet, a startup is born. Tayo Oviosu is of their number.
In 2008, the Silicon Valley alumnus returned to Nigeria with a mission to eliminate the need for people to carry around huge amounts of cash. The result was Paga, described as Nigeria’s answer to PayPal. In August 2015, it announced it had attracted more than five million users.
Glad to be back
Oviosu explains the reasons for his return: “One of the things that got me excited to come back to Nigeria from the States was the opportunity to be part of the economic redevelopment of Nigeria. One of my friends told me that Nigeria felt like India and China 15 years ago.”
But while Beijing and Delhi attract serious money, Yabacon Valley has a way to go. Many startup founders spend about half their time looking for funding, says Eghosa Omoigui, chief executive of EchoVC Partners, a Lagos-based venture capital fund.
“It is a remarkable achievement that our entrepreneurs have gotten this far even with that constraint.” Alongside EchoVC, the Lagos Angel Network is a major investor in local startups. Some chief executives have, like Oviosu, also turned into angel investors.
Printivo co-founder Oluyomi Ojo and two others began the business with their own funds before finding a local investor. “We bootstrapped Printivo for several months before going on to raise a sizeable seed funding,” he says.
Within Yaba, a common belief is that the cluster will soon make its mark on the global scene. “It’s a great time to be involved [in Yaba], and I will like to see rapid growth in this area,” says Konga’s Adekoya.
But for now, Yaba is not counting its chickens but is looking for mythical beasts. “Yaba will be the home of unicorns!” says Onigbinde, a reference to the one-in-a-million tech company that breaks the $1bn valuation mark.
The TAR Debate on “The new tech era: job-killer or job-creator” is at the Sofitel Abidjan Hôtel Ivoire at 2pm on 5 April.