In June 2025, Nigerian drone startup Terra Industries, formerly known as Terrahaptix, marked a significant milestone by securing a $1.2 million contract for hydropower plant security. This achievement saw Terra outcompeting an Israeli consortium, largely due to its Abuja-designed and manufactured drones proving to be more cost-effective, faster to deploy, and better suited to Nigeria’s challenging terrain compared to foreign alternatives. Nathan Nwachuku, Terra’s CEO, attributed this competitive edge to the company’s focus on “data sovereignty and a full-stack ecosystem.” The extensive contract entails the deployment of approximately 12 autonomous drones and over 35 surveillance towers, specifically tasked with monitoring critical infrastructure that, according to Nwachuku, had previously served as hideouts for bandits and even terrorists. This functionality positions the project akin to a frontline military defence initiative, despite its official designation as commercial ‘infrastructure security’.

The framing of Terra’s work as ‘infrastructure security’ rather than direct defence reveals a nuanced interplay of financial constraints and geopolitical influences. One of Terra’s co-founders, Maxwell Maduka, previously served as a Nigerian Navy drone engineer, underscoring the company’s intrinsic relevance to Nigeria’s pressing security challenges. However, in May 2024, Terra announced the closure of its defence division, declaring an end to its military systems development and research, citing “ethical considerations.” This announcement closely followed Terra’s successful pre-seed funding round, which raised $800,000 primarily from US-based venture capitalists. CEO Nathan Nwachuku stated in a press release, “We do not want ethical disasters in our hands. We want to produce low-cost, mobile robots and automate core industries globally, not fight wars.” Yet, merely six months later, Terra secured the $1.2 million contract to protect hydropower plants—facilities explicitly identified by Nwachuku as havens for bandits and terrorists. The company’s drones now perform critical functions such as threat monitoring, real-time intelligence relay, and persistent aerial surveillance, with the crucial distinction being the contract’s label: “infrastructure security,” not “defence.”

This strategic pivot is not merely coincidental but structurally influenced by the nature of foreign capital. While Nwachuku asserts that investors imposed no direct restrictions, stating, “None, we live in a different world. The likes of Anduril and Palantir paved the way for global defence startups,” the reality of venture capital funding for dual-use technology, particularly for companies operating outside major defence markets, often dictates a startup’s roadmap. Venture funds typically have explicit restrictions from their limited partners (LPs) regarding defence investments, especially those involving foreign militaries, often coupled with ESG (Environmental, Social, and Governance) exclusions and stringent compliance regimes. Terra is not backed by traditional defence contractors or sovereign wealth funds but by venture funds whose structures inherently discourage overt military work.

Further complicating Nigeria’s ability to develop its own defence capabilities is the impact of U.S. policy, specifically the Leahy Law. This U.S. law prohibits military aid to foreign security units credibly accused of gross violations of human rights. For over a decade, the Leahy Law has been instrumental in dictating Nigeria’s military procurement, leading to instances like the U.S. vetoing Israel’s resale of U.S.-made Cobra gunships to Nigeria in 2014 and senators freezing an $875 million package of attack helicopters and precision weapons in 2021. The irony is stark: the same U.S. system that restricts arms exports to Nigeria also provides the venture capital whose internal compliance mechanisms make explicit weapons development nearly impossible for Nigerian founders seeking external funding. This creates a structural asymmetry where the U.S. sells military equipment to Nigeria under strict conditions and at premium prices, while simultaneously impeding Nigerian startups from developing domestic alternatives.

Nwachuku’s comparison of Terra to U.S. defence tech giants like Anduril and Palantir, claiming a “different world” for defence startups, overlooks a critical distinction. Anduril and Palantir operate within the U.S. market, securing lucrative Pentagon contracts and supplying their own military. Terra, on the other hand, would be a foreign defence contractor supplying a military that is subject to the very export restrictions and Leahy Law vetting that limit Nigeria’s defence autonomy. The ‘different world’ inhabited by these U.S. companies does not extend to Nigerian startups building for the Nigerian military, leaving Nigeria in a precarious position where it neither truly controls its weapons supply nor the development of new systems.

Beyond external pressures, domestic challenges within Nigeria’s military procurement system also deter startups from engaging in direct defence work. The country has a well-documented history of corruption, exemplified by the 2015 arrest of Colonel Sambo Dasuki, former National Security Advisor, following the exposure of a $2 billion arms procurement scandal involving phantom contracts for helicopters, fighter jets, and ammunition intended for the fight against Boko Haram. Transparency International’s defence integrity ratings consistently place Nigeria in a “very high risk” category for defence procurement. Even as recently as May 2025, 18 soldiers and 15 police officers were arrested for selling military weapons to armed groups, highlighting corruption at various levels. Former NSA Monguno admitted in 2020 that substantial funds provided by the president for equipment were never properly utilized, and in 2024, $8.9 million in stolen defence funds, meant for Boko Haram equipment, was seized by the Royal Court in Jersey. For a venture-backed startup like Terra, which reportedly generated around $1 million in revenue in its first year from commercial deployments after raising $800,000, relying on Nigerian military contracts presents an insurmountable hurdle. The slow payment cycles, entanglement in investigations, and lack of guaranteed proper equipment usage make such ventures unprofitable and unsustainable for rapid growth. Thus, Terra’s decision to close its defence arm is less about ethics or patriotism alone, and primarily an operational reality driven by economic viability.

However, the concept of “infrastructure security” in Nigeria is intrinsically linked to national security. The country faces severe threats from armed groups, as evidenced by a “weekend of horror” between November 20-30, 2025, when attacks across four northern states included the alleged use of a commercial-style drone to surveil a church before an attack and kidnapping. Nigerian security reports already indicate insurgents in the North-East are experimenting with commercial drones, reflecting a broader regional trend where armed groups in the Sahel, Syria, and Iraq adapt off-the-shelf technology. In this context, whether Terra protects a ‘private’ hydropower plant becomes irrelevant; Nigerian critical infrastructures, such as Telco cables, pipelines, power plants, and mining operations, are strategic targets for terrorists and bandits. Attacks on these assets can cripple communications, cut vital revenue, disrupt resource flow, and even fund insurgent activities. Therefore, Terra’s contract, while commercially labelled, directly contributes to national security by safeguarding military logistics, providing intelligence through remote surveillance, and offering early warning systems for real-time threat monitoring.

While the current workaround, leveraging commercial channels for defence capabilities, is effective in some respects, it suffers from significant brittleness. It operates in an ungoverned space, lacking formal data-sharing protocols, integration frameworks, and coordinated efforts among competing private operators during crises. This system functions adequately during peacetime, low-intensity conflicts, stable supply chains, and without sanctions pressure. However, it is highly vulnerable to rapid changes, such as foreign component supply cut-offs due to sanctions or the compromise of a “commercial” security firm. Crucial questions remain unanswered: who owns the surveillance data collected by companies like Terra? Is it shared with security agencies, and under what framework? What happens if Terra is acquired by external players or hacked, potentially compromising strategic intelligence about Nigeria’s critical infrastructure? Nigeria possesses the technology, but lacks the overarching system to integrate and govern it effectively, unlike examples like Ukraine, which heavily utilizes commercial drones within a framework of military integration, government coordination, and centralized procurement.

Nathan Nwachuku aptly summarized the blurred lines: “Infrastructure security is at the heart of defence in Africa. When terrorists attack in Africa, they typically target the lifeblood of a nation: pipelines, power plants, oil rigs, telecom towers.” This perspective underscores that, in Africa’s current threat environment, the distinction between infrastructure and defence security is increasingly meaningless. Terra Industries has undeniably demonstrated that Nigerian firms can globally compete on price, speed, and technical prowess. Yet, the story behind their $1.2 million contract uncovers a more uncomfortable truth: foreign capital dictates what Terra can build, and U.S. policy restricts what Nigeria’s military can procure, forcing military-grade surveillance to be delivered under a commercial label. This workaround functions, but it relies on informal relationships and remains ungoverned, shaped by foreign capital, and lacking a robust institutional framework. This is not a sustainable defence industrial base; it is a gamble. Nigeria urgently needs frameworks that foster military-dual-tech collaboration without the traditional bottlenecks, alongside incentives that make national security development profitable for startups. The technology exists, but the coherent system to deploy and manage it for national defence is conspicuously absent.