Earlier this year, Nigeria’s finance minister and coordinating minister for the economy DrNgoziOkonjo-Iweala while hosting foreign investors from Great Britain said Nigeria was the best destination for investments in Africa.

Iweala boosted of the country’s single digit inflation rate (about 8.6 percent), a stable exchange rate and a strong financial services sector.

Over the recent few months, Nigeria has witnessed an influx of major international conglomerates, enterprises and manufacturing companies entering the west African nation. A number of fast rising tech startups eying the west African market are setting up shop in Nigeria.

In July for example, internationally renowned taxi app Uber launched in Lagos to compete in a market that has several other similar services.

For tech startups founded in Africa or by African founders, expanding their operations to Nigeria, especially the nation’s commercial capital city of Lagos is a milestone goal.

At DEMO Africa, an event described as the launching pad for startups in Africa, 40 startups from across the continent pitched their startups in front of investors with the goal of securing investments and achieving new partnerships.

While startups from Nigeria that pitched at DEMO set their eyes on deepening penetration and making more Nigerians to use their services, tech founders from outside Nigeria believe their ultimate goal is to extend their services to Nigeria.

Tomi Davies, a tech expert and investor said the interest in the Nigerian market is as a result of the country’s sheer market size.

“Only few countries in Africa have GDP higher than that of Lagos alone,” he said. This according to him is why startups in other African countries are targeting the Nigerian market.

Nigeria’s economy overtook South Africa early this year as the largest in Africa. The country also boosts of the largest population of over 170 million people.

“The market size in Nigeria makes it an attractive place for non-Nigerian startups to launch,” said Rich Tanksley, director of global venture builder SeedstarsAfrica.

BeamRemit.com is based in Accra, Ghana. Although it officially began beta phase this month, it is already eyeing the Nigerian market. The startup that allows Africans to remit money cheaply and instantly is building its business around Bitcoin.

Falk Benke, BeamRemit chief technology officer, said they are already looking for investors, partners in Nigeria in addition to funding.

Benke said: “We want to go to Nigeria and DEMO Africa 2014 was the first time we were in Nigeria. We are seeking partnerships and trying to understand the market. We will be getting in contact with local businesses.”

“I see Ghana as a place where we can start off on small scale, once we are ready for bigger markets we will come to Nigeria,” he said.

In similar development, founders of Chura, a Kenya-founded startup company that offers users several airtime recharge options such as bulk, switch, and airtime-for-cash is also targeting the Nigerian market according to Byron Sitawa, the platform’s systems-support analyst.

“Mobile subscribers across Africa experience difficulties in accessing airtime; there is also the challenge of quality of service in the Nigerian market. We believe our solutions would be accepted in Nigeria,” Sitawa said.

Frank Abbot, the chief executive at Pearl Dream — a company that animates African stories for young Africans, said his firms is also interested in the Nigerian market adding that the large market size is a major reason why they are interested in extending their services to Nigeria.

“We are in contact with Etisalat one of the telecoms companies in Nigeria that are focusing on the youths because this is for kids. You know African population is predominantly under-30. It is really the youths that are going to drive us to where we want to get to. We are in age of mobile devices, you are not just spending time on the smartphones, you are also learning,” Abbot said.

What the startups need to do to succeed in Nigeria

Tanksley said the startups should understand the Nigerian market very well in addition to the people. This he said would make them realize the kind of products that would succeed in Nigeria.

“The main challenge is that if they don’t understand the market or the people, they will face a difficult battle. There might not even be a market for their product,” Tanksley told AFKInsider.

He recommended the startup founders should live in Nigeria for a period of at least six months and find trustworthy local partners, adding that there is a greater need for the founders to build several personal and business partnerships with as many people as possible in Nigeria to succeed.

“The best way to go about it is to live in the market for six months at least or find a strong local partner that they trust. To succeed, you have to buildstrong personal and business connections with as many people as possible in Nigeria,” said Tanksley.

Collins Onuegbu, executive vice chairman of Signal Alliance, an IT systems integration company and member of Lagos Angel Network said a deep understanding of Nigeria’s very young ecosystem is also important.

“There are lots of challenges especially those of infrastructure. Understanding these challenges would be crucial because only companies that are able to make their solutions work in spite of the numerous infrastructural challenges will survive in Nigeria. Many may see the challenges as problems, we see them as opportunities,” said Onuegbu.