But in 2025, the tables have turned. The ‘Giant of Africa’ now looks like the continent’s middle child, still the great startup hub, but subtly losing attention.

Across Africa, startups have raised about $2.2 billion in funding so far this year, through September. It’s not a bad figure, in fact, it shows a comeback after 2024’s sluggish performance. 

But Nigeria’s share of that pot is behind. Once the darling of venture capital, the country now follows Kenya, South Africa, and Egypt behind in investor flow and deal flow. We could say this decline reveals cracks in policy, perception, and predictability.

The Numbers

Let’s look at the facts. In the third quarter of 2025, African startups collectively pulled in hundreds of millions, a steady rebound from the funding winter of 2023-2024.

September alone saw between $140 million and $160 million in disclosed deals, a strong 430% recovery from August’s slump. South Africa topped with roughly $64 million, followed by Nigeria’s $44 million, Kenya’s $22 million, and Egypt’s $15 million.

Yes, Nigeria ranked second that month, but context matters. A single month’s uptick doesn’t reverse a year-long slide. The $44 million figure looks good until you recall that just two years ago, Nigeria regularly attracted over 40% of Africa’s total venture capital. Today, that has thinned, the rebound is real, but the lead is gone.

It’s not that Nigeria didn’t have highlights. Lagos-based Kredete closed a $22 million Series A round, one of the continent’s biggest in the month. But a handful of bright spots cannot disguise the bigger difference. Nigeria’s once-dominant startup sector is now fighting for air.

Why the Slide? The Risk Equation

There’s no single villain here. It’s a mix of currency challenges, policy inconsistency, and investor fatigue.

1. Currency Risk and FX Instability
Let’s start with the obvious, the naira. Investors hate surprises, and Nigeria’s currency offers plenty. A venture capitalist can invest $5 million today and see its real value drop by a quarter within months. For startups, it’s a nightmare: revenues in naira, debts in dollars, and no way to plan beyond next quarter.

Currency instability doesn’t just kill profit margins; it kills patience.

2. Regulatory Whiplash
One month, a fintech is celebrated for innovation; the next, it’s hit with a compliance directive or policy change that halts operations. The Central Bank’s unpredictable stance on digital assets, tax laws, and banking limits has left founders second-guessing the next move. For investors, unpredictability is more frightening than failure, you can’t plan for confusion.

3. Investor Confidence Erosion
Venture capital is about risk, but it’s also about trust. And Nigeria’s perception problem runs deep. The inflation rate, the liquidity problem of 2024, and the fear of policy reversals have pushed many funds to look elsewhere.

Kenya’s climate-tech growth looks more predictable. Egypt’s structured reforms provide clearer returns. South Africa’s venture-debt model gives investors better exit options. In comparison, Nigeria? Quite unstable.

4. Cost and Infrastructure Burden

Even the best Nigerian startups fight a heavier battle. Cost of power bites into margins, logistics are inconsistent, and security concerns increase overheads. The same $5 million that can comfortably sustain a startup in Nairobi or Cairo barely covers the basics in Lagos. Investors see this, and they price it in, or calmly move their money elsewhere.

5. Lack of Exit Opportunities

And then there’s the silence after success. Since Paystack’s 2020 acquisition, Nigeria has produced few visible exits. No IPOs, no major mergers, no new liquidity events. For investors, that’s a red flag. Without an exit, even the best-performing portfolio company becomes a waiting game. Venture capital doesn’t thrive on patience, it thrives on movement.

Meanwhile, Elsewhere in Africa…

Kenya, Egypt, and South Africa have been rebalancing the equation.

Kenya has turned climate-tech into a national asset. Its policy environment rewards clean-energy startups and provides tax incentives that attract green investors. 

Egypt, after years of reforms, now has one of the most transparent startup ecosystems on the continent. Its currency stabilisation plan and government support for digital infrastructure are winning back foreign confidence.

South Africa, on the other hand, plays a more sophisticated game. Its venture-debt market gives startups more flexibility and gives investors partial liquidity, a balance Nigeria still hasn’t mastered. 

Together, these hubs have built something Nigeria once had, predictability.

Reclaiming the Edge: What Nigeria Must Do Next

The thing is that Nigeria still has the best talent pool in Africa. Its entrepreneurs are fearless, resourceful, and globally aware. Innovation isn’t the problem; the system is.

To get back in the game of venture capital investment, Nigeria needs credibility, the kind that comes from action, not announcements.

1. Ensure FX Stability:
   A predictable currency policy restores trust faster than any PR campaign.
2. Create a Transparent Regulatory Environment:
   Investors can live with tough regulations, they can’t live with arbitrary ones. Nigeria must fix its fintech and crypto regulatory frameworks if it wants long-term funding.
3. Mobilise Local Capital:
   Pension funds, sovereign wealth vehicles, and high-net-worth individuals must be encouraged to fund innovation. Relying solely on foreign dollars is a risk in itself, unsustainable.
4. Build Exit Pipeline:
   Encourage IPOs, mergers, and acquisitions. When investors see others cash out, they come back, fast.
5. Fix the Basics:
   Energy, internet reliability, and logistics are not “startup issues”, they’re national competitiveness issues. Solving them will reduce risk and attract fresh capital.
6. Promote Investor Dialogue:
   Nigeria’s public and private sectors need to start speaking the same language. Investors hate surprises more than they hate losses.

The venture capital hasn’t left Africa; it’s just gotten pickier, and Nigeria has to earn trust again. The ideas, the founders, the products, they’re all here. What’s missing is a sense that the system itself won’t betray them.

If Nigeria can steady its currency, clean up its regulations, and show genuine respect for investor logic, its startup sector will recover faster than many expect.

Investors go where stability lives. If Nigeria can steady its policy, stabilise its currency, and show a consistent commitment to reform, its startup sector would reignite, with more venture capital investments.

Nigerian fintech startup, Kredete, has officially launched its lending platform to deepen accessibility to formal credit, financial education, and innovative financial solutions.

The launch event, which took place on the 16th of April 2023, at the Civic Centre, Victoria Island, hosted tech specialists and entrepreneurs, who convened to discuss the future of lending in Africa and Kredete’s commitment to bridging the significant credit gap and financial exclusion faced by Nigerians who lack access to formal credit through traditional means.

Kredete aims to revolutionize the sphere of lending in Nigeria and beyond by leveraging AI-driven technology and strategic partnerships with financial institutions to create a complete lending infrastructure that enables lenders to be more efficient and cost-effective while empowering users to access credit products suited to their needs.

With AI, the pre-approval odds for users enhance by providing tailored loan options based on their credit history and financial profile, while for lenders, it becomes easier to assess risks, reduce non-performing loans, and make informed lending decisions.

Kredete is also passionate about strengthening financial literacy in Nigeria and will achieve this by offering free credit scores, reports, and monitoring tools to help users understand their credit standing and make informed financial decisions.

These financial literacy tools prove mutually beneficial for lenders to help streamline their operations and provide loans to creditworthy borrowers, thereby fostering a healthier lending ecosystem. The app can be downloaded here from Google Play Store and the Apple App Store.

Adeola Adedewe, Founder and CEO, Kredete said: “Kredete was founded out of my personal experience trying to secure a loan to start a business, and the difficulties experienced inspired me to help Nigerians access loans. Thus, we embarked on a mission to bridge Nigeria’s $360B credit gap and foster financial inclusion for the 82% of Nigerians who lack access to formal credit. We are deeply motivated by the importance of access to credit in any country – from empowering SMEs to spurring economic growth. So, we have positioned Kredete to leverage AI-driven technology to facilitate loans for Nigerian entrepreneurs that are faster and simpler to help their businesses scale.”

“While analysing the digital lending outlook in Nigeria, we identified that one of the limitations to accessing lending opportunities is the difficulty in determining creditworthiness. Therefore, we have included free credit scores, reports, and monitoring to empower users to obtain credit products that meet their specific needs while equipping lenders with insights to make effective lending decisions. This way, we will modernize Nigeria’s lending industry, provide a competitive edge, and set new standards for loan origination, risk assessment, and approval processes. He added.”

In only a few months since Kredete’s establishment, the company has formed strategic partnerships with 25+ financial institutions, including the largest African-based credit bureau, CRC Credit Bureau, and secured funding from prominent investors, including being backed by Techstars, a renowned startup accelerator powered by J.P. Morgan.

In its beta phase, the platform attracted over 70,000 users, demonstrating the strong demand for its services, and signifying the high demand for credit access in Nigeria. 

Alongside its founder, Kredete is led by Hakeem Oriola, Chief Technical Officer, Feyisetan Sowunmi, Head of Customer Experience, and Ebuka Arinze, Head of Product. Kredete envisions a future where financial access, opportunities, and literacy are equitable for all Nigerians, regardless of their socioeconomic background or credit history. While the Company’s immediate focus is on the Nigerian market, it aims to scale its platform and lending infrastructure across Africa to bridge the gap within the continent’s unbanked/underbanked populations. 

Interested in becoming a lending partner with Kredete?

Request a demo here.