Broad Street, Lagos

Nigeria’s commercial capital, Lagos, has overtaken Nairobi, Kenya, to become Africa’s leading startup ecosystem.

According to the Global Startup Ecosystem Index 2021, released by StartupBlink, Lagos displaced Nairobi as the continent’s top start-up hub.

Lagos is also ranked in the global top 50 cities for E-commerce & Retail Technology and in the global top 100 for both Transportation Technology and Education Technology.

Notable startups that helped the growth of Nigeria in the index include Flutterwave, VerifyMe and Mono.

“The Nigerian city of Lagos has become the top African startup ecosystem, ranked 122nd after switching places with Nairobi, Kenya, which now ranks 136th,” the report said.

Ibadan, capital of Oyo State, saw a massive increase in ranking, jumping 601 spots to 353rd globally and second in Nigeria, surpassing the Nigerian capital of Abuja.

The nation’s capital ranked 3rd nationally, fell 12 spots to 466th, while Port Harcourt decreased by 6 spots to 906th.

The report said the newest Nigerian city in the rankings, Enugu, ranks 978th globally and 5th nationally.

Benin City increased nine spots to 979th, while Kano jumped 14 spots to 981st.

In total, Nigeria has seven cities in the global top 1000 and continues to have the highest number of ranked cities of any African nation.

Index

The Global Startup Ecosystem Index is built using data points processed by an algorithm that takes into account several dozens of parameters including the number of startups, the size of the domestic market, the ease of doing business, amongst others.

The report said the top 5 countries have all maintained their rank from last year, although there are several deep changes.

The United States maintains a massive lead over the 2nd ranked United Kingdom as the effect of Brexit finally takes effect.

Buoyed by its massive consumer market and more than 500 active startups, one of the largest in Africa, Nigeria saw a notable increase, leaping 5 spots to now rank 63rd globally.

However, the nation still remains 3rd in Africa behind South Africa and Kenya.

Regional Outlook

The Middle East and Africa region saw very positive momentum in the rankings this year. The region has a total of 74 startup ecosystems represented in the global top 1,000 cities ranking, up from 55 during the previous year.

Although the number of cities ranked in the global top 100 remained stable, the region’s representation among cities ranked 101-200 increased from 6 last year to 8 this year, showing that ecosystems in this region are continuing to develop.

North America no longer produces the highest number of ranked ecosystems globally as the European region now has the most cities with 386 cities while North America has a total of 297 startups in the global top 1,000.

West Africa had a good year, according to the report, and all ranked countries (Nigeria, Ghana, and Cape Verde) improved their rankings. Eastern Africa grew from 4 to 6 countries in the global top 100 while Northern Africa retained its three representatives. Two of the three nations in North Africa, Tunisia and Morocco, however declined in rank.

Southern Africa had a good year as South Africa broke into the global top 50, and Namibia joined the rankings, while Central Africa still has no representation in the rankings.

The report added that challenges such as a lack of financing options, unpredictable regulatory decision making and a lack of broadband internet infrastructure, were rife in Nigeria.

It urged the government to develop and strengthen existing entrepreneurship programmes and legislation that would support entrepreneurship.