| By: Francis Onyemachi
Nigeria is undeniably Africa’s leading home for unicorn startups, accounting for five of the continent’s 12 companies valued at more than $1 billion.
According to the 2025 Global Innovation Index, Nigeria’s unicorns include
- Flutterwave,
- OPay,
- Moniepoint,
- Interswitch and
- Andela, among companies enabling the country to stay ahead of South Africa, Egypt, Kenya and Senegal in the number of billion-dollar startups.
However, experts have warned that maintaining this position will require deliberate action as startup funding continues to decline and investors become increasingly cautious.
Data from Africa: The Big Deal shows African startups raised about $5.2 billion in 2021 before funding dropped to around $3.3 billion in 2022 and $2.9 billion in 2023. Investment remained below previous highs in 2024 as rising global interest rates slowed venture capital activity.
The experts warned against relying too heavily on fintech and foreign venture capital, arguing that Nigeria can still produce the next generation of unicorns if local investors, founders and government each play their part.
Local capital, infrastructure key to future growth
Chigozie Njoku, co-founder and CEO of Afiari, said shrinking funding has made local risk capital more important for early-stage founders.
“What now needs to happen is that more local capital is required as risk capital to encourage more builders to build and grow businesses before larger investors can then come in.
“Capital is always looking for where it can be returned and if we are able to prove the market by leveraging local capital early enough, it can easily attract more funding to scale more startups to unicorn status and then create a ripple effect for more funding in the ecosystem,” he said.
Njoku noted that funding has declined over the past few years as high interest rates and global economic uncertainty forced many international investors to scale back their activities.
Beyond funding, he identified poor infrastructure as another major obstacle to building billion-dollar companies.
According to the Infrastructure Concession Regulatory Commission (ICRC), Nigeria faces an estimated $2.3 trillion infrastructure gap and requires about $100 billion annually to bridge it.
Njoku said inadequate infrastructure forces startups to spend valuable resources building systems that should already exist.
“This is where both the government and private sector can collaborate to lay the foundation for growth.
“Once we have great infrastructure in both physical and human development, talent becomes easy to groom since we already have the numbers, solutions can be built and adopted easily leading to growth, and capital can then come in to catalyse the growth even further. So it’s a mix of all.”
He added that building digital products without adequate internet access limits adoption and slows growth.
“The challenge, however, is in execution. Once we can execute properly, we begin to see growth happening. DFIs can then work with the government to ensure that the right things are funded, not just for international interests but also for local interests.”
Sectors likely to produce the next unicorns
Gideon Tomoloju, CEO of Pixxis Agency, believes the next generation of unicorns will come from businesses solving complex, high-impact problems rather than entering already crowded markets.
“I’m not convinced that simply creating more startups in already crowded sectors will produce Africa’s next unicorns. Companies solving deep, high-impact problems with strong barriers to entry are more likely to create outsized value,” he said.
He pointed to TerraHaptix, led by Nathan Nwachukwu, as an example of a company building advanced defence and autonomous technologies in a largely untapped sector across Africa.
Tomoloju advised founders to focus on underserved industries where innovation can deliver greater economic impact instead of launching another payments company.
While he expects fintech to continue growing, he said payments and financial inclusion are already being addressed by companies such as OPay, PalmPay and Moniepoint.
He also identified logistics as another sector with significant potential, citing Chowdeck‘s growth as proof that the market can support large-scale innovation despite its operational challenges.
“Any company that can consistently execute over the next five years while navigating Nigeria’s infrastructure and regulatory challenges could very well become the continent’s next unicorn. To me, Chowdeck has introduced a new strategy for logistics that has proven to be effective over the last three years.”
Njoku agreed that the next wave of unicorns will likely emerge from businesses that build on existing digital payment infrastructure rather than creating new payment rails.
“While we will continue to see growth in fintech solutions and perhaps a few more unicorns, the sectors that will produce more unicorns will be those that facilitate commerce at scale using the payment rails that have been built. So, rather than just sending and receiving money, using payments to solve further issues around transportation, retail, healthcare and others will see a wave of unicorns.
“Another set will be those that leverage AI to take actions for both enterprises and SMEs across industries such as education, pharmaceuticals, energy, retail and manufacturing.”
Mistakes holding startups back
Tomoloju said many founders expand too quickly after raising capital instead of focusing on building sustainable businesses.
“After raising capital, they move into larger offices, hire faster than necessary, upgrade their lifestyles or spend heavily on sponsorships that don’t directly contribute to growth. Sustainable businesses are built on operational discipline,” he said.
He also argued that more founders need practical business knowledge, stressing that building a successful company requires more than developing good software.
“Great technology alone doesn’t guarantee a successful company.”
Government’s role
Tomoloju said the government must place greater priority on entrepreneurship and innovation through well-funded incubator and accelerator programmes that equip young Nigerians with practical business skills.
“Our education system is producing graduates, but too few are adequately prepared for the realities of building businesses in a challenging economic environment.”
He also called for policies that encourage highly skilled Nigerians in the diaspora to return and contribute to the country’s innovation ecosystem.
According to him, the government must address the basic conditions businesses rely on, including stable electricity, reliable internet access, quality infrastructure and predictable policies.
He said these improvements would strengthen local businesses and rebuild investor confidence in Nigeria’s technology ecosystem.
Tomoloju also urged founders to reduce their dependence on foreign capital and focus on building businesses with sound unit economics, sustainable revenue and long-term resilience.
He noted that the investment climate has changed significantly since the technology funding boom of 2019, when venture capital flowed more freely into Nigeria. Hyperinflation, currency volatility and the collapse of several startups have since made investors more cautious.
Despite the slowdown, data from Africa: The Big Deal shows African startups raised $3.2 billion in 2025, representing a 40 per cent year-on-year increase, driven largely by a surge in mega funding rounds.
