African Development Bank approves a $170 million investment in Nigerian digital and creative tech startups
Globalization and a relatively stable government have led to a growing shift toward technology investments in Africa. In addition, the recent coronavirus pandemic and China’s repression of Uyghurs in Xinjiang have led to a momentous shift in people’s attitudes toward China.
Investors are slowly beginning to move their business operations away from China to business-friendly countries like Vietnam, India, and the continent of Africa. These investments have also brought a wave of optimism to a continent with a population of over 1.3 billion people and millions of young educated people.
To take advantage of this shift, the Nigerian government has launched a new initiative called the Digital and Creative Enterprises Program (i-DICE) to promote investment in digital and creative industries. The program is part of Nigeria’s efforts to build back better, greener, and more inclusively, to create more sustainable jobs for the teeming youthful population. The funding for i-DICE came through this week after the African Development Bank gave a green light for the multi-million dollar loan to support the effort.
Today, The Board of Directors of the African Development Bank announced it has approved a loan of $170 million to finance a digital and creative enterprises program in Nigeria. Other backers of the program include the Agence Française de Développement (AFD) and the Islamic Development Bank (IsDB).
The program targets more than 68 million Nigerians aged 15 to 35 years who are recognized as leaders of innovative, early-stage, technology-enabled start-ups or as leaders of creative sector micro, small and medium-sized enterprises.
“Governments have a much greater role than just policymaking. They need to be innovative and create an enabling environment that includes infrastructure and de-risking to harness private sector investments in key growth sectors,” said African Development Bank President Akinwumi A. Adesina.
The investment in the Digital and Creative Enterprises Program will also support the leaders through enterprise support organizations – groups that support, train, and sometimes fund entrepreneurs – including innovation hubs, accelerators, venture capital, and private equity firms. Bank financing of i-DICE will help the Government initiative further consolidate Nigeria’s position as Africa’s leading start-up investment destination and as a youth entrepreneurship hub.
“This program is among the latest series of our operations meant to bolster the implementation of the Bank’s Jobs for Youth in Africa Strategy. Given that tech-enabled enterprise cut across all the economic growth sectors, the program’s focus on the digital sector will deepen Nigeria’s job creation efforts,” said Beth Dunford, Bank Vice President for Agriculture, Human, and Social Development.
The initiative will stimulate investments in 226 technology and creative start-ups and provide non-financial services to 451 digital technology and small and medium enterprises. The program is expected to create 6.1 million direct and indirect jobs, of which the Bank’s financing will support the creation of about 850,000 jobs. The value added to the Nigerian economy connected to the program is estimated at $6.4 billion.
The program will boost Nigeria’s venture capital market through independently managed funds focusing on digital and creative enterprises. These funds aim to attract an initial capitalization of $433 million in private and public sector financing.
“This program will generate significant economic benefits to Nigeria,” said Lamin Barrow, Director General of the Bank’s Nigeria Country Department. “The program interventions will help respond to the challenges of youth employment in Nigeria, which could intensify without scalable interventions. I want to recognize the strong country ownership, under the leadership of Vice President Osinbajo,” he added.
The African Development Bank’s active portfolio in Nigeria comprises 57 operations across 30 public and 27 private sector operations, valued at about $4.61 billion. The i-DICE Program aligns well with the Bank’s strategic priority areas, better known as the High 5s – specifically, “Industrialize Africa,” “Improve the quality of life for the people of Africa,” and “Feed Africa.”