Responding to shoddy journalism

Last week, the Financial Times started an article on the African start-up ecosystem with this banger ‘If every iCloud has a silver lining, then from every pandemic bursts an online business opportunity’. Tell the judges to go home, we’ve found this year’s Pulitzer winner. The writer then went on to regurgitate a randomly selected list of recent African funding rounds mixed with banalities about increasing internet penetration and young entrepreneurs innovating against a backdrop of poor governance and infrastructure. The article ended with a call for Aliko Dangote to launch a corporate venture capital fund because the next Bill Gates could be African. It was a head-scratching end to an article filled with head-scratchers. It’s at this point in my posts that I would typically link to the article, but I read that drivel so you don’t have to.

Not to be outdone, the Economist had its own piece about the Nigerian fintech ecosystem. This time, it had help from multiple members of the ecosystem. The article questions the sustainability of the current buzz in the Nigerian fintech ecosystem, given the socio-economic and political realities in the country. I’m still quite amazed that the journalist managed to gather some of the most prominent investors in Nigeria and get them all to say bad things about the ecosystem they’re investing in.

It’s not that anything in the article was untrue. Nigerians are mostly poor. The economy isn’t growing. The CBN is a very hands-on regulator and is always a wildcard. Infrastructure in Nigeria is underdeveloped. The investors quoted in the article aren’t wrong to point out these facts. But these aren’t new facts. I struggle to believe there is anyone investing in Nigeria’s fintech ecosystem that would be shocked to hear any of this. So if there is over-exuberance in the market, it is certainly not due to ignorance of these factors.

A properly written article would have tried to investigate why savvy investors are still putting money into the ecosystem despite these challenges. The journalist would have seen that investment in the ecosystem has been steadily ramping up over years - from $70M in 2016 to $356M last year. The journalist would also have seen that those investments are already starting to reap great returns. Last year alone, African fintechs returned over $1B to investors through just 3 exits.

In 2020, Fintech companies across Africa raised $356M in equity. As