Nigeria’s startup goldmine faces scale crisis as founders battle funding, talent, policy

Nigeria’s technology ecosystem has reached a point where innovation is no longer its biggest challenge.

The harder test is turning promising startups into durable, globally competitive businesses.

That was the central message from technology executives and entrepreneurs at the GITEX Nigeria Startup Festival in Lagos, where industry leaders warned that weaknesses in funding, talent, infrastructure, government policy and procurement could prevent the country from converting its growing startup base into globally significant scale-ups.

Read also: Lagos Angel Network seeks to make local investors the first backers of Nigerian startups

Michael Nwoseh, business and digital solutions director at All TalentZ, USA, warned founders against making fundraising the primary measure of startup success.

“Your business must first be meeting the need, the commercial need,” he said, arguing that entrepreneurs should prove customers are willing to pay before making venture capital the centre of their growth strategy.

For Nwoseh, a startup that can acquire and retain its first customers has already demonstrated the foundation required for expansion. “If you can prove that concept by having one customer, two, three, four, then it shows that you can get more and more customers out there,” he poaited.

The approach shifts funding from being a survival mechanism to an accelerator for an already functioning business.

Nwoseh cited All TalentZ as an example, saying the company grew from about 30 employees to more than 500 across the United States, Nigeria, Ghana, the Philippines and Mexico.

The lesson for Nigerian founders is to build locally while thinking globally from the outset, he advised.

Nnenna Irebisi-Okoli, public sector lead for West Africa at Amazon Web Services, added that scaling a technology company also requires the ability to expand without repeatedly encountering infrastructure limitations.

Cloud computing has lowered one of the traditional barriers by allowing startups to access computing resources without investing heavily in physical servers and infrastructure, she stated.

But technology alone does not create a global company. Product quality, agility, innovation and talent remain critical, particularly as artificial intelligence accelerates the pace of technological change. “The things that we could do six months ago and what we can do now are totally different,” she added.

Nigerian startups, must therefore continue adapting rather than rely on products and technologies that worked in the past, she urged founders.

Nwoseh similarly cautioned founders against spending too long trying to perfect a product before launching it. “You can’t have perfection from the start. You have to build and continue to improve,” he added.

Policy execution remains a major constraint

Oswald Osaretin Guobadia, managing partner at DigitA Nigeria, said the problem facing Nigerian startups is not necessarily a lack of government policies but weak implementation. “There is a great deal of policies that never got full implementation,” he averred.

For startups operating with limited capital, regulatory uncertainty and inconsistent policy execution can significantly increase the cost of doing business.

Guobadia argued that Nigeria should focus less on producing new policy documents and more on making existing policies work.

He likened the business environment to soil, saying: “If the soil is bad, the idea will not be the right thing.”

He also urged founders to pay greater attention to corporate governance, data protection, taxation, KYC requirements and cross-border regulations, warning that a strong technology product can still fail to become an investable or acquirable business if its institutional foundations are weak.

Government procurement could unlock growth

Government procurement emerged as another potential engine for startup growth. Guobadia said public institutions could help Nigerian startups scale by becoming customers of locally developed technology.

Winning a government contract can provide a startup with revenue, credibility and a reference customer that can help unlock private-sector opportunities.

But delayed government payments can cripple small companies that operate with limited working capital.

“Those of us who have a lot of business, and you might know about cash flow, if you just take care of payments alone, the SMEs will change,” he said.

Faster government payments could therefore have an immediate impact on the survival and growth of small businesses, he argued.

Nigeria’s talent advantage faces global competition

Talent remains another critical part of the scale equation. Nwoseh said startups need more than engineers as they grow. Customer support, marketing, operations and commercial expertise become increasingly important once a company moves beyond product development.

The growing globalisation of work presents both an opportunity and a threat for Nigeria.

Nigerian professionals can serve international companies without leaving the country, but global businesses can also recruit the same talent pool, leaving local startups competing for skilled workers.

The response, Nwoseh said, is greater flexibility, including outsourcing some functions while gradually building internal capabilities.

U.S. partnership offers a route to global markets

Brandon Hudspeth, U.S. consul general in Nigeria, said American companies are already helping strengthen Nigeria’s technology ecosystem through investment, infrastructure and skills development.

He cited Google, Cisco, Meta and Microsoft as companies training Nigerians in technology and artificial intelligence, while U.S. companies are also supporting cloud, connectivity and digital infrastructure.

Hudspeth said the U.S.-Nigeria commercial relationship could give Nigerian startups access to capital, technology, expertise and international networks needed to expand beyond the domestic market.

The opportunity goes beyond investment to creating jobs and building companies capable of competing globally, he posited.

Read also:Why a Lagos payment to Nairobi still travels through New York and the startup trying to change that

The GITEX discussion ultimately exposed a gap between Nigeria’s reputation as a startup hub and its ability to consistently produce large, globally competitive technology companies.

The next phase of Nigeria’s technology story will therefore not be measured simply by the number of startups created or funding rounds announced.

The real test will be whether companies can generate sustainable revenue, retain talent, navigate regulation, win enterprise and government contracts, attract international capital and sell into global markets.

Nigeria has the talent, market and technology problems capable of producing valuable businesses. But converting that potential into a scale-up economy will require founders, investors, government and large corporations to address the structural barriers that prevent promising companies from growing.

The challenge is no longer building Nigerian startups. It is building Nigerian companies that can scale beyond Nigeria.