In a rare foray into Nigeria’s high-risk startup sector, the Nigeria Sovereign Investment Authority (NSIA) has launched the Impact Innovation Fund, a new financing initiative targeting early-stage companies working to solve some of the country’s most pressing development challenges.
Announced in partnership with the Japan International Cooperation Agency (JICA), the fund will back startups in critical sectors such as agriculture, healthcare, education, clean energy, and waste and water management — areas with potential for measurable economic and social impact.
The fund’s creation follows the signing of a Grant Aid Agreement between JICA and Nigeria’s Federal Ministry of Budget and Economic Planning, after receiving Cabinet-level approval from the Government of Japan. While the exact size of the fund has not been disclosed, the initiative will offer capital from pre-seed to pre-Series A stages to companies headquartered or operating in Nigeria.
“We are focused on strategic partnerships and pivotal initiatives that advance entrepreneurship, innovation, and economic empowerment,” the NSIA said in a statement. “The Impact Innovation Fund aligns with our long-term vision for sustainable development.”
The announcement comes just days after Launch Base Africa published a detailed report on the NSIA’s cautious relationship with Nigeria’s startup ecosystem. Founded in 2012 to manage the country’s excess oil revenues, the NSIA has historically taken a conservative approach to investment. It manages three key funds — the Stabilisation Fund, the Nigeria Infrastructure Fund, and the Future Generations Fund — and holds an estimated ₦4.42 trillion ($2.95 billion) in assets as of 2024.
Private equity investments account for roughly ₦549.5 billion ($347.6 million), spread across 38 funds, including domestic firms such as Verod Growth Fund and CardinalStone Capital. Yet, despite its diversified portfolio, the NSIA has made few direct investments in Nigerian startups.
Most of its exposure to the country’s growing tech ecosystem has been through limited stakes in local venture capital firms like Ingressive Capital and Ventures Platform. Even then, its broader strategy emphasizes stability and capital preservation over speculative returns.
“The NSIA’s approach is pretty conservative,” a Lagos-based venture capitalist told Launch Base Africa on condition of anonymity. “They tend to favor well-established private equity and infrastructure projects instead of the unpredictability that comes with early-stage tech.”
This strategy stands in contrast to sovereign wealth funds in other regions. In 2024 alone, Abu Dhabi’s Mubadala Investment Company deployed $29.2 billion in capital, including $3.1 billion in private equity and 157 direct tech investments in 2021. Nigeria’s NSIA, by comparison, has been a minor player in direct startup funding.
Missed Opportunities
Nigeria’s startup ecosystem has attracted more than $2 billion in venture capital since 2015 and ranks among Africa’s top four destinations for tech investment. Yet domestic institutional investors — including pension funds, insurance companies, and the NSIA — remain largely absent from the funding landscape.
The passage of Nigeria’s Startup Act in 2022 was meant to address this gap by establishing a legal and financial framework to support innovation. However, several proposed funds — including a $40 million startup initiative and a much-touted $618 million tech innovation fund in 2023 — have failed to deliver on expectations, reinforcing skepticism among entrepreneurs and investors alike.
Despite the potential offered by initiatives like the Impact Innovation Fund, many in the ecosystem remain cautious. Past experience with unfulfilled government commitments has bred distrust, and local startups continue to rely heavily on foreign venture capital.
JICA’s involvement signals Japan’s expanding interest in Nigeria’s digital economy. In a separate agreement signed earlier this month, JICA committed $30 million in grant funding to establish two major startup support initiatives in Abuja. The first, worth $9.9 million, will fund a state-of-the-art Start-Up Hub under the National Information Technology Development Agency (NITDA). The second, a $21 million program titled the Project for the Development of a Supporting Environment for Social Start-ups in Nigeria, will be implemented by the NSIA.
These efforts aim to foster innovation, promote job creation, and strengthen Nigeria’s startup ecosystem by investing in digital infrastructure and support services. According to official documents, the funding will be disbursed in phases through 2030, covering infrastructure development, equipment, and consultancy services.
The launch of the Impact Innovation Fund marks a tentative yet notable shift in the NSIA’s posture toward early-stage investment. While the authority’s overarching strategy still prioritizes low-risk, long-term growth, this initiative suggests a growing recognition of startups as engines of inclusive development.
Still, questions remain about how far the NSIA is willing to go. Without greater clarity on fund size, deployment timelines, and governance structures, skepticism is likely to persist. For now, the move appears more symbolic than transformative — an incremental step rather than a full embrace of venture capital.
Whether the Impact Innovation Fund will serve as a pilot for deeper engagement with Nigeria’s innovation economy — or remain a one-off collaboration with a foreign development partner — remains to be seen. But in a funding landscape long dominated by international investors, the NSIA’s entry could help reshape the narrative.