| By: Francis Onyemachi
After a wave of proposed mergers, strategic acquisitions and restructuring in Nigeria’s tech sector in H1 2026, experts expect a shift from a growth era to one driven by capital efficiency and sustainable business models.
According to experts, the industry is entering one of its biggest consolidation cycles in more than a decade, with mergers and acquisitions (M&A) expected to rise as startups face funding challenges, higher regulatory costs and growing pressure to achieve profitability.
Abiola Jimoh, co-founder and chief executive officer of XChangeBOX and Payrep Microfinance Bank, said the current wave of mergers and acquisitions is the beginning of a long-term restructuring of the tech ecosystem rather than a temporary response to economic challenges.
“What we are seeing is not a spike. It is a correction that was three years in the making.
“The 2021 funding cycle created a large number of companies with good products but no credible path to profitability, and the capital that used to cover that gap is simply no longer available.”
Raising capital became one of the biggest challenges for startups after record investment levels in 2021, not only in Nigeria but globally, as investors became more cautious and founders were forced to rethink their growth strategies and focus more on profitability.
Experts say founders are now turning to mergers and acquisitions as an alternative to raising fresh capital.
In H1 2026, the industry recorded several mergers and acquisitions, with some proposed deals yet to be completed.
The deals include MTN Group’s proposed acquisition of IHS Towers, MTN Nigeria’s proposed sale of a 60% stake in its fintech subsidiaries, MoMo Payment Service Bank and Y’ello Digital Financial Services (YDFS), to MTN Group in a deal valued at N152.06 billion, as well as the proposed merger between Legend Internet Plc and Spectranet.
Jimoh said the industry could see major deals completed in H2 2026 as buyers and sellers reach alignment on valuations.
“By the second half of the year, two things converge. First, founders who have been extending runway through cost-cutting since 2024 reach the limit of what cost-cutting can achieve. Second, buyers — banks, licensed operators and better-capitalised startups — have finished repricing and now know exactly what they are willing to pay.
“When a motivated seller and a disciplined buyer finally agree on price, deals close quickly. H2 is when that agreement happens.”
Venture capital activity is beginning to recover, but experts believe this does not represent a return to the easy-money era, as investors continue to ask tougher questions about where they commit capital.
According to data from funding analytics platform Africa: The Big Deal, Nigerian startups raised $214 million in the first six months of 2026.
For Jimoh, currency stability has also improved enough for valuations to be assessed in dollars without major assumptions, which could help unlock stalled transactions.
“That alone unlocks transactions that stalled in 2024 and 2025.”
The expert said 2026 marks the beginning of a genuine consolidation cycle driven by market conditions rather than being the cause of them.
“The structural reality is that Nigeria built far more technology companies than the market can profitably support at their current scale. We have dozens of payment companies chasing the same merchants, multiple lending platforms underwriting the same thin-file borrowers, and a long tail of logistics startups moving the same parcels.
“That is not a funding problem, that is a market-structure problem, and market-structure problems resolve through consolidation.”
He referenced Nigeria’s banking recapitalisation in 2005, which reduced the number of banks from 89 to 25, with the sector emerging stronger, better governed and more investable.
“Nigeria’s tech industry is entering its own version of that moment, driven by regulators raising capital and compliance requirements rather than by a single decree. I expect the next three to five years to reduce the number of independent players materially, while the surviving platforms become larger, more regulated and more investable,” he added.
Key Drivers of M&A
The funding reset
According to Jimoh, growth capital has been repriced globally, with Nigeria feeling the impact strongly. Companies that raised at 2021 valuations cannot raise a similar round today, making a sale a more realistic option for some founders and boards.
Regulatory capital pressure
He said higher licensing thresholds, stricter capital adequacy requirements and tighter anti-money laundering (AML) and consumer protection rules from the CBN and SEC have made compliance increasingly expensive.
Smaller operators cannot always absorb these costs, making mergers more attractive than building compliance structures from scratch.
Licences as the scarce asset
Jimoh explained that acquiring a licensed entity, such as a microfinance bank, PSSP, switching or crowdfunding licence holder, is now often faster and cheaper than obtaining a new licence.
“We took the build route with Payrep MFB, and I can tell you first-hand why many others prefer to buy. Product is no longer the moat. Agent networks, merchant bases, POS footprints and verified customer records are what acquirers actually pay for.
“A company with 15,000 active agents is worth more than a company with a beautiful app and no distribution.”
Founder fatigue
Six or seven years of building through a currency crisis, a funding winter and a changing regulatory environment have taken a toll on founders.
Jimoh said some of the deals announced this year represent well-timed exits by entrepreneurs who have invested years building their businesses.
Meanwhile, he explained that both domestic and international buyers will drive more M&A activity if they are well positioned.
According to him, most transactions by volume will involve local and regional players, including Nigerian banks acquiring fintech capabilities, larger fintech companies absorbing smaller competitors, and pan-African firms from Kenya, Egypt, South Africa and Francophone West Africa expanding into Nigeria.
“These are the buyers who understand the regulatory terrain and can price naira risk without applying a discount for uncertainty.
“International capital will return for the larger, cleaner assets: businesses with dollar-linked revenue, audited accounts, strong governance and licences.”
He said development finance institutions and global strategic buyers are actively monitoring opportunities, but their due diligence requirements remain high, with more interest in majority or control positions rather than the minority growth investments that characterised the previous funding cycle.
The co-founder advised founders to strengthen governance, audit processes and compliance systems to position themselves for larger opportunities.
“In this market, a clean data room is worth more valuation uplift than another quarter of growth.”
