Foreign investments in Nigerian startups plunge by 65.83% in 2023

By Sodiq Adelakun

Foreign investments in Nigerian startups plummeted by 65.83 percent in 2023, causing the country to slip to fourth place in total startup investments on the continent.

In a surprising turn of events, Nigeria’s startup ecosystem experienced a significant decline in foreign investments in 2023.

The Big Deal,’ investments in Nigerian startups dropped by a staggering 65.83 percent year-on-year, falling from $1.2 billion in 2022 to a mere $410 million.

This decline in investments has resulted in Nigeria losing its coveted top spot in terms of total startup investments on the African continent.

Instead, Kenya emerged as the new leader, with its startups raising just under $800 million in 2023. Nigeria now finds itself trailing behind Kenya, Egypt, and South Africa, finishing the year in fourth place.

The dominance of what is known as the “Big Four” – Kenya, Egypt, South Africa, and Nigeria – continued in 2023, attracting a whopping 87 percent of the total startup funding on the continent. These four countries were home to 71 percent of the 500 startups that received funding of $100,000 and above.

The research firm, ‘Africa: The Big Deal,’ commented on Nigeria’s dramatic fall, stating, “Nigeria is the country where the most significant change occurred in 2023.”

While Nigeria still boasted the highest number of startups raising $100,000 or more (146, accounting for 29 percent of the continent), the amount they raised was divided by three compared to the previous year. This decrease of 67 percent resulted in a total funding of $410 million.

Despite suffering a decline (25 percent year-on-year) Kenya was able to raise just under $800 million in 2023, attracting the most funding, 28 percent of the continent’s total. In Egypt, 48 such ventures raised $100k+ in 2023, the lowest number out of the Big Four. But because of Kenya and Nigeria’s overall decline, the country claimed the second spot on the continent raising $640 million.

The firm said, “South Africa’s share of regional funding remains the highest at 97 per cent. The 70 start-ups who raised $100k or more in the country cumulated $600 million in funding i.e. 21 percent of the continent’s total. South Africa was the only one of the Big Four not to see its total funding shrink between 2022 and 2023 (+8 percent y-o-y).”

Overall, startup funding into Africa declined by 39 percent to $2.9 billion in 2023.