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"From Startups to Scaleups: A Review of Business Scaleup Activities in Nigeria"

Dear ,I am excited to share our most recent research work with you, "From Startups to Scaleups: A Review of Business Scaleup Activities in Nigeria". This research comes on the heels of the global shift taking place prompting world leaders to focus policies and support on scaleups as global research has shown that scaleups wield enormous potential to significantly impact an economy in terms of contribution to GDP, jobs creation and income generation.Recent SMEDAN/NBS data shows that there are 41,543,028 Micro, Small and Medium Enterprises in Nigeria. 41,469,947 of these MSMEs are micro, 71,288 are small businesses and 1,793 are medium businesses. While these numbers emphasize the entrepreneurial dynamism in Nigeria, they also pose deeper questions like do businesses scale in Nigeria? What factors enable or hinder business scale in Nigeria? We sought to answer these questions in this research and also to define the term "scaleup" in the Nigerian context.Our approach involved surveying 250 potential scaleup businesses across 6 states - Lagos, Ogun, Oyo, Osun, Ekiti, and Ondo and across 10 sectors; the use of Interviews; Focus Group Discussions; Desktop analysis and a validation of findings at the 5th FATE Foundation Policy Dialogue Series which held in November last year. Recommendations shared are included in the report.   

We surveyed 250 businesses across 6 states

Our working definition of a scaleup for the research was the OECD definition which defines a scaleup as an enterprise with average annual growth in turnover or employee base greater than 20% per annum over a 3 year period  and with more than 10 employees at the beginning of the observation period. 

From our research, we came up with a more context-specific definition of a scaleup taking into consideration present economic realities in Nigeria. We define a scaleup in Nigeria as an enterprise with 20% annual growth in revenue or employee base over a 3-year period with a minimum employee base of 6 at the start of the observation period.

Critical Factors that Impact Business Scale

From our findings, enablers of scale are: Managerial Skills, Access to Markets, Innovation and New Technology, Availability of Funding and Government Policies.

Enablers & Inhibitors of Business Scale

To access the full report, please click 

here

or click below to download.

We hope you find answers to some of your questions around business scale in Nigeria in this report, and you are inspired to continue to work within the ecosystem to enable businesses start, grow and scale.

Download the full report

here

List of sectors of businesses surveyed

The 250 businesses surveyed were potential scaleups identified using the OECD "scaleup" definition metrics and they cut across the Agriculture, Education, Entertainment, Financial Technology, Green Industries, Health, Manufacturing, Service, Unique Businesses and Technology sectors.

Our findings showed that 14% of the businesses surveyed were scaleups and that there are 5 critical factors that impact on business scale. These are Financing, Infrastructure and Government Policies, Entrepreneurship Leadership, Talent and Innovation. These factors are fully analysed in the report with deep-dive segments on each.

Gender Comparison

We also found that the ratio of female-led scaleups to male-led scaleups was 1:5. 

Also, funding played a critical role in scaling with 63% attributing their business scale to an injection of funds. 67% indicated that technology played a huge role in scaling while 63% noted that competent talent enabled business scale.

Factors responsible for business scale

We look forward to engaging and working with you this year to support scaleups to impact the Nigerian economy, create jobs and drive wealth creation. 

Yours sincerely,

Amaka Nwaokolo,

Head, Research & Policy

FATE Foundation