Nigeria’s ICT sector contributed 19.78% to the country’s GDP in 2024. The telecommunications segment accounts for the vast majority of this, at around $7.6 billion. Other important contributors are broadcasting, data center services, cloud, IT, and BPO.

Nigeria’s combination of relatively stable governance, strategic location, and young and innovative population has made it an attractive destination for multinational companies. Several notable firms, such as Oracle, IBM, Microsoft, Cisco, HP, and SAP, have offices in Nairobi, and some have based their entire African operations from these offices.

Why You Should Work With Nigerian IT Companies

Digital service providers in the cloud and BPO markets are primarily involved in the provision, rather than the development, of services, whereas Nigerian firms are more prevalent in the fintech and e-commerce markets. The physical technology required for the delivery of digital services is typically imported, and it is not clear that Nigeria could produce these products more efficiently. 

A key strength in the digital services market is the acceptance of mobile services. Any consumer solution entering the market would have to be mobile-compatible. Mobile healthcare services are expected to grow particularly rapidly as the sophistication of these offerings increases.

In addition, the CEO of Toniceli considers that one of the competitive advantages Nigerian IT companies have compared to those established in neighboring countries is the challenging conditions. Here in Nigeria, we're used to working in challenging and stressful environments. This gives us grit, especially when faced with challenging projects. It's just a part of our nature to face challenges headlong and not to back down.

What to Pay Attention to When Working With Nigerian IT Companies and Web Agencies

On the consumer side, it is vital that any proposed digital service offering be mobile-compatible due to the prevalence of mobile usage in Nigeria. Furthermore, smartphone penetration in the region is steadily increasing, thus increasing the sophistication of viable digital service offerings. 

Given the acceptance of fintech by the Nigerian population, a possible route to entry in the consumer market is to acquire one of the many smaller fintech firms in the industry. This would resolve some of the primary barriers to entry, most specifically bureaucratic red tape and a lack of local knowledge. 

On the corporate side, the most effective route to entry is likely through partnerships with smaller local resellers. This model is already popular in the Nigerian market. A key differentiating feature here will be how well the service adapts to the Nigerian market.

How Reliable Are Nigerian-based IT Companies?

Considered to be one of the biggest African IT hubs, Nigerian web agencies and IT companies compete only with Ethiopian ones in terms of reliability. As many foreign companies have already invested and thus developed the local IT infrastructure and industry overall, Nigerian IT companies find it easier than other neighboring countries to enter the global market and provide their services at accessible prices. 

How Does the Nigerian IT Industry Relate to the Neighboring Countries?

Nigeria is actively trying to establish itself as a key ICT hub in the East African region. The country appears to be making good progress in this regard, helped by having a strong connectivity infrastructure and a young, innovative population. Despite this, the country currently faces considerable political uncertainty, and issues surrounding the transparency of tenders remain a major barrier to growth.

Although Nigeria’s score in the Global Innovation Index 2024 is not high in absolute terms, it ranks 113th in the world. This supports the conjecture that businesses, government, and consumers will be receptive to new technologies, as ICT has already had a substantial impact on the Nigerian economy.

The Business Environment in Nigeria

The CEO of Toniceli - a leading Nigerian IT company, Oluwayomi Olabanjo, states that the Nigerian business environment is growing rapidly. Most business environments are still very much clustered in the city of Lagos, but over the years, there's been an expansion in economic clusters in other cities. There had been challenges in infrastructure, policies, power, and access to professional training and education. However, things have been getting better over time, especially with the coalition of private and public enterprises addressing these challenges headlong. I would say the biggest factor we've had working for us in the Nigerian market is the availability of youthful talent and the increasing flow of foreign and local capital into the market.

What Makes Nigeria Attractive for International IT Companies?

Oluwayomi Olabanjo mentions on this topic that what makes it attractive is the abundant supply of youthful talent. However, unstable government policies, infrastructure, and power shortages are challenges, making it unattractive for international IT companies.

Yet, the Nigerian Communications Commission had been doing quite a lot with the startup bill and also with the establishment of public-private incubator programs within the country. I really do believe they should be given credit for this.

Lagos, Ibadan - Best Cities for Doing IT business in Nigeria

Lagos, because it has always been the economic hub of the country, hence the IT industry has found it quite easier to experience growth in that space.

Ibadan due to the fact that it is a fast-growing economic hub and also, and there's less capital expense in setting up and running a company here. - mentioned Oluwayomi Olabanjo.

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