The bold $5 billion funding goal for Nigerian startups set by the Minister of Communications, Innovation, and Digital, Dr. Bosun Tijani, is changing into infeasible with the continual decline in funds attracted by the nation’s innovators in latest instances.
Going by the Minister’s plans unveiled upon assumption of workplace in 2023, this goal is to be achieved in 2027 by guaranteeing a 50% enhance in funding every year from the $1.2 billion attracted by the startups in 2022.
Nevertheless, information from 2023 and as much as Q1 2025 suggests in any other case, as funding continues to say no.
On the finish of 2023, Nigeria slipped from the highest place it occupied for years to turn out to be 4th in Africa as startups within the nation managed to lift about $400 million, marking a major decline from 2022.
In 2024, the nation’s startups additionally raised about the identical quantity and remained among the many high 4 in Africa when it comes to funds raised for the yr.
Based on information tracked by the Nairametrics Dealsbook, Nigerian startups raised round $100 million in Q1 2025. Whereas this confirmed some resilience within the face of the present world capital tightening, it fell far in need of the expansion required to fulfill the nation’s 2027 goal.
Why is funding declining
Trade analysts consider a mix of things is driving the decline in startup funding, not solely in Nigeria however globally.
These elements embody rising world rates of interest, a shift in investor focus, and chronic challenges inside Nigeria’s startup ecosystem.
Based on the founding father of Startup Arewa, Jega Mohammed, enterprise capitalists are actually trying towards different verticals corresponding to Synthetic Intelligence, massive information, cybersecurity, automation, and blockchain, therefore the decline in common tech startup funding.
For the founder and CEO of Kippa, Kenedy Ekezie, whose firm benefited from the funding increase between 2021 and 2022, elevating a complete of $11.6 million, the dynamics have modified, and startups must look inward for funding.
“There’s a world capital meltdown taking place proper now, and fundraising has slowed down for startups worldwide, together with in Africa. As it’s now changing into tougher to lift capital within the present market and exterior funding turns into tougher, Nigerian startups must rely much less on outdoors funding and search for extra native buyers,” he mentioned.
Past funding, Nigerian startups face coverage challenges
A latest report by Startup Graveyard recognized funding shortages as the first explanation for African startups’ failure in 2023 and 2024.
- Nevertheless, past that, it pointed to particular challenges in Nigeria, particularly within the areas of regulation and insurance policies.
- The report famous that Nigeria’s startup ecosystem faces distinctive hurdles, together with unreliable energy provide and sudden regulatory modifications.
- It added that some startups within the nation have modified their enterprise fashions and developed improvements to swimsuit the present regulatory insurance policies, which have additionally hindered potential worldwide funding.
“Notable circumstances, such because the Central {Bank} of Nigeria’s introduction of the cybersecurity levy and Digital Cash Levy Switch (EMTL) as government-mandated charges for all digital transfers, visibly affected fintech startups that gained traction without cost cell cash transactions,” the report acknowledged.
Function of Nigeria Startup Act
To attain the $5 billion goal, Minister Tijani mentioned the federal government can be pushing for extra native funding via the implementation of the Nigeria Startup Act, which was signed into regulation in October 2022.
He mentioned the Ministry would additionally set up an energetic sandbox surroundings that encourages and empowers innovators and entrepreneurs to develop distinctive options for sectors traditionally thought of to have restricted publicity to technological innovation.
“By eradicating regulatory obstacles and offering the required help, we goal to encourage progressive, problem-solving approaches to current challenges,” he acknowledged.
- Whereas a lot of the implementation recorded thus far of the Act is the startups’ labelling, via which Nigerian startups are inspired to get registered on the federal government’s portal, the Nationwide Data Expertise Growth Company (NITDA) mentioned it’s making progress with funding.
- Based on a spokesperson of the Workplace for Nigeria Digital Innovation, the subsidiary of NITDA answerable for the implementation of the ACT, 75 startups have been labelled as of Could 2025, and the Workplace is addressing the funding challenge via the institution of a $40 million Startup Funding Seed Fund.
- The ONDI acknowledged that the Fund arrange in Could this yr has secured $20 million from the Japan Worldwide Cooperation Company (JICA), whereas the Nigeria Sovereign Funding Authority is to match the remaining $20 million.
- As a part of the implementation, the ONDI mentioned it has additionally arrange a Startup Consultative Discussion board to drive data sharing and collaboration within the ecosystem with respect to coverage proposals, data on startups that qualify for labelling; and deliberation on a memorandum to the Nationwide Council for Digital Innovation and Entrepreneurship (NCDIE).
What you must know
Former President Buhari signed the Nigeria Startup Invoice 2022 into regulation on October 19, 2022, to place an finish to the authorized uncertainties that had trailed the startup trade prior to now. It offers for what qualifies an organization to register and acquire startup standing.
The Act stipulates, amongst others, that:
- Earlier than an organization will be labeled a startup, it should acquire a certificates generally known as the startup label. Which means solely firms with the startup label will probably be acknowledged as startups.
- It mandates {that a} Startup Help and Engagement Portal must be established to facilitate the issuance of the startup label and in addition bridge the hole between regulators and startups. It additionally spells out the necessities for a corporation to acquire a startup label. Corporations issued with a startup label have obligations below the invoice, and failure to adjust to these obligations may end up in the revocation of their startup label.
Based on the Act, for a corporation to be named a startup, it have to be a registered restricted legal responsibility firm that has been in existence for no more than ten years from the date of incorporation, amongst different necessities.
