Having lived in Lagos these past years, I have adapted to juggling my work-life in this bustling African city with the help of these SME's
10 Underrated Small Businesses of Africa’s Top Startup City
If you ever lived in a city where everyone is mobile, has something to sell and advertises unashamedly, whether dressed in a three-piece suit or an agbada, that city must be Lagos. I consider everyone in Lagos a hawker-in-the-making. The code here is S.U.R.V.I.V.A.L.
Lagos no doubt is the most business-friendly city in Nigeria, but business survival means rising above competition in Africa’s most populous city. Recently, startups in this city overtook Nairobi, Kenya to become Africa’s top startup city. Nigeria now ranks 136th globally according to the Global Startup Ecosystem Report released by StartupBlink. Notable startups that helped in this ranking are fintech solutions that support small businesses like Flutterwave.
Just as the tech-based startups in Nigeria are soaring, other small businesses leverage on them for growth. We call them the less glamorous businesses, believe it or not, many of them are profitable. While they might appear to be underrated business ideas to you and me, they are successfully connecting with an underserved group of customers. These small businesses on the streets are not inconsequential. They offer simple and relevant solutions to problems with little or no fanfare.
Having lived in Lagos these past five years, I have adapted to juggling my work-life in this bustling city simply by patronizing these underrated businesses. Below I share some of these business ideas. Who knows? You may consider venturing or investing in them:
- Online Teaching and Homeschooling Service: This is for education practitioners and those with a flair for teaching basic IT skills. Online tutoring job sites offer such teaching job opportunities. Teaching online is a good way of earning an income and saving some of the expenses that would go into commuting to school if a teacher were to be employed full-time. Over the past few years, the security declined in Nigeria (not Lagos alone) has resulted in many parents embracing the idea of home-schooling their children. Since children can be monitored, protected, and taught one-on-one, it makes this service attractive to families who can afford it.
- Drop-shipping: This is an online product distribution model that does not require stocking inventories. Maintaining an e-commerce website is necessary for taking orders from customers. The product manufacturer or supplier will then deliver the product to the customer and commissions paid for the sale.
- Virtual Assistance service: Outsourcing jobs to online freelancers is a strategy many entrepreneurs and companies in Lagos adopt. A virtual assistant offers administrative services remotely to clients while operating outside of the client's office. A virtual assistant typically works from a home office but can access the necessary planning tools like shared calendars.
- Website Rentals: The online business community understand the value of a good website. However, when a business owner has no idea about managing a website or they are too busy to do it, renting pre-set up websites is an option. Rented websites have to be within the niche of the business. A fraction of what it would cost to own and manage a website is paid to the website manager.
- Product Photography Services: The increase in online businesses gave rise to this underrated business of supporting the company brands and converting sales. Presentation of goods and services online is a big deal to the Lagos consumer. This is where the product photography services help to provide appealing images that grab the attention of prospective customers who view the business online.
- Co-working Spaces and Room Rentals: As more people choose to work remotely in Lagos and freelancers are increasing, there are not enough co-working spaces to meet the demand. Whether it’s a desk in a corner or a conference room for meetings, co-working spaces serve a growing market. Such spaces are usually serviced, providing furniture, wifi, printing and other services that allow the client to focus on their core business. There is also the Room rental which is like the Air b ‘n’ b service where people rent a bedroom within a home to tourists and visitors. A local version of this allows residents to give up their living space for a short term as a bed and breakfast service. This service is familiar to tourists and foreign businesspeople, it would only take a short while for more Nigerians to use them.
- Maternity Wear Rentals: Some of us may not have imagined this would be a thriving business in Nigeria. The business has to do with renting or selling pre-owned maternity wears to mothers who would rather not buy new ones. I come across young working women in Lagos who maintain their sharp and smart look despite pregnancy and I wonder how they keep up. When asked one of them explained that she patronizes this business because she could not be seen to be sloppy at work. Another reason was to avoid spending a significant amount of her income on clothes she may never wear again after four months.
- Food Sharing: Farming in Lagos is rare. Most food items sold in Lagos are brought from neighbouring towns and villages which makes food expensive. A food sharing service is a way to spend less on feeding expenses in Lagos. Food sharers take advantage of the number of residents who want to save on food expenses by organizing bulk buying. It only takes networking to identify people who are interested in sharing. The sharer gathers the money, visits neighbouring towns where food items are sold for cheap and adds their profit.
- Mobile Fruit Juice Production: Just like food, fresh fruits are expensive in Lagos. The health consciousness of residents makes the demand for fruits inevitable for those who want to avoid drinks with chemicals and additives. Making fruit juice available in places like office complexes, recreation, sports, or event centres is viable because it is a more convenient option than buying, cleaning and preparing the fruits.
- Mobile Dry Cleaning: Professional dry-cleaning businesses operate with overhead costs like rent and staff salaries. Besides the cost of pick-up and delivery, this business doesn’t cost a lot to launch and saves customers time and money. Let’s face it. It’s often a scramble to get things done in a city where you can spend up to 3 hours navigating traffic to work. These conditions make mobile dry-cleaning services attractive. Regardless of the future, people will go to work, spend hours in traffic and yet they have to show up in clean clothes the next day.
With a massive consumer market with more than 500 active startups, most of which are thriving in Lagos, the time has come for you to put your unique business idea to the test. But wait. I will not advise you to hop on the next bus to Lagos. There is another Nigerian city with as much potential, promise and less stressful than Lagos.
According to the StartupBlink report, the newest Nigerian city in the rankings is Enugu. Enugu ranked 978th globally and 5th nationally. Benin City was next at 979th, while Kano placed 981st. Abuja ranked 3rd in Nigeria at 466th globally, while Port Harcourt decreased to rank 906th. None of these cities, however, are my recommendation.
A city to consider for venturing into any of the underrated Lagos small businesses in Ibadan. Ibadan increased massively in the ranking, placing 353rd globally and 2nd in Nigeria after beating Abuja. Ibadan has over a million residents, a population third only to Lagos and Kano. Ibadan is host to manufacturing companies like P&G with factories located in the heart of the city. Traffic in this city cannot be compared to Lagos and crime rates are relatively low. Regular cabs go for as low as fifty Naira (0.1 cent) in Ibadan. This is affordable even in smaller Nigerian towns. As far as competition goes, there are not many ambitious businesses that hustle the Lagos way. Ibadan is an opportunity for innovative small business owners to take over the local market.
Opportunities abound, but many have difficulty recognizing them. Lagos teaches us what separates a successful entrepreneur from others is the ability to see, seize, and even invent opportunities. Are there any untapped business ideas you think are worth sharing? Or perhaps you might have identified a problem that can inspire a business idea. I will be happy to read your thoughts in the comments.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.