Lagos leads as Nigeria records 120+ AI startups

Nigeria’s artificial intelligence (AI) industry is growing fast, with more than 120 active startups now operating across different sectors. However, experts warn that poor funding and weak infrastructure could slow down this progress.

This is according to the AI Outlook 2026: Shifts, Trends & Predictions report released by AI CoLab Africa and AI in Nigeria in collaboration with industry experts.

The report says Nigeria’s AI startups are working in areas such as health technology, financial technology, agriculture, and language technology. It surveyed 504 professionals and spoke with many leaders in the ecosystem.

The Federal Government has also taken steps to support AI development. The Nigeria National AI Strategy (NAIS) was launched in August 2024, and the Nigeria National AI Trust was created in February 2025. The Director-General of National Information Technology Development Agency (NITDA), Kashifu Inuwa Abdullahi, said regulation should help AI grow responsibly, not slow it down. He explained that proper rules will protect human rights and ensure transparency and accountability.

The report shows that there are now 122 AI startups in Nigeria, most of them based in Lagos, with others in Abuja and some states.

Some of the leading startups include:

Awarri, which is building Nigeria’s first multilingual large language model that supports five major Nigerian languages.

CDIAL AI, which focuses on language technology for African languages.

Ubenwa Health, which uses AI to analyse babies’ cries to detect early neurological problems.

BetaLife Health, which uses AI to improve blood donation supply systems.

Terra Industries, an Abuja-based company building AI-powered drones and exporting them to eight African countries.

Despite these successes, funding remains a major problem. The report says:

79% of respondents said lack of capital is a serious challenge.

40% of startups rely on personal savings.

Only 20% have received international funding.

16% have secured venture capital.

Just 6% have received government grants.

Experts say this shows that Nigeria’s AI sector is still financially weak and needs stronger local investment and government support.

AI adoption is strongest in the financial sector. Banks and fintech companies use AI for credit scoring, fraud detection, and customer service. Growth Executive at Sterling Bank, Obinna Ukachukwu, said AI is helping to make banking more personal and accessible.

Dr. Stanley Jacob also noted that electronic payments reached N1.07 quadrillion in 2024, partly due to AI integration.

However, sectors like manufacturing, agriculture, and healthcare are still developing slowly because of poor infrastructure, limited data, and low funding.

Agriculture expert Prof. Gabriel Dedeke of FUNAAB highlighted the Ogun SmartFarm Initiative, which used drones, soil sensors, and AI forecasting to increase crop yields by 35% and reduce costs by 20%. Still, he warned that many rural farmers lack digital skills and access to technology.

The report also stressed the importance of education and training. Prof. Olayinka David-West said Nigeria must invest in AI education from primary to university level if it hopes to build a $1 trillion economy by 2030.

Global HR leader Lara Yeku added that AI will not replace people, but people who understand AI will perform better than those who do not.

Florence Nwadinso, Volunteer Lead at AI in Nigeria, said many AI communities operate with little funding, poor internet, and outdated equipment. She called for a national fund to support grassroots AI learning hubs, especially in underserved areas.

Ashley Immanuel also warned that AI growth must be handled carefully to avoid data protection risks and misuse of customer information.

In conclusion, experts say Nigeria has made progress in AI development, but more work is needed.

They recommend better funding, stronger infrastructure, improved education, clear regulations, and more support for local innovators to ensure long-term growth.