Nigeria’s $5 Billion Startup Funding Goal Under Pressure as Investment Declines
Nigeria’s $5 billion startup funding target by 2027 is increasingly under threat as data shows a consistent decline in capital raised by startups across the country. The ambitious funding target, set by Minister of Communications, Innovation and Digital Economy Dr. Bosun Tijani, was based on a plan to grow funding by 50% year-on-year from the $1.2 billion secured in 2022.
However, data from 2023 through Q1 2025 tells a different story. Far from growing, startup funding in Nigeria is stalling, raising doubts about the feasibility of the government’s bold projections.
Nigeria Falls from Top Spot in Africa for Startup Funding
In 2023, Nigeria’s startup ecosystem slipped from the top spot in Africa to 4th position, raising only $400 million—a significant drop from the previous year. The trend continued into 2024 with similar figures, and Q1 2025 recorded just $100 million in startup investment, according to data from the Nairametrics Dealsbook. This trajectory is far short of the annual growth needed to achieve the $5 billion goal by 2027.
Why Nigerian Startup Funding Is Declining
Several factors are contributing to this downturn:
- Global economic slowdown and capital tightening
- Higher global interest rates, reducing risk appetite
- Shift in investor focus towards emerging sectors like AI, big data, cybersecurity, and blockchain
- Regulatory and policy instability in Nigeria
According to Jega Mohammed, founder of Startup Arewa, investors are now more interested in sectors like artificial intelligence and blockchain, leading to reduced funding for traditional tech startups.
Kippa CEO Kennedy Ekezie, whose company raised $11.6 million during the 2021–2022 boom, said startups need to focus more on local funding as international capital becomes harder to access.
“There is a global capital meltdown… Nigerian startups will have to rely less on outside funding and look for more local investors,”
— Kennedy Ekezie, CEO, Kippa
Beyond Funding: Regulatory Hurdles Slow Progress
The Startup Graveyard Report listed funding shortages as the number one cause of startup failures in Africa in 2023 and 2024. However, Nigeria faces additional hurdles:
- Unstable power supply
- Sudden regulatory changes
- Government-imposed levies, such as the Cybersecurity Levy and Electronic Money Transfer Levy (EMTL), affect fintech startups.
These challenges have caused some Nigerian startups to pivot business models or exit the market altogether, further discouraging foreign investment.
Can the Nigerian Startup Act Save the Ecosystem?
In response, Minister Tijani is relying on the Nigeria Startup Act (NSA) to revive investor confidence and attract more local capital. The Act, signed into law in October 2022, includes:
- Startup labelling, allowing startups to register for access to incentives
- Startup Investment Seed Fund, with an initial $40 million fund:
- $20 million from the Japan International Cooperation Agency (JICA)
- $20 million to be matched by the Nigeria Sovereign Investment Authority (NSIA)
So far, 75 startups have been officially labelled under the Act as of May 2025. The Office for Nigeria Digital Innovation (ONDI), under NITDA, is leading implementation efforts and has also established a Startup Consultative Forum to encourage collaboration, policy dialogue, and funding strategies.
“By removing regulatory barriers and providing the required support, we aim to inspire innovative, problem-solving approaches to existing challenges.”
— Dr. Bosun Tijani, Minister of Communications, Innovation and Digital Economy
Nigeria’s Startup Ecosystem Needs More Than Just Targets
While the Nigeria Startup Act and the Seed Fund offer glimmers of hope, achieving the $5 billion funding target by 2027 remains uncertain unless:
- Regulatory clarity and stability improve
- Infrastructure challenges are addressed
- Local investor networks are scaled
- Innovation-focused sectors are better supported
Nigeria’s startup ecosystem has the talent and drive, but without coordinated policy, local capital, and infrastructure improvements, the funding shortfall may widen further.
