By Sogeyinbo Abdulrahmon Olabanji (SIWES student, Gate Way ICT Polytechnic)
In 2023, Nigeria, despite being one of Africa’s big four startup hubs, experienced a significant drop in funding. While it excelled in 2021 and 2022, the country recorded its lowest performance compared to Egypt, Kenya, and South Africa.
In contrast to 2021/2, when Nigeria led the big four, Egypt, Kenya, and South Africa secured higher percentages of funding in 2023.
For instance, Egypt raised $640 million (95%), Kenya raised $800 million (91%), and South Africa raised $600 million (97%). This contrasts with the records of 2021, where Nigeria raised $1.7 billion, and in 2022, it raised $1.2 billion.
Factors contributing to Nigeria’s funding decline in 2023 include the japa syndrome, where talented individuals leave the country, the abrupt removal of fuel subsidies, political and economic instability, and inflationary pressures.
According to Hi-Tech interviews with Nigerian startups, these challenges significantly impacted funding.
The data, presented in a report by Africa: The Big Deal, indicates that the ‘Big Four’ countries attracted 87% of all startup funding in Africa in 2023.
Kenya led with just under $800 million, representing 28% of the continent’s total funding. Egypt, despite the lowest number of startups raising $100k+, claimed the second spot with a YoY decline of -20%. South Africa maintained its lead, with a 97% share of regional funding.
Startup founder reactions reveal concerns about Nigeria’s economic challenges. Comfort Onyaga, CEO of Izanu Africa, attributes the poor 2023 performance to the new administration’s removal of fuel subsidies, causing instability, inflation, and a migration of tech talents.
In the aggregate fundraising reports, Nigeria raised $410 million (68%), trailing behind Egypt, Kenya, and South Africa, highlighting the challenges faced by Nigerian startups in securing funds in 2023.
