Nigeria’s aspiration to raise $5 billion in startup investments by 2027 is encountering growing uncertainty, as recent data reveals a consistent drop in funding. Despite bold projections set in motion by the Minister of Communications, Innovation, and Digital Economy, Dr. Bosun Tijani, the country’s current trajectory suggests the ambitious goal may be slipping out of reach.
Upon assuming office in 2023, Dr. Tijani laid out a vision to progressively increase startup funding by 50% annually, starting from the $1.2 billion recorded in 2022. However, figures from 2023 through the first quarter of 2025 show that the expected momentum has not materialized.
Declining Capital Inflows Raise Concerns
In 2023, Nigeria’s startup ecosystem saw a dramatic dip, falling from its long-held top position in Africa to fourth place. Startups raised approximately $400 million—down significantly from the previous year. This trend continued into 2024, with funding levels remaining stagnant.
By the first quarter of 2025, Nigerian startups had secured only about $100 million, underscoring the mounting difficulty of attracting capital amid global financial tightening. These figures fall far short of the projected year-on-year increases needed to meet the 2027 target.
Global and Local Challenges Crippling Growth
The contraction in startup funding is not unique to Nigeria. Experts cite a mix of global economic factors—including high interest rates and shifting investor interests—as key contributors to the broader slowdown. Investors are increasingly prioritizing emerging sectors such as artificial intelligence, cybersecurity, automation, and blockchain, reducing the appetite for conventional tech ventures.
Locally, entrepreneurs are also grappling with a challenging funding landscape. According to Kippa’s CEO, Kennedy Ekezie, who raised $11.6 million during the funding surge of 2021–2022, startups can no longer rely on international funding as they once did. He emphasized the need for increased local investment, warning that external capital is drying up amid a global capital squeeze.
More Than Just Funding: Regulatory Hurdles Abound
While capital shortages remain a pressing issue, policy instability is also dampening investor confidence. A recent report highlights inconsistent regulations, unreliable infrastructure, and abrupt policy shifts as major obstacles within Nigeria’s innovation ecosystem.
Fintech startups, once thriving on free mobile money transfers, were particularly affected by the introduction of mandatory government fees such as the Electronic Money Transfer Levy and cybersecurity charges. These moves have forced several startups to overhaul their models or pivot entirely, in some cases undermining foreign investor interest.
The Startup Act: A Hopeful Framework with Slow Implementation
To stimulate innovation and attract local capital, Nigeria introduced the Startup Act in October 2022. The Act aims to provide a structured framework for recognizing, supporting, and regulating startups through a “startup label” system, coupled with policy support and funding access.
Dr. Tijani has expressed plans to leverage the Act to reduce regulatory friction and create a supportive environment through sandboxes and innovation hubs. However, progress has been gradual. So far, 75 startups have received official labels, while implementation efforts remain focused on foundational structures such as a Startup Consultative Forum and funding mechanisms.
The Office for Nigeria Digital Innovation (ONDI), the agency tasked with implementing the Act, recently announced the creation of a $40 million Startup Investment Seed Fund. Half of the fund—$20 million—has been secured from the Japan International Cooperation Agency, with the remainder to be matched by Nigeria’s Sovereign Investment Authority.
Legal Clarity and Startup Status
Under the provisions of the Startup Act, only companies that meet specific criteria—including being a limited liability company less than ten years old—can receive the official startup label. These labels not only grant recognition but also tie companies to specific obligations. Noncompliance may result in their revocation.
Additionally, a dedicated digital portal is being developed to facilitate labelling and foster direct engagement between startups and regulators.
Conclusion
Nigeria’s vision of becoming a startup powerhouse by 2027 is at a critical juncture. With funding numbers falling short and systemic challenges persisting, urgent policy refinement, deeper implementation of the Startup Act, and stronger local investor engagement will be vital to reignite momentum. The path to $5 billion may still be possible—but only with swift, strategic action.
