The most innovative business ideas in Nigeria for startups

Explore the business ideas in Nigeria that have potential to evolve into successful companies, and discover those that focus on solving Nigerian problems.

The Covid-19 pandemic affected many businesses in Nigeria but with the current economic recovery, 26.5 % of businesses in Nigeria have begun business activities since January 2021.

Although this seems like a small proportion, there are still untapped business opportunities in Nigeria you can take advantage of.

So, how do you start up a business in Nigeria? In this article, you’ll learn the major business ideas in Nigeria and the skills necessary to launch and scale lucrative businesses in Nigeria.

The business landscape in Nigeria

The corporate affairs commission is a federal organisation responsible for business registration irrespective of company size. Small and medium-sized businesses are the predominant types of businesses in Nigeria.

This guide to doing business in Nigeria explains that businesses can come in the following forms:

• Sole Proprietorship: A single person business model.
• Partnership: 2 or more individuals own a business.
• Companies: Businesses with a share capital of N10 million.

In order to attract foreign investors, Nigeria now has free trade zones where foreigners can set up businesses without government tax obligations and custom duties. The federal government also initiated the free trade zones to promote industrial growth and to create job opportunities for the unemployed.

Nigeria has 17 active Free trade zones located in states such as Calabar, Portharcourt and Lagos. Nigeria also has business partnerships with investors from the United States of America, United Kingdom, Canada and China.

Despite difficulties such as poor infrastructural facilities, harsh government policies for businesses and tax returns, Nigeria still has the highest volume of startups in Africa, though these startups have limited funding. 

Overview of successful Nigerian startups

Locally registered Nigerian startups have raised a total of $64million in 2020, which is small in comparison to the $241 million dollars raised by South African startup companies.

The Nigerian startup ecosystem is growing, and numerous incubation/innovation hubs have been developed in order to groom young startup business owners and to attract foreign investors.

With the growth of Ecommerce stores in Nigeria and the freelance gig economy, the demand for online payment processing companies has increased. This has created opportunities for the creation of many fintech companies in Nigeria.  

Fintech companies are the most successful startups in Nigeria and they have attracted lots of foreign investors for funding. Also, healthtech business startups were the second most funded business startups in 2020. Online e-commerce startups are also among the fastest-growing companies for venture funding in Nigeria. 

Here are a few examples of successful Nigerian startups:

Flutterwave

Flutterwave is a fintech company that ensures easy payment processing online across major African retail markets. It is the fastest-growing fintech startup in Nigeria and has closed multiple rounds of successful venture funding. 

In 2020, it closed a total of $35 million venture funding round which is amongst the highest in the Nigerian startup ecosystem. Flutterwave is projected to begin active operations across Africa.

Paystack

This is another leading fintech and online payment processing startup in Nigeria.  Paystack has secured the sum of  $8 million venture funds and was partly acquired in 2020 for a huge sum of $200 million by Stripe company. This is one of the biggest business acquisition deals in Africa. 

Remita

Remita is among the top online payment processing startups in Nigeria, and is responsible for the majority of local online payments. It is used by the Nigerian government to facilitate payment across numerous government institutions in Nigeria.

Flying Doctors

This is a health tech startup that offers air ambulance services to patients who need emergency medical attention. The company has expanded its services in Nigeria and has saved lots of lives due to prompt emergency health care services on demand.

Lifebank

Lifebank is a healthtech company that ensures patients in need of blood transfusion have access to blood products without delay. Lifebank has facilitated the delivery of blood products to rural areas and to patients who require emergency blood transfusions. The founder has also received international grants and awards since the onset.

Cars45

This is an online e-commerce company that connects owners of cars (sellers) with their buyers. Cars45 has raised a total of $5 million in venture funding.

The major business ideas in Nigeria

The Nigerian society has many challenges which provide business opportunities for startups. Here are some untapped business opportunities to consider:

Agricultural business

Nigeria has a large expanse of land for agricultural activities, and there is a constant demand for food crops and livestock products like meats and poultry because of the expanding population. The federal government plans to diversify the economy and reduce dependence on crude oil products by providing grants to agricultural business owners through the central bank of Nigeria.

If you have an agricultural business idea, you can access funds through the bank of agriculture of Nigeria- a bank dedicated to providing grants to agricultural entrepreneurs.

Oil and gas

The abundance of crude oil in Nigeria provides opportunities for entrepreneurs to start private businesses such as local petrol stations, manufacturing and sales of petrochemical products like engine oil, paints, sales and distribution of cooking gas, etc.

Transportation and Logistics

There is a need for transportation businesses because some manufacturing companies are situated far from retail outlets that are close to consumers. Logistics businesses are in constant demand to aid the transport of heavy goods and products from one geographical location to another. There are diverse markets you can choose to serve; for example, building materials and consumer product transportation.

Waste management

The government at all levels are overwhelmed by the level of wastes generated and the need to keep the environment clean. Poor recycling of wastes is a major problem in Nigeria. This provides a business gap for private waste management and recycling businesses to step in and carry out proper collection, recycling and disposal of individual and industrial wastes.

Real Estate

Urbanization has increased pressure on the available houses across urban cities. Individuals are consistently in search of houses either to rent or buy. Therefore, you can start a real estate company that provides house deals for people who want to rent or buy a house.

Fashion designing

Nigerians celebrate events like birthdays, anniversaries and burial ceremonies with a special local attire. If you are a good fashion designer, this is a lucrative business idea because these socialites need a fashion designer to sew the attire for each event. Also, there is an upsurge of private primary and secondary school institutions, and they may need fashion designers to make school uniforms for their students.

Skills for entrepreneurs starting a business in Nigeria

The Nigerian business environment has its unique features and challenges to overcome.

To run and grow your business in Nigeria, you need to learn and gain the following skills:

• Creativity: This is an essential skill because you need a consistent flow of ideas to give your business leverage over your competitors.
• Marketing : You need excellent marketing abilities to acquire and retain customers.
• Financial skills: Your ability to track and manage income and expenses determines your business growth potential.
• Administrative/human resource: You require sound judgement and interpersonal skills to hire the right team to help manage and run your business effectively.
• Resource management: Nigeria has limited resources such as power supply and capital. Entrepreneurs require the capacity to use the little resources available to serve their customers and achieve their business goals.

Final Thoughts

Nigeria has a different ecosystem that provides opportunities for businesses because of the large population size and untapped natural resources.

The Federal government has set policies that promote industry growth and support for startups.

Fintech, healthtech and e-commerce startups are the fastest-growing companies with venture-funded capitals.

To succeed as a Nigerian entrepreneur, you need to acquire certain business skills such as creativity and resource management to handle the challenging business environment of Nigeria.