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Nigerian startups experienced a stark reversal of fortune in 2023, witnessing a dramatic plunge in foreign investments and losing their prime position in Africa’s startup landscape. A recent analysis by “Africa: The Big Deal” paints a sobering picture of a sector once hailed as a continental powerhouse.
Foreign investment into Nigerian startups plummeted by a staggering 65.83% year-on-year, dropping from $1.2 billion in 2022 to a mere $410 million in 2023. This precipitous decline, attributed to a confluence of global economic factors and local concerns, dethroned Nigeria from its coveted position as the continent’s top recipient of startup funding.
Across the border, Kenya capitalized on the shift, with its startups securing a little under $800 million in 2023, propelling it to the coveted top spot. This reshuffle saw Nigeria plummet to fourth place, trailing behind Kenya, Egypt, and South Africa.
The analysis delves further, revealing the enduring dominance of the “Big Four”: Kenya, Egypt, South Africa, and Nigeria. Collectively, these nations raked in 87% of total startup funding on the continent, their highest share since 2019. Moreover, a staggering 71% (357 out of 500) of funded startups called these countries home.
This stark shift raises critical questions about the future of Nigeria’s once-booming startup ecosystem. What factors contributed to the dramatic decline in foreign investment? Can Nigeria regain its lost ground? What needs to be done to rebuild investor confidence and foster a sustainable entrepreneurial environment?
The findings of “Africa: The Big Deal” serve as a wake-up call for Nigeria’s policymakers, investors, and entrepreneurs. A thorough analysis of the underlying causes and a concerted effort to address them are crucial to reignite the spark of Nigeria’s startup scene and reclaim its rightful place as a leader in Africa’s innovation landscape.
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