Enugu makes global ranking for the first time, Lagos displaces Nairobi as Africa’s top startup city

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Lagos has become Africa’s top startup ecosystem. The city ranked 122nd globally, effectively switching places with Nairobi, Kenya, which now ranks 136th globally. This is according to the recently released StartupBlink Ecosystem Index Report 2021

In general, the top two startup ecosystems in the world remain the same as they were last year – San Francisco and New York. San Francisco is the “supernova” of startup ecosystems, scoring 328.96, which is almost 3 times higher than New York’s 110.77.

The Global Startup Ecosystem Index is built using hundreds of thousands of 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.

In terms of countries, the top 5 countries have all maintained their rank from last year, however, 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.

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

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

Lagos displaces Nairobi as Africa's top Startup City, Nigeria climbs to 63rd Globally
Startup ecosystem in Middle East and Africa

South Africa climbed 4 spots to rank 48th globally. With that rise, South Africa becomes the first African country to make the top 50 since this report was first published in 2017.

The Southern African country’s growth was attributed mainly to its private sector-led startup ecosystem and the availability of early-stage investment thanks to forward-thinking public initiatives.

Kenya rose one spot to rank 61st globally and 2nd in Africa, propelled by its innovative tech hub, especially for mobile payment solutions. The presence of global tech giants like Google, Microsoft and Samsung in its capital city also helped its growth.

Other African countries in the top 100 include Egypt which climbed 11 spots to rank 70th, Namibia ranked 99th followed by the vibrant seed ecosystem of Ethiopia in 100th globally.

Startupblink Index focuses instead on the output of entrepreneurial innovation developed in each location.

Lagos displaces Nairobi as Africa's top Startup City, Nigeria climbs to 63rd Globally
Top 10 Startup ecosystem in the world

Regional outlook, Africa is growing

Exploring the regions in general, 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.

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.

Lagos displaces Nairobi as Africa's top Startup City, Nigeria climbs to 63rd Globally
Startup spread by percentage across regions

Within Africa, Western Africa had a good year, where 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 kept its three representatives. However, two of the three nations (Tunisia and Morocco) declined in rank.

Southern Africa had a good year. South Africa broke into the global top 50, but a second Southern African country, Namibia joined the rankings. Central Africa still has no representation in the rankings.

The increase in startups ranked in the region further affirms analyst and investors prediction on the immense potential of the region. The continuous influx of foreign investment into the continent’s major tech hubs is also evident.

Ibadan climbs to 2nd in Nigeria as Enugu joins the ranking

In total, Nigeria has 7 cities in the global top 1,000 and continues to have the highest number of ranked cities of any African nation. Lagos leads the pack after gaining 5 spots to 122nd globally.

Aside from being the biggest startup city in Nigeria and Africa, Lagos is also ranked in the global top 50 cities for e-commerce and retail technology. It also made the global top 100 for both transportation technology and education technology.

Lagos displaces Nairobi as Africa's top Startup City, Nigeria climbs to 63rd Globally
Startup ecosystem in Nigeria

Ibadan saw a massive increase in ranking, jumping 601 spots to 353rd globally and 2nd in Nigeria, surpassing Abuja. The growth of the Southwestern state can be tied to the significant growth of SafeBoda, the ride-hailing company.

The federal capital territory, Abuja ranked 3rd nationally, after falling 12 spots to 466th globally. The capital suffered more from the pandemic as startups preferred Lagos due to its economic wealth and population.

Similarly, Port Harcourt decreased by 6 spots to 906th while the newest Nigerian city in the rankings, Enugu, ranks 978th globally and 5th nationally. Benin City has increased 9 spots to 979th, while Kano jumped 14 spots to 981st.

In Summary

Startupblink’s latest report shows that startups have survived the worst of the pandemic. It also highlights how the startup ecosystem has evolved over the last year, with some cities becoming startups hubs.

In Nigeria, the high investment activity reflected in the index. The creation of new unicorns like Flutterwave and the entry of Global Fintech like Stripe with the acquisition of Paystack showed growth in the ecosystem.

However, Nigeria faces some major challenges, such as a lack of financing options, harsh regulatory condition and even a lack of broadband internet infrastructure.

This shows that while the startup ecosystem is growing, there’s huge potential that can be tapped if the underlying challenges are solved.

 

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