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Paper short abstract:

Growth of the Nigerian digital economy is driven by adaptation of foreign technologies to mitigate bottlenecks and address local problems. This paper documents leadership actions taken by digital economy sector leaders in Nigeria to achieve these aims, highlighting their successes and failures.

Paper long abstract:

The Nigerian digital economy emerged prior to significant development of manufacturing industries. This divergence from the normal pattern of structural change fuels a 'leapfrog narrative' that obviates the need for developing industrial capacity. The debate on the likelihood of service-led growth, spearheaded by the digital economy, is a lively one, especially across Africa. However, firm-level evidence about the drivers and dynamics of said growth is limited and little is known about cross-sectoral diffusion and application of these technologies.

This paper presents a case study of the growth trajectory of the Nigerian digital economy, documenting actions taken by sector leaders to overcome local challenges and highlighting successes and failures recorded. An investigation of the digital economy in Nigeria points to economic liberalisation, on the prompting of International Finance Institutions, and subsequent government policy actions as key growth drivers. However, these macro-level drivers act in combination with bold micro-level actions taken by the leadership of digital firms in Nigeria.

In the absence of a supportive business or regulatory environment, innovative actions are taken by firm leadership to develop digital solutions which adapt foreign technologies to address local needs. Most importantly, these solutions mitigate infrastructure or 'analogue' bottlenecks in the local environment. Bottlenecks include limited last-mile delivery infrastructure, non-existent product distribution networks, poorly skilled human capital and irregular power supply. Given the lack of cross-sectoral demand-pull dynamics, these indigenous innovations have been limited to a few sectors, mainly financial services. The paper concludes by drawing broader lessons and implications on digitalisation across Africa.