April 23, 2024
Itana: Paving the Way for Africa's First Digital Free Zone

In early 2022, Iyinoluwa Aboyeji, co-founder of Andela and Flutterwave, shared his ambitious vision with TechCrunch. He unveiled a moonshot project, Talent City, designed to be a haven for both local and global startups and service businesses aiming to scale their operations across Africa. The goal was to overcome the challenges posed by unstable policies, infrastructure deficits, and other business hurdles in the region.

Backed by the Charter Cities Institute and Pronomos Capital, a venture fund supported by Peter Thiel, Talent City was already on its way to success, securing over $10 million for its development within Alaro City, located in the Lekki Free Zone, just outside Lagos, Nigeria. While the physical city’s completion was still a few years away, the project had already made significant strides. Itana, as Talent City came to be known, had raised an impressive $2 million in pre-seed funding, earmarked for the establishment of a digital free zone.

The brains behind Itana are CEO Luqman Edu, COO Coco Liu, and Aboyeji, who is also a founding investor. Their vision for Itana is nothing short of groundbreaking. Itana is poised to become Africa’s very first digital free zone, a concept aimed at improving Nigeria’s ease-of-doing-business index, attracting foreign direct investment (FDI), and generating employment opportunities within the country.

Nigeria has already witnessed success with private-led and government-led free zones, with the former typically outperforming the latter. These zones have primarily attracted businesses in the oil and gas and manufacturing sectors, capitalizing on the financial incentives, tax breaks, and other advantages of operating there. However, Itana is set to disrupt the status quo. While awaiting the physical charter city’s completion, Itana intends to create a virtual city within these free zones, catering specifically to digital and service industry businesses. In doing so, they aim to offer the same advantages that traditional industries have enjoyed, including FDI investments.

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The flagship project for Itana is Itana Edge, an online one-stop-shop app reminiscent of global tech products such as Stripe Atlas. Through this platform, international businesses can access a range of incentives, including favorable taxation, business visas, banking services, capital repatriation, and supportive legislation. Itana’s partnership with the Nigerian government allows it to provide these services seamlessly, as they are authorized to issue business licenses.

Luqman Edu, the CEO of Itana, likens their virtual city concept to the likes of Delaware in the U.S., e-Estonia in Europe, or Dubai in Asia. However, the unique involvement of the Nigerian government adds an interesting dimension to Itana’s potential for scaling as a venture-backed business. Edu believes that just as physical private free zones have thrived in Nigeria, a digital free zone tailored to the service and digital economy can do the same, led by the private sector. Itana’s long-term plan includes expanding its services to enable remote business operations and partnering with other African governments to replicate digital and physical free zones in their respective markets.

Itana’s pilot phase in Nigeria is set to kick off in the coming weeks, with select companies gaining access to the ambitious 72,000-square-meter “live-work-build” campus known as Itana District. This campus is designed to accommodate permanent residents and visitors from the digital community, offering networking events, co-working spaces, and co-living options. The first phase of development is slated for completion by 2027.

One of the key aspects of Itana’s revenue strategy is itsmulti-pronged approach. It includes annual subscription fees for business licenses, with a share of the revenue going to the government. Additionally, Itana will offer on-demand services through its one-stop-shop app within the Free Zone, encompassing services like banking, visas, tax auditing, recruitment, payroll management, business sector licenses, and minimal transaction fees for non-VAT revenue. This innovative approach aims to optimize revenue as clients expand and grow, while also fostering partnerships with relevant government agencies.

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Despite its futuristic vision, several factors align in favor of Itana. Africa has emerged as an opportunity-rich continent for software developers and foreign direct investments, as evidenced by a 400% year-on-year growth in incorporated businesses from Nigeria, as reported by Stripe Atlas data. Furthermore, domestic factors in Nigeria, such as the Nigerian Startup Act and the appointment of tech CEO Bosun Tijani as the Minister of Innovation and Digital Economy, could play pivotal roles in advancing projects like Itana. Bosun Tijani’s focus on directing government funding toward Nigerian incorporated businesses and plans to allow companies in the free zone to go public in dollars create a favorable environment for Itana’s success.

Notably, Itana boasts backing from influential venture capitalists, including LocalGlobe, Amplo, and Pronomos Capital, which has supported model digital societies like e-Estonia and Afropolitan. Yvonne Bajela, a partner at LocalGlobe, emphasizes the significant market opportunity to serve digital service and technology businesses in Africa. The continent’s tech ecosystem is rapidly growing despite infrastructure challenges, and Itana is poised to address these challenges while empowering a new generation of entrepreneurs in Nigeria and beyond.

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