Updated: February 25, 2021
Nigeria’s young tech sector faces a major hurdle in an unreliable power supply, with the average tech firm reporting 30+ power outages per month, according to a major new survey of the country’s tech sector by the Center for Global Development and the ONE Campaign.
The survey covered 93 tech firms, which encompasses the majority of Nigeria’s tech industry. Firms were asked about a range of potential business obstacles, including access to credit and electricity, corruption, taxation, the legal system, and more. Political instability, access to finance, and reliable power were the most severe constraints, according to respondents.
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Nigeria is becoming a major African destination for tech investment, driven in part by a large, well-connected population, but the survey raises concerns about the fundamentals of the business environment tech entrepreneurs have to operate in.
“Everyone is talking about 5G access or startup accelerators, but we found Nigeria’s tech industry is struggling with much more basic problems, like unreliable electricity. The firms we talked to are dealing with dozens of power outages per month. That’s hard for any business, and especially for a technology company,” said Vijaya Ramachandran, one of the authors of the report and a senior fellow at the Center for Global Development.
“Basically, Nigeria’s 21st century economy is being held back by a very 20th century problem: lack of power,” she said.
Some of the survey findings:
- 57% of tech firms surveyed said reliable access to power was a “major” or “severe” obstacle to their business.
- 53 of the tech firms surveyed reported 30+ outages, and another 22 reported more than 20 outages per month.
- A typical power outage was 2-3 hours for most firms, although for a significant group (about 15%), the lights usually stay off for 5 or more hours at a time.
- A third of firms surveyed report losing more than 20% of their sales due to power outages.
“We know that unreliable power is a huge issue across Nigeria, and now we have data on just how badly outages are affecting technology companies. Big Silicon Valley investments and government-sponsored tech hubs can be helpful, but Nigeria needs to get the basic business environment right first. That means providing the energy infrastructure all businesses need to flourish,” Ramachandran said.