Lagos has surpassed Nairobi as Africa top startup city
Lagos has surpassed Nairobi as Africa's top startup city
Lagos has surpassed Nairobi as Africa's top startup ecosystem. The city was ranked 122nd globally, effectively replacing Nairobi, Kenya, which is now ranked 136th. This is according to the StartupBlink Ecosystem Index Report 2021, which was recently released.
In general, the world's top two startup ecosystems remain unchanged from last year – San Francisco and New York. San Francisco is the “supernova” of startup ecosystems, scoring 328.96 points, nearly three times that of New York, which scores 110.77 points.
In terms of countries, the top five have all maintained their positions from last year, but there have been several significant changes. The United States maintains a sizable lead over the United Kingdom, which is ranked second.
Nigeria improved significantly, jumping five spots to rank 63rd globally. This was facilitated by the country's sizable consumer market and over 500 active startups, making it one of the largest in Africa.
However, the African colossus remains Africa's third largest economy, trailing only South Africa and Kenya.
South Africa improved four places to 48th in the world. South Africa is the first African country to crack the top 50 since the report's inception in 2017.
The growth of the Southern African country has been attributed primarily to its private sector-led startup ecosystem and the availability of early-stage capital as a result of forward-thinking public initiatives.
Kenya climbed one spot to 61st in the world and second in Africa, boosted by its innovative technology hub, particularly in mobile payment solutions. The presence of global technology giants such as Google, Microsoft, and Samsung in its capital city aided in its development as well.
Other African countries in the top 100 include Egypt, which climbed 11 spots to rank 70th, Namibia, which is ranked 99th, and Ethiopia, which is ranked 100th due to its vibrant seed ecosystem.
Regional outlook, Africa is growing
In general, North America no longer produces the most globally ranked ecosystems, as Europe now has the most cities (386), while North America has a total of 297 startups ranked in the global top 1,000.
This year's rankings saw a significant increase in the Middle East and Africa region. The region is represented in the global top 1,000 cities ranking by 74 startup ecosystems, up from 55 the previous year.
Within Africa, Western Africa had a good year, with all ranked countries improving their rankings (Nigeria, Ghana, and Cape Verde). Eastern Africa increased its representation in the global top 100 from four to six countries, while Northern Africa retained its three representatives. However, two of the three countries (Tunisia and Morocco) saw their rankings slip.
Southern Africa enjoyed a prosperous year. South Africa entered the global top 50, but Namibia, another Southern African country, also entered the rankings. Central Africa continues to be underrepresented in the rankings.
The increase in startups ranked in the region confirms analysts' and investors' predictions about the region's enormous potential. Foreign investment into the continent's major technology hubs is also evident.
Ibadan moves up to second place in Nigeria, while Enugu is added to the rankings
Nigeria currently has seven cities ranked in the global top 1,000 and continues to have the most ranked cities of any African country. Lagos now leads the pack, having climbed five spots to 122nd in the world.
Apart from being Nigeria's and Africa's largest startup city, Lagos is also ranked among the world's top 50 cities for e-commerce and retail technology. Additionally, it was ranked in the global top 100 for transportation and education technology.
Ibadan jumped 601 spots to 353rd globally and 2nd in Nigeria, surpassing Abuja. The growth of the Southwestern state is directly related to the rapid growth of ride-hailing company SafeBoda.
Abuja, the federal capital territory, was ranked third nationally, having dropped 12 spots to 466th on a global scale. The capital was particularly hard hit by the pandemic, as startups flocked to Lagos due to its economic prosperity and population.
Port Harcourt, meanwhile, fell six spots to 906th, while Enugu, Nigeria's newest city, is ranked 978th globally and 5th nationally. Benin City improved nine spots to 979th, while Kano improved fourteen spots to 981st.
Conclusion
According to Startupblink's most recent report, startups have weathered the worst of the pandemic. Additionally, it demonstrates how the startup ecosystem has evolved over the last year, with certain cities establishing themselves as startup hubs.
In Nigeria, the index reflects the country's robust investment activity. The emergence of new unicorns such as Flutterwave and the entry of global fintechs such as Stripe through the acquisition of Paystack demonstrated the ecosystem's growth.
Nigeria, however, faces significant obstacles, including a lack of financing options, stringent regulatory conditions, and even a lack of broadband internet infrastructure.
This demonstrates that, while the startup ecosystem is growing, there is enormous untapped potential if the underlying challenges are addressed.
