In the heart of Lagos’ bustling tech ecosystem, once hailed as the “Silicon Valley of Africa,” a quiet exodus is taking place. More and more Nigerian startups—especially early-stage tech ventures—are choosing to incorporate, scale, or relocate their operations to Rwanda and Kenya, two East African nations that are fast becoming preferred destinations for digital entrepreneurs on the continent.
The reasons are as telling as they are urgent: crippling regulation, stifling bureaucracy, multiple tax regimes, and a lack of policy clarity have made doing business in Nigeria a tightrope walk.
From Yaba to Kigali: The Shift Begins
While Nigeria remains Africa’s largest economy and home to the continent’s most funded startups, its business environment has become increasingly hostile, especially for small and medium-sized tech companies.
“Registering a business in Rwanda takes just six hours—online,” says Emeka Obasi, a Lagos-based founder who recently opened an office in Kigali. “Compare that to Nigeria, where you face weeks of paperwork, conflicting agency requirements, and unpredictable fees.”
Obasi’s startup, which focuses on edtech, was recently rejected by a key Nigerian regulatory body after a year of compliance back-and-forth. “I just needed somewhere I could work in peace. Rwanda gave me that.”
Kenya and Rwanda: Africa’s New Startup Hubs
According to the World Bank’s Ease of Doing Business Index, Rwanda and Kenya consistently rank among the top African countries for starting and running a business.
- Rwanda, in particular, has embraced pro-business reforms, cutting red tape, improving legal frameworks, and digitizing public services.
- Kenya, home to the thriving Silicon Savannah, boasts a dynamic tech scene supported by government investment, innovation hubs, and relatively friendly tax laws.
Both countries offer political stability, efficient public institutions, and smoother access to funding and partnerships—key ingredients for startup success.
Nigeria: Innovation Under Siege?
Back home, the story is different.
In recent years, the Nigerian government has introduced policies that tech entrepreneurs describe as “antagonistic.” These include:
- The ban on cryptocurrency transactions by the Central Bank of Nigeria (CBN),
- Increasing scrutiny and clampdowns on fintech companies (e.g., Flutterwave and OPay),
- Multiple taxes from federal and state agencies,
- Internet service disruptions, and
- A general atmosphere of regulatory uncertainty.
“Regulators in Nigeria see innovation as a threat, not an opportunity,” says Mary Akindele, co-founder of a logistics startup that now operates out of Nairobi. “Instead of building sandboxes, they build walls.”
Investor Confidence is Moving Too
It’s not just founders leaving—investors are following.
In 2024, over 30% of venture capital destined for African startups went to Kenya, with Rwanda recording a significant uptick in international funding. In contrast, many Nigerian startups are now registering their companies abroad (in Delaware, Mauritius, or Rwanda) just to access global investment.
Some say it’s a survival tactic. “If you register in Nigeria, you scare away investors. The country risk is too high,” says a VC executive who asked not to be named.
The Silent Cost
While Lagos still remains a vibrant ecosystem—home to unicorns like Flutterwave, Andela, and Paystack—experts warn that the long-term impact of startup flight could be devastating.
“You lose talent. You lose tax revenue. You lose innovation. But most importantly, you lose hope,” says tech policy expert, Ayoola Ogunjimi. “And that’s hard to win back.”
What Needs to Change?
Entrepreneurs and policy analysts alike agree that Nigeria must urgently reform its startup landscape by:
- Reducing bureaucratic bottlenecks at CAC and FIRS,
- Streamlining tax regimes and compliance processes,
- Creating startup-friendly regulations and sandboxes,
- Encouraging transparency and digital governance,
- And ensuring political support for innovation.
Without such changes, the tech dreams that once made Lagos a magnet for Africa’s brightest may soon be realized in Kigali or Nairobi instead.
