Fidelity Advert

Big tech firms leave Yaba for Ikoyi on infrastructure need

Big tech firms leave Yaba for Ikoyi on infrastructure need %Post Title







In 2015 and till recently, many foreign tech investors who were visiting Nigeria wanted to see the budding Yaba tech ecosystem popularly referred to as Yabacon Valley, a reference to the richest tech ecosystem in the world, Silicon Valley.

At the peak of its power in 2017, the biggest incubators and accelerators – Co-Creation Hub, Idea Hub, and Leadpath – were located within Yaba. These hubs were the cooking chamber for startups, some of which have gone on to achieve fame.

BudgIT Nigeria, Riby Finance, LifeBank and many others were beneficiaries of the thriving hubs located at Yaba, Lagos.

CcHub and the bloom of Yaba

Bosun Tijani was recruiting European developers for tech businesses owned by returnees in Jos and Abuja. More than a decade later, he teamed up with partner Femi Longe to create Co-Creation Hub (CcHub) ­Nigeria, the country’s first technology hub and incubation space, in Yaba in 2011.

Before long, CcHub became like a mecca for tech entrepreneurs, seekers and curious types, investors, and policy makers who visited to catch a glimpse of the pulse of the sprawling ecosystem.

“This is where you have all the ingredients for innovation,” Bosun Tijani said in an interview with Africa Report.

Yaba was, therefore, the perfect destination for CEOs of big tech companies visiting Nigeria for the first time. These include Mark Zuckerberg, CEO of Facebook (now Meta) in 2016, Sundar Pichai, Google’s CEO in 2017, Jack Dorsey, former CEO of Twitter in 2019, and Jack Ma also, former CEO and founder of Alibaba in 2019.

Zuckerberg in particular was so impressed with the development in the Yaba ecosystem that his visit yielded a $24 million investment in Andela, a tech talent recruitment firm founded by two Nigerians and four of their foreign friends. The visit also gave birth to a new hub known as the NG-Hub in 2018. The hub managed by CcHub was Facebook’s first flagship community hub space in Africa, in Lagos, and aimed at bringing together developers, startups and the wider tech community to collaborate, learn, and exchange ideas.

Yaba’s claim to the valley began to flounder from 2021 after the COVID-19 which forced many companies to embrace remote work environments to survive. Some tech startups that couldn’t take the pressure on their revenue either closed shop or pivoted.

Andela was one of those affected. It began with layoffs and finally an announcement it was pivoting from its core talent training to merely recruiting. Also, it was no longer going to run a physical office in Nigeria; it shut down its Ikorodu Road, Yaba, physical office. Other tech startups simply just relocated to various parts of Lagos Island and a few to Ikeja and environs.

Facebook also stepped away from its active involvement at the NG-HUB in 2021 and transitioned the full maintenance and management to CcHub, a company spokesperson told BusinessDay. CcHub had to turn the hub into a centre dedicated to all its educational activities. Its edtech practice is called Re:learn.

“So, all its activities including the team are in the building. I believe future edtech accelerators will also take place there,” a source who remains anonymous told BusinessDay.

With the Yaba hub out of its hands, it was time for Facebook to find a befitting location for its physical office, the first of its kind in West Africa. The social media giant chose Ikoyi and it was not the only big tech relocating to the prime commercial business district.

How Yaba ceded the valley crown

The designation of Yaba as the Tech Valley in Lagos had very little merit. The most significant was the location of about six tertiary institutions within the area, giving the impression that quality talent would always be available for startups operating from there.

At the time, it made sense because Silicon Valley was also a major beneficiary of the proximity of institutions such as Stanford University. Some of the startups that are making the buzz in the Bay area, also known as Silicon Valley, were founded or populated by graduates or drop-outs from University of California and Stanford University.

Thus when big names like Konga, an ecommerce opened office at Yaba in 2013 and Africa Internet Group transferred six of its companies to Yaba in 2014, almost anyone could have been convinced that Yaba was the place to be.

The idea of a Yabacon Valley was also sold on the prospects of collaboration between the tech community and the academics. Big tech companies are heavy on research and development most of which are conducted abroad with active collaboration from academia.

Nevertheless, the quality gap between Stanford or University of California and their counterparts in the Yaba area was very wide and would not be bridged simply by congregating a community of tech entrepreneurs and sparsely funded ideas.

Importantly, the urban plan of Yaba wasn’t flexible enough to accommodate the needs and caprices of a vibrant and millennial-driven ecosystem. According to a real estate expert, many of the houses built in Yaba were family houses whose owners were not willing to give them up for newer and more tech-compliant facility developments.

Beyond poor accommodation in Yaba, the road infrastructure was and remains very poor and security was no different from other Lagos suburbs with high incidence of robberies and social disturbances. YabaTech onwards of the higher institutions located in Yaba, is alleged to have some cult related issues. Recently, such led to the murder of five students from the institutions.

Yaba’s insecurity was so telling that when Zuckerberg visited, he couldn’t walk around the area without being accompanied by very heavy security personnel. Also, his choice of exercise location was the Ikoyi Link Bridge rather than the streets of Sabo, Yaba.

Salami Abolore, founder and CEO of Riby Finance, one of the fintech startups incubated at Leadpath located within Yaba, said location was always based on three things initially. These include proximity of key needs like tech personnel, price, and buzz. For him, Yaba had all three things. However, other places are starting to catch up and adding a few extras, prompting the movement of startups to those places.

“Big tech companies now have proper funding and can afford offices and staff transport systems, so expect much more to change. Plus, Ikoyi is perhaps the new buzz for Big Tech,” Salami said.

Read also: Here are destinations where money will go next in global real estate

Ikoyi the new valley

Some big tech companies were already securing rent spaces in Ikoyi before it became a permanent choice location for them.

Described as the most affluent neighbourhood of Lagos and located in Eti-Osa Local Government Area, Ikoyi lies in the Northeast of Obalende and adjoins Lagos Island which houses the headquarters of some of the financial institutions as well as the regional operational centre of the Central Bank, and at the edge of the Lagos Lagoon.

Apart from the proximity to the financial district of Lagos, Ikoyi urban development is always being upgraded, with old buildings giving way to more 21st century compliant structures and Lekki with its modern health care facilities and residential apartments.

Ikoyi is also in close proximity to Victoria Island where the major event venues in Lagos are located. Ikoyi began to attract big tech companies almost at the same time the tech ecosystem began to get noticed globally.

Microsoft was one of the early tech companies to move into Ikoyi. Currently tech companies occupy some of the most iconic high-rise buildings on Alfred Rewane Road, Ikoyi. These include the Kings Tower occupied by Meta (former Facebook, Flutterwave, and Microsoft), Heritage Place occupied by Oracle Corporation and Google, and 39 Alfred Rewane occupied by Samsung.

Nevertheless, Ikoyi is not the only recipient of the migration from Yaba. Victoria Island and Lekki have also received a significant share of the startups in Nigeria’s tech ecosystem as well as big tech companies are settling in these locations. Amazon’s new office in Nigeria is located on the corner of Akin Adesola Street and Ahmadu Bello Way, Victoria Island in Lagos.

For many startups, choosing an office still comes down to affordability. Chuba Ezekwesili, co-founder of Akanka Design, a design and innovation studio, locating an office today would involve decisions about the current economic climate.

“Unless there is something that brings in more money by being in Ikoyi, it makes no sense. I think the best place to set up is a place that is affordable but even more than that is to choose a place where people who work at the company can easily access,” Ezekwesili said. (BusinessDay)

League of boys banner

Leave A Reply

Your email address will not be published.