Nigeria’s Fintech Crisis: Over $200 Million Lost as Startup Failures Surge

Nigeria’s fintech sector, once hailed as a beacon of innovation and investment in Africa, is witnessing an alarming surge in startup failures. In just one year, over $200 million in investment has evaporated due to the collapse of 15 African tech startups, many of them Nigerian. The recent shutdown of Okra, an open banking startup backed by $16 million, has spotlighted the deepening crisis fueled by macroeconomic instability, regulatory delays, internal disputes, and a severe funding drought.

The domino effect includes prominent players like 54gene, Pivo, Lazerpay, Zazuu, Edukoya, and Bundle Africa—each shutting down after raising millions in funding. Their reasons vary from co-founder conflicts and regulatory uncertainty to failed pivots and poor market fit. The situation has scared off major accelerators like Y Combinator and has pushed local investors to explore safer markets abroad, highlighting eroding investor confidence in Nigeria’s tech ecosystem.

Experts identify a cocktail of causes: poor macroeconomic conditions (like inflation, naira depreciation, and policy instability), over-reliance on foreign funding, inadequate corporate governance, and immature leadership. Many startups chased rapid growth and fundraising while ignoring profitability and local market realities. Issues such as over-hiring, costly offices, and excessive marketing without ROI have left them vulnerable when investor funds dried up.

Compounding the crisis is Nigeria’s volatile regulatory environment. Abrupt policy shifts, licensing delays, and a lack of innovation-friendly frameworks from regulators like the CBN have destabilized many business models. Experts also cite infrastructure issues (like unreliable power and internet), low financial literacy, and talent drain (“japa” syndrome) as major structural barriers to sustainable operations in the country’s fintech space.

Industry experts urge a paradigm shift: startups must build for local relevance, prioritize profitability, and engage regulators collaboratively. Solutions include embedding strong governance practices, hiring wisely, conducting proper market research, and adopting realistic funding strategies. The future of Nigerian fintech, they emphasize, lies not in hype or vanity metrics, but in solving real financial problems, building sustainable operations, and creating lasting value amid tough local conditions.

Source: The Sun