Saturday, 2nd December 2023

Nigeria’s policy makers need to stop holding innovators back

How easy is it to be a start-up in Nigeria? You could look at the ease of doing business rankings — we rank 169 out of 189 countries, up one spot from 170 in 2015, so that’s progress, I guess?


How easy is it to be a start-up in Nigeria? You could look at the ease of doing business rankings — we rank 169 out of 189 countries, up one spot from 170 in 2015, so that’s progress, I guess?

Or you could ask actual entrepreneurs. A respected one recently described it as running the earth with a backpack full of rocks strapped to one’s back. Compared to that, entrepreneurship in the United States is a gentle micro-gravity stroll on the moon.

He is probably understating the true situation, which is arguably closer to running a mine on a hard, craggy planet full of active volcanoes and man-eating parasites. Nigerian innovators are forced to survive in some of the most toxic socio-economic conditions in the world. Initial start-up costs are the biggest barrier to entry: Two years rent upfront, a power generator and fuel to run it, and for those that can afford it; an inverter, the horrors of incorporation, the dearth of human capacity. But all these things would not be so bad if there wasn’t also the paralysing artificial gravity of bone-headed policy to deal with as well.

Take broadband adoption for instance. Studies show that for every ten percent increase in broadband penetration, there is a corresponding 1.3 percent increase in gross domestic product. But despite the government’s ostensible dedication to increasing broadband access — the target is 30 percent by 2030 — rent-seeking state governments have obstinately insisted on keeping ridiculously expensive right of way fees, which removes the commercial incentive for the ISP’s to take broadband to the last mile. One is in fact beginning to wonder if Nigeria’s policy makers are aware that there is a broadband access target in the first place. Otherwise, it is hard to imagine why a bill that seeks to impose a nine percent levy on telecommunication services hasn’t been thrown out, and its sponsors pilloried.

Edtech pioneer, Gossy Ukanwoke, could have chosen an easier problem to solve. Instead, he chose to tackle Nigerian higher education. Getting into Nigerian university is a small miracle. Only one in five people that sit JAMB can gain admission into a Nigerian university. It’s not a question of merit. Nigeria’s universities simply do not have the capacity to accommodate the number of people who try to get in. Even after getting past the hurdles that kill most start-ups — game-changing technology, product market fit, world-class team to execute, and even funding to scale, Gossy’s biggest problem is ham-handed policy. The National Universities Commission recently declared that “online degrees” are not recognised in Nigeria. Intractable NUC policy, including its insurmountable requirement for Nigerian degree-awarding institutions to build physical campuses are what forced Iyin Aboyeji’s 2014 edtech start-up, Fora, to execute a fundamental pivot that saw it become a developer talent accelerator, instead of fulfilling its original mission to democratise Ivy league education.

Examples abound of policy thwarting innovation in Nigeria. Advancement in the payments sector have been hamstrung for years by Central Bank policy. It costs more to acquire a drone license than to acquire the drone itself, and only by means of a byzantine application process. Perhaps the only thing that’s worse than being a Nigerian trying to acquire another country’s visa is to be a foreigner seeking a Nigerian visa. And when the Nigerian Communications Commission (NCC) suddenly reneged on its approval of the Visafone acquisition by MTN, which for all intents and purposes was a done deal, for rather opaque reasons, it signalled to all who were watching that Nigeria’s regulators are capricious creatures. It would be a bad idea for anyone, entrepreneur or investor, to set their watch by them.

The Buhari administration isn’t totally oblivious to the opportunity that Nigeria’s innovators represent. It demonstrated a vague awareness of the sector when it hosted 30 start-ups at the Aso Villa a few weeks ago. But mere nods to the importance of innovation without action that is aligned is useless to everyone concerned. While pitching one’s start-up to the president is cool, most entrepreneurs would choose expedited business incorporation and friendly regulatory policy (where necessary) over a presidential handshake.

A lot of potential harm can be avoided if the people in charge considered the long term effects of the policies they make. Nobody expects the government to innovate. But at the very least, it should not get in the way of those who can.