Stakeholders raise concern over Nigeria’s tech industry

Stakeholders at the Association of Issuing Houses of Nigeria Award Night have raised significant questions on the country’s tech industry, especially insurtech and healthtech.

In a discussion entitled, ‘The Future of Money: Prospect for Equity Capital Raise in Nigeria’, chaired and moderated by AIHN Publicity Secretary and Head of Investment Banking for Africa Regions at RMB, Chidi Iwuchukwu, the panelists questioned some of the steps taken by the industry to compete with other sectors.

The increase in tech startups in Nigeria has remarkably increased the demand for equity capital in the form of private equity and venture capital investments from foreign investors, most of which are not facilitated by Nigerian issuing houses, hence the dearth of equity in their activities.  

The discourse sought to explore the trends in the equity capital raise ecosystem and the actions issuing houses could take in rebuilding the equity capital markets. The conversion also centred on what new thinking is required to raise capabilities and better position the issuing houses to play in the equity space.

One of the panelists, Director of the Company’s Board in Custodian Investment, Mr. Adeniyi Falade, questioned the slow rate at which insurtech was growing in comparison with other sectors. 

His words, “In recent months, we have seen insurance technology companies emerge in the Nigerian insurance ecosystem. Particularly noteworthy are the likes of Cassava and Reliance HMO, who in H1 2022 raised $4m and $40m respectively from venture capital and private equity firms. To what extent do you see these insurtech companies disrupt the business of traditional insurance companies, and what steps are being taken by traditional insurance companies to favourably position themselves against this potential competitive threat from the Insurtechs?”

According to Falade, research reveals that the largest pre-seed fund raising by insurtech companies stood at $4m in Africa as at 2021, considered to be lower than other sectors like the African healthtech startups, which raised almost $400m and African fintech, which also raised over $2bn in 2021. 

“What could be attributed to this seeming low development of the insurtech industry, particularly when compared to its counterparts in other sectors?” he queried. 

Among the panelists, who raised other crucial questions, is the Managing Director, Verod Capital, Mr Danladi Verheijen. 

According to him, Y Combinator, in a recent communique, warned of impeding slowdown in VC and PE fundings due the economic downturn currently experienced globally, and as such founders of startups should strategise appropriately to thrive in this downturn. 

He also noted that Nigeria had historically seen a heightened investor appetite for tech startups despite her poor economic conditions. 

With the increase in digital currency acceptability as legal tender for the exchange of goods and services, the Managing Director/Chief Executive Officer of Central Securities Clearing Systems Plc, Mr Haruna Jalo-Waziri, questioned Nigeria’s preparedness for the revolution, especially using technology and innovation. 

“What steps are being taken by the exchanges in Nigeria to strategically position themselves for these technological disruptions?” he asked. 

While noting the increase in the population of Nigeria, the Founder at Flying Doctors Healthcare Investment Company, Dr Ola Brown, raised some questions surrounding the healthtech industry. 

Her words, “In light of the population explosion currently experienced in Nigeria, the need for healthcare providers would continue to increase; hence, the emergence of healthtech companies in Nigeria is a welcome development.”

Brown also noted the deteriorated health system in Nigeria, which requires more funding.  

“However, this is not currently the case, as we have seen low participation of the health sector in the Nigerian capital market, particularly as it relates to the mobilisation of equity or debt capital that could be utilised in the development of these health facilities,” she added. 

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