Investment Downturn: Nigerian Startup Ecosystem Sees a 65% Drop in Foreign Investments
In 2023, foreign investments in Nigerian startups witnessed a significant downturn, plummeting by 65.83 per cent from $1.2 billion in 2022 to $410 million. This substantial decline not only reshaped Nigeria’s position but also led to the country conceding its top spot in the continent’s startup investment landscape to Kenya.
Key Findings:
According to the latest analysis by ‘Africa: The Big Deal,’ Kenya emerged as the new leader in the African startup ecosystem, securing nearly $800 million in 2023. This propelled Kenya to the forefront, pushing Nigeria to the fourth position behind Kenya, Egypt, and South Africa.
Concerns and Analysis:
The research firm expressed apprehension over Nigeria’s drastic downturn, highlighting that despite maintaining the highest number of startups raising $100k or more, the total investment experienced a two-thirds decline, dropping from $1.2 billion in 2022 to $410 million in 2023.
Regional Impact:
Nigeria’s decline further impacted its share of Western African funding, plunging to 68 per cent, a significant drop from 85 per cent in 2021 and 77 per cent in 2022. This marks the lowest regional share among the Big Four markets since 2019.
Kenya’s Resilience:
Despite a 25 per cent decline in funding, Kenya’s ability to secure nearly $800 million solidified its position at the top of the continent’s funding ranking. Egypt, with the fewest startups raising $100k or more among the Big Four, claimed the second position, accumulating $640 million.
South Africa’s Positive Shift:
Maintaining its dominance with a 97 per cent share of regional funding, South Africa was the sole Big Four member to experience a positive shift, witnessing an 8 per cent year-on-year increase in total funding.
Overall Impact on Africa:
The continent, as a whole, experienced a 39 per cent decline in startup funding, dropping to $2.9 billion in 2023. This decline was largely influenced by the setbacks witnessed in Nigeria’s startup investment landscape.
Conclusion:
The shifting dynamics in Africa’s startup investment landscape underscore the need for strategic initiatives to revive Nigeria’s position. As Kenya takes the lead, stakeholders must address the challenges faced by Nigerian startups to reinvigorate the country’s entrepreneurial ecosystem.
