Nigeria launches £559m fund to support young tech founders

Nigeria is looking to support its technology and creative industries with a new fund for young investors who struggle to raise capital in Africa's largest economy.

The country's vice-president Yemi Osinbajo launched the fund under the Digital and Creative Enterprises Programme (DCEP) in the federal capital Abuja, the presidency said in a statement.

"DCEP is a government initiative to promote innovation and entrepreneurship in the digital tech and creative industries and especially targeted at job creation," Osinbajo was quoted as saying at the launch of the fund.

The initiative will target 15 to 35-year-olds. It will be supported by the government, which will provide $45m (£37m) while the private sector has pledged $271m (£225m). 

Of the latter, African Development Bank will put in $170m (£141m), $116m (£96m) will come from Agence Francaise de Developpement and another $70m (£58m) from Islamic Development Bank. 

The announcement follows concerns regarding the impact of the collapse of US startup-focused lender Silicon Vally Bank (SVB) Financial Group on the Nigerian business ecosystem.

To date, only payments startup Chipper Cash has been materially affected, as it had $1m (£831,000) held with SVB. Some of the biggest startups, including e-commerce firm Jumia and Africa-focused fintech firm Flutterwave, told Reuters they had no exposure to the Californian bank.

The collapse of SVB - which had an estimated $2.9tn in assets - has been described as the biggest financial crash of an individual bank since 2008. 

The bank, which specialised in lending to start-up firms, was founded in California in 1983. However, over the past few months, it has suffered under the pressure of higher interest rates, which made it harder for its customers to raise money through private fundraising or share sales.

In the UK, a financial crisis was averted when HSBC agreed to a rescue deal to acquire the British arm of the bank.

Nigeria has the largest number of startups in Africa - mostly in tech and fintech - which have pulled funding from overseas banks and venture capital firms.

However, most startups are said to struggle with attracting funding because banks demand that they provide collateral, which they do not have.