ICTworks by Inveneo

I hear much talk about how the Nigerian information and communication technology industry is the 2nd largest industry in Nigeria, right behind Oil and Gas, but I don't believe it. Why? Because if ICT were really such a large part of Nigerian economy, we'd hear about a thriving venture capital community that's support it.

Who is investing in ICT?

Who are the Nigerian Venture Capitalists?

Recently on the Naija IT Professionals newsgroup, we were presented with a list of Nigerian venture capital companies. But in researching the VC's Internet footprint, I only found these to be viable organizations:

• African Capital Alliance
• Bank of Industry, Nigeria
• Areos Capital
• First Funds
• AfriCap
• AfricInvest
• Unique Venture Capital

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Do any Nigerian Venture Capitalists focus on ICT?

One key aspect of Silicon Valley's dominance of the ICT sector, in everything from hardware, to software, to services, is the tight interplay between VC's and the surrounding technology companies. VC's provide the rick and patient capital that helps two college students go from garage fiddling to Hewlett-Packard, Apple, Microsoft, and Google.

Yet, if we look at the Nigerian ICT landscape, there are few, if any standout VC's. I checked each organization's portfolio from those listed above, I didn't see a focus on the ICT industry, or even the mention of ICT company investments.

No VC's? Then no large-scale ICT industry

Now why does this matter? Couldn't the Nigerian government, funders of some much else, also become the venture capitalists? As Paul Graham notes in his How to Be Silicon Valley post, VC's do matter more than government:

Do you really need the rich people? Wouldn't it work to have the government invest in the nerds? No, it would not. Startup investors are a distinct type of rich people. They tend to have a lot of experience themselves in the technology business. This (a) helps them pick the right startups, and (b) means they can supply advice and connections as well as money. And the fact that they have a personal stake in the outcome makes them really pay attention.

Bureaucrats by their nature are the exact opposite sort of people from startup investors. The idea of them making startup investments is comic. It would be like mathematicians running Vogue-- or perhaps more accurately, Vogue editors running a math journal.

So in the end, I don't believe that ICT is the 2nd largest in Nigeria. If there are no high-profile VC's, there can't be the Silicon Valley that can spawn a sizable technology ecosystem. In fact, how can Nigeria's technology industry be of any decent size when the World bank says that Sudan and Zimbabwe have higher Internet penetration than Nigeria?