In the last decade, Nigeria has become a fintech powerhouse in sub-Saharan Africa. The fintech scene has produced two unicorns - Flutterwave and Interswitch - and several high-profile international acquisitions and partnerships with venture capital funding, including Paystack, OPay, and Kuda. Between 2014 and 2019, Nigeria's fintech companies raised more than $600 million in funding, and $439 million in 2020.
Ironically, this growth has highlighted a gap within the ecosystem: talent. A recent Ernst & Young report on the state of fintech in Nigeria highlights that "the quality and volume of fintech talent in Nigeria is limited and insufficient." Nigerian fintech organizations have had trouble attracting and retaining employees. Workers who are proficient in data analytics, cybersecurity, and software engineering are difficult to find. This talent gap presents barriers to growth.
Nigerian fintech founders and investors have been weathering this problem for many years. Victor Asemota, co-founder of MFiSA, an African mobile financial services accelerator, wrote in a tweet earlier this year that the biggest challenge startups in Africa face is talent. "Many are feeling the pains already. The biggest threat to talent availability is migration," he wrote. Jessica Akano, recruiting manager at Andela, a software engineering outsourcing startup in Lagos, told TechCabal in 2019 that one of the major challenges of her role has been hiring talent, given pay competition and the many opportunities for software engineers at home and abroad. "There's always another company willing to pay more or do more."
Being a nascent industry, the competition for fintech talent is high because the talent pool is limited. While this gap is not new, over the last four years, it's been exacerbated by several factors, including a fintech boom that increased the emigration of young Nigerians to Canada and Europe and a broken education system with outdated computer science curricula and inadequate teaching tools.
Also, Nigeria's rising inflation and continual devaluation of the naira against the U.S. dollar have spurred local talent to seek foreign employers in order to earn in U.S. dollars as a hedge against inflation and devaluation. The pandemic further opened up international remote working opportunities to Nigerians.
Fintech founders and employers have resorted to providing hands-on training programs for new employees, hiring from outside of Nigeria, and hiring foreign-educated Nigerians. While some large and well-funded fintech companies, like Paystack, are able to successfully explore these options, smaller companies with lean budgets cannot afford to hire and train fresh graduates - or even to hire international candidates or returning Nigerians who studied abroad. Unless this gap is filled, smaller fintech companies will remain at a disadvantage. The last thing a budding ecosystem needs is an uneven playing field where smaller companies are unable to compete for talent.
The objective of this study is to understand the level of talent gaps and development among Nigeria's startup ecosystem, and the need to empower talents in Nigeria and Lagos State. The quantitative research method was adopted to get facts and spontaneous responses from the startups. Questionnaires were administered online to respondents via email and call interviews, the sample size was estimated at 200 respondents
Most startups lacks professional tech talents due to capacity to pay competing wages
54% of the startups engaged could only afford to pay an average of N100k and below, this is equivalent to $150 in a month. With this remuneration, tech talent would prefer to take freelance jobs outside their paid employment. In this study, just 1.1% of startups can afford to pay N400k and above to employees.
More so, there is a clear indication most startups don't have much capacity to employ enough talents. Approximately 47% of the startups engaged disclosed their current headcount is between 1to 5 employees. Research from India(a developing economy) shows most startups hired less than 10 employees
Startups need support to train and develop the existing talent who are most time self-taught
About 62% of startups currently outsourced their product development. Also, approximately 45% of them could not afford to sponsor their talents(tech and non-tech talents) for training and development. One perspective to this, is the fact that most startups are unfortunately struggling to raise capital, so they bootstrap with raw talents without capacity development which leads to unviable products. Although, 56% of startups disclosed they sponsor their tech and non-tech talents but this is mostly As-The-Need_Arise
Most startups currently lack backend & mobile engineers, sales & operation professionals, and marketing experts
This research shows backend engineers and mobile android developers especially IOS developers are the most difficult tech talent to resource. About 65% of the startup mentioned backend engineers and mobile devs. are the most difficult tech talent to resource. Also, 38% of them disclosed product managers are difficult to resource.
For non-tech talents, approximately 80% of the startups find it difficult to resource business developers, marketing(digital and traditional)experts, and sales operations.
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