Condia Insider: Can state-backed VC work?

🍔 Quick Bite: Nigeria is investing $64 million in Ventures Platform from its $617 million iDICE program, joining a growing wave of African governments putting money into startups. The move will test whether state-backed venture capital can genuinely boost the local ecosystem.

🧠 The Breakdown

Last week, Nigeria became the latest African government to back its words with capital. The country deployed funds from its $617 million iDICE program into Ventures Platform as a limited partner.

While this marks the first time the Nigerian government has invested in a VC fund, it isn’t entirely new on the continent. From Cairo to Kigali, African governments are increasingly stepping into venture capital.

Egypt launched Egypt Ventures back in 2017. Rwanda runs its Innovation Fund. Morocco, Senegal, South Africa, and Kenya all have state-backed venture programs either running or announced.

The scoreboard so far

Egypt was one of the early movers. Egypt Ventures, launched in 2017 by the Ministry of International Cooperation, has deployed over EGP 306 million (about $15 million) across more than 150 startups. Its portfolio includes names like MNT Halan, now Egypt’s first unicorn. It’s often cited as a model of how state-backed investing can work, provided the structure remains professional and independent of direct political interference.

In Morocco, the Innov Invest Fund backed 68 startups between 2017 and 2019, with approximately 92% at the pre-seed or seed stage. At the same time, the Mohammed VI Investment Fund is mobilising fresh capital (reportedly around US$150 million) into startup and venture-oriented funds. Yet, the ecosystem faces a binding constraint: only a handful of meaningful exits have occurred in recent years. Without exits, capital cannot recycle, and momentum risks slowing.

Rwanda, on the other hand, offers a cautionary tale. Its Innovation Fund, backed by a $30 million loan from the African Development Bank in 2018, was intended to jump-start the local startup scene. The fund has made only a handful of disclosed investments. It appears to lean more regional than strictly domestic. Local founders like Angelo Gitego have argued that its criteria misalign with local realities. 

Then there’s Senegal, where a more measured approach has worked. The FONSIS sovereign fund, established by dedicated legislation rather than presidential decree, has built a reputation for independence and transparency. A senior manager at FONSIS has stated that the fund’s structure—protected from political cycles and guided by commercial discipline—allows it to co-invest effectively in sectors such as renewable energy and healthcare.  

Risks and opportunities

Research shows that when state‑backed funds exert direct control over business decisions, there is a heightened risk that economic objectives get subordinated to political ones. In South Africa, the BBBEE programme, designed to promote Black economic participation, has been criticised for enabling procurement corruption due to poor accountability.

Nigeria’s iDICE deployment into Ventures Platform will test whether state backing can work at scale in Africa’s largest tech ecosystem. Ventures Platform claims its first fund ranks among the top performers globally, having returned capital from four of six investment cohorts. Managing partner Kola Aina noted that government backing could unlock “regulatory issues that are multi-agency and multi-government agency.”

In 2024, local African investors represented 31 % of all active VC backers on the continent, a new milestone in domestic capital formation. The uplifts in Egypt, Morocco, and other markets, where state‑backed programmes have helped build local fund capacity, play a part in this shift. However, exit activity remains a limiting factor: although deals continue, the scarcity of meaningful exits keeps capital from recycling at scale.

The next few years will test whether African governments can do what few state institutions have achieved: invest on merit, resist political interference, and build sustainable tech ecosystems.

Egypt Ventures shows it’s possible when governance and management are professional and independent. Rwanda’s Innovation Fund illustrates the risks associated with weak structure and local alignment. Nigeria’s move will show whether the continent’s largest tech market can get it right.​​​​​​​​​​​​​​​​