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Nigerian startups shut down despite supportive policies: A growing storm in the tech ecosystem

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Nigerian startups shut down despite supportive policies

Nigeria’s position as Africa’s startup epicentre is in turbulent waters. Despite a flurry of policies designed to prop up innovation, a troubling wave of tech company closures is sweeping the nation — exposing deeper vulnerabilities in the entrepreneurial ecosystem. In the last 18 months alone, at least 13 high-profile startups have folded, even as regulatory frameworks and investment inflows aimed to provide a cushion.

The disappearing act: who’s closing and why it matters

Startups once lauded as high-potential players — ThePeer, HerRyde, Chopnownow, Cova, BuyCoins Pro, Quizac, Joovlin, Edukoya, and most recently, Okra — have shut their doors between early 2024 and mid‑2025, according to various reports. The combined fallout has rippled across multiple sectors, from fintech and logistics to edtech and agritech.

A regional database, StartupGraveyard.africa, shows that 53 startups across seven African countries shut down between 2013 and 2024, with nearly half based in Nigeria. That figure puts the nation’s tech sector under fresh scrutiny, especially as it still hosts an estimated 845 active startups by mid-2025, according to ecosystem trackers.

Nigerian startups shut down despite supportive policies

Ecosystem decline in global rankings

Nigeria fell from 64th to 66th place in the 2025 Global Startup Ecosystem Index published by StartupBlink — a subtle but symbolic dip punchng.com. Analysts attribute the drop to macroeconomic turbulence, weak investor sentiment, and persistent operational hurdles that continue to impede progress.

Macroeconomic and regulatory crosswinds

Though the government has rolled out startup-friendly policies — such as tax breaks, funding initiatives, and mentorship frameworks — the execution remains flawed, experts say. Two intertwined issues are frequently cited:

  1. Economic instability: Inflation, currency devaluation, and erratic forex policies undermine both funding flows and operational planning. This has hit fintech and cloud-service startups particularly hard, as they often depend on dollar-denominated infrastructure costs.
  2. Regulatory unpredictability: Frequent shifts in licensing, ambiguous compliance rules, and delays in policy rollouts — such as open banking regulations, now not expected until August 2025 — redirect founder energy toward compliance rather than innovation.

The business model trap

Industry insiders, like the founder of Naijatal, Ifeanyi Christopher, argue that many startups chase funding rather than viable business models:

“Too many startups here are built for pitch decks, not for people… Are people already solving it manually? Will they pay for a better solution?”

The confusion between raising capital and generating revenue creeps into strategy, as Christopher notes:

“Raising money is different from making money… Every naira should go into building a better product, reaching the right customers, and improving user experience.”

Nigerian startups shut down despite supportive policies

Inside a high-profile collapse: Okra’s fall from grace

Arguably the most emblematic of recent failures, Okra was launched in 2019 by Fara Jituboh and David Peterside to pioneer open-banking APIs in Nigeria. The startup raised around US$16 million and became a flagbearer for fintech infrastructure.

In late 2024, Okra launched Nebula, a cloud‑infrastructure pivot priced in naira to save on forex costs. Despite initially eliciting excitement, the pivot failed to catch on. Peterside had already exited in 2022, and Jituboh resigned in May 2025 to join a UK startup, Kernel. Within weeks, Okra quietly stopped operations — a sudden ending with few answers, provoking criticism from ecosystem watchers.

Venture capital specialist Tayo Olowu was scathing:

“This wasn’t a small trial… a company that raised $16m… shut down with little clarity or meaningful analysis.”

He went on to argue that infrastructure startups “win by doubling down on product‑market fit and scaling adoption, not by building internal tools while the core product still lacks traction”

Fintech dominates the failure list

Analyses show that fintech accounts for approximately 50% of Nigeria’s recent startup closures. The high level of funding and intense competition within the sector make it a hotspot for both success and spectacular failure. Investments plummeted 52% between 2022 and 2024; losses reportedly exceeded US$200 million from around 15 failed African tech startups, many of them Nigerian fintechs.

Unfortunately, the wave doesn’t stop there. Other affected sectors include:

  • Edtech: Edukoya, which soared to 80,000+ students but now counts as Africa’s largest edtech pre‑seed failure (US$3.5 million raised).
  • Healthtech/genomics: 54gene collapsed in 2023 after raising US$45 million, due to governance issues, shaky revenue, and cost overruns.

A new trend: responsible exits

Despite the high-profile closures, a peculiar pattern is emerging: founders are returning unspent capital to investors, a sign of growing responsibility and maturity. Okra reportedly returned US$4–5.5 million, ThePeer returned US$500,000, and Edukoya refunded undisclosed sums.

This marks a progressive shift; rather than prolonging unsustainable operations, founders are choosing ethical winding down — a departure from the previous norm of following money until all resources are exhausted.

Deep structural barriers remain

A common refrain surfaces from analysts and founders alike:

  • Technical infrastructure deficits: Unreliable power, patchy internet, and high data costs drive up operating expenditures.
  • Financial instability: Persistent inflation and foreign exchange volatility make planning difficult.
  • Regulatory friction: Compliance stacks up fast, while policy adjustments — like delayed open-banking laws — undercut business models.
  • Talent drain and cost inconsistency: Skilled professionals often pursue more stable work abroad, raising local hiring costs.

Chinwe Michael of BusinessDay states:

“African startups receive less funding… VCs use the same models as in Silicon Valley… they demand quicker paths to profitability.”

Founders ring alarm bells on growth pressure

Without strong fundamentals, chasing rapid scaling becomes fatal. Experts like innovation adviser Jide Awe caution against the “growth‑at‑all‑costs” mindset, urging a return to unit economics, product‑market fit, and organic expansion.

Similarly, Chinedu Chidi of Vlundcruch notes that Nigeria’s startup failure rate is around 61%, exacerbated by economic pressures, policy unpredictability, and internal weaknesses.

Hope amid the setbacks: lessons and next steps

Despite setbacks, stakeholders contend that Nigeria’s startup ecosystem is resilient — provided it adapts. Here are key takeaways:

  1. Re-frame success metrics: Profitability and sustainability must take priority over fundraising and vanity metrics.
  2. Adopt responsible exits: The founder-led capital return trend signals the emergence of healthier entrepreneurial norms.
  3. Strengthen regulation frameworks: Clear, consistent, and timely policies — especially in fintech — can reduce unnecessary friction.
  4. Invest in infrastructure and talent: Reliable power, connectivity, and workforce development (including vocational training) are critical priorities.
  5. Align VC approaches: Local and international investors must focus on patient capital—committed to enabling growth over longer timelines.

Ecosystem in flux

Nigeria remains Africa’s single largest tech market, with hubs extending across Lagos, Abuja, Ibadan, Enugu, Port Harcourt, and Ilorin. At the same time, global programs — like Google for Startups Accelerator Africa — continue to select Nigerian ventures for support.

In other words: Nigeria is still fertile ground for innovation — but only if startups pivot from flashy pitches to deep, systemic discipline.

Nigerian startups shut down despite supportive policies

The bottom line

  • Rising startup closures signify systemic cracks in Nigeria’s tech ecosystem — from economic pressure to execution gaps.
  • The term “supportive policies” rings hollow when inconsistent enforcement and delivery undermine outcomes.
  • However, the trend of responsible exits and a growing maturity among founders presents an opportunity: a reset, stronger than the pre-2024 era.
  • As long as stakeholders — founders, investors, and policymakers — refocus on long-term viability, Nigeria can reassert itself as a thriving tech nation.

Nigeria’s tech moment is far from lost. But the priority must now shift from supportive rhetoric to tactical, sustainable action — rooted in business fundamentals, policy clarity, and genuine ecosystem discipline.

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