Nigeria is rapidly emerging as a major player in the global software development industry. The country is leveraging its large youth population and technology talent to build innovative solutions for markets across the world. This explosive growth presents lucrative opportunities for new entrants looking to tap into the burgeoning Nigerian software development space.
The Surging Nigerian Software Industry
The Nigerian software industry has expanded enormously over the past decade. Revenues have grown from just $200 million in 2010 to over $10 billion in 2020, a staggering 5000% increase according to research from PwC . The industry is projected to reach $30 billion by 2025.
Driving this growth is the rise of young tech talent. Nigeria has the fastest-growing developer population globally with over 500,000 software developers . Lagos, Nigeria’s commercial capital, is rapidly transforming into a major tech hub. It was named one of the top 10 emerging global tech hubs by Oxford Business Group .
Government initiatives like the National Software Policy  launched in 2019 are spurring software development. The policy aims to position Nigeria as the premier digital solutions destination in Africa. Tax incentives, training programs and business support are attracting companies.
Global demand for software across industries is also fuelling growth. From fintech and e-commerce to logistics, Nigerian developers are building innovative solutions. International clients are taking notice of the skilled engineering talent and cost efficiencies.
Key Opportunities in the Software Space
Outsourcing Software Development
The rapid growth of software developers coupled with lower costs is making Nigeria very attractive for outsourced software development. Everything from custom enterprise apps, web development, QA testing, IT support and more can be outsourced to skilled Nigerian teams.
According to 2021 statistics from PwC, the software outsourcing market in Nigeria  stood at $760 million and is growing at 12% annually. Top services offered include software development, web app development and business process outsourcing.
Major global companies like Andela  and Softcom  have already established development centres in Nigeria. Their access to qualified local developers has made them preferred partners for outsourcing needs.
The abundance of English-speaking software engineers coupled with cultural affinity with Western clients gives Nigeria an edge over other outsourcing destinations like India.
Collaboration with Software Development Firms
In addition to outsourcing, new entrants can find opportunities by collaborating with leading Nigerian software development firms. Companies like AppZone , Flutterwave  and Paystack  have established expertise in fintech, payments and e-commerce solutions.
Partnering with such firms can help quickly build and deploy products for African markets. Their on-the-ground knowledge and resources can be leveraged for strong results.
Funding Software Startups
Some of the most innovative software products for global markets are coming out of Nigeria’s startup ecosystem. Startups like trucking logistics company Kobo360  and B2B e-commerce platform TradeDepot  have attracted funding from major venture capital firms worldwide.
Investing in high-potential Nigerian software startups can provide outsized returns. For instance, fintech startup Flutterwave  achieved unicorn status just six years after launch.
Active involvement by investors can also help guide startups to scale globally. Facebook co-founder Chris Hughes  helped build online payments giant Paystack before it was acquired by Stripe.
Training & Development
Nigeria’s youthful population and rising Internet penetration is creating a large addressable pool of software talent. Setting up training and development programs can help impart software engineering skills to young Nigerians.
Andela  has shown success with its software training programs which have produced thousands of job-ready developers. Its trainees have been hired by tech giants like Amazon , Microsoft  and Google .
Curriculum and certifications can also be tailored to produce expertise in high-demand skills like cloud, cybersecurity, data science, UI/UX and more. Partnerships with universities provide another avenue for training students.
Key Cities and Hubs for Software Development
Lagos is the epicentre of Nigeria’s tech revolution. It accounts for a majority of the country’s software development activity. Key factors attracting companies include:
- Large talent pool: Lagos has over 13 million residents and some of the country’s best universities like Yabatech producing software engineers.
- Startups & investors: Lagos has the highest number of software startups in Africa. Major hubs like CCHub  and Wennovation Hub  and investors provide support.
- Infrastructure: High-speed Internet via extensive fibre optic cable networks and reliable power through off-grid power companies ensure connectivity.
- Government backing: Policies like the Lagos Startup Bill  provide incentives for companies.
Top companies in Lagos: Andela , Flutterwave , SystemSpecs .
As Nigeria’s capital city, Abuja has seen rapid growth in software companies buoyed by government projects and partnerships.
- IT infrastructure: Abuja has the infrastructure to support software projects and B2B collaboration.
- Local talent: Universities like University of Abuja  offer software engineering and computer science degrees.
- Government ties: Proximity to federal government leads to partnerships on projects like National Identity Management System.
Major companies: eHealth Africa , Civic Innovation Lab , Venture Garden Group .
Enugu has a lower cost of living compared to Lagos which makes it attractive for software firms:
- Engineering talent: Enugu draws engineering graduates from universities like the University of Nigeria Nsukka .
- BPO services: Companies like TCX Data Services  provide business process outsourcing from Enugu.
- Real estate costs: Significantly lower costs than Lagos or Abuja for development centres.
Notable companies include Freshworks , AWA BPO , Clinton Health Access Initiative .
Optimizing for the Local Market
A key success factor for new entrants in the Nigerian software space is optimizing products and services for the local market. Understanding regional needs and consumer behaviour is crucial.
Offering Value-Added Services
Beyond just core software development, companies can provide vital ancillary business services needed by Nigerian organizations. This includes:
- Digital marketing services like search engine optimization, social media management and email marketing.
- Business process analysis and optimization.
- Training and change management for new software rollouts.
- IT support and helpdesk services for end users.
Packaging ancillary services create additional revenue streams while increasing appeal to clients.
Adapting software and content for the Nigerian consumer requires strong localization expertise. This includes:
- Offering multilingual support beyond just English for major Nigerian languages like Igbo, Yoruba and Hausa.
- Local payment options like bank transfers and leading e-payment platforms.
- Nigeria-specific functionality e.g., address forms supporting Nigerian states.
- Culturally relevant content that resonates with users.
- 24/7 in-country support to handle user queries.
To truly customize for the local market, companies need on-the-ground presence through local offices and staff. Being based in-country provides many benefits:
- Insight into consumer needs through direct research and interactions.
- Partnerships with local players like resellers, marketing and payment partners.
- Relationships with key stakeholders like regulators and government agencies.
- Access to qualified local talent like developers, designers and product managers.
- Brand-building opportunities through local events and communities.
Key Factors for Software Development Success
For new entrants looking to tap into the expansion of Nigeria’s software development space, the following strategies are key to maximize success:
Conduct stringent screening and evaluations when selecting software partners or investing in startups. Review portfolios, client references, technical capabilities, track record, financials and team credentials. Be selective.
Start with smaller pilot engagements to test capabilities and cultural fit before committing fully. Set clear milestones and metrics for graduation to a larger scope.
Strong measures are needed to protect source code and intellectual property like patents when working with third-party developers. Non-disclosure agreements and license agreements should be in place.
Tie payments to delivery milestones and acceptance criteria rather than upfront payments. This ensures accountability and minimizes risk. Independent QA is recommended.
Implement standardized and mature software development processes like agile methodologies. Ensure documentation, security practices and project tracking are ingrained.
Nigeria’s software development sector shows no signs of slowing down. Demand for skilled developers will continue to rise globally while technical innovation drives new opportunities in fields like AI, blockchain and IoT.
With strategic moves, new entrants can tap into this high-growth industry. Partnerships with leading software firms and startups provide avenues to build talent and deploy solutions for global markets. Investments in training help develop future Nigerian software engineers.
By leveraging the right opportunities and optimizing localization, new players can benefit tremendously from the energy and innovation Nigeria offers as a rising star in the software world.