Spread the love

Investors Bullish on Nigerian Startups as Government Reforms Drive Stability

Economic Reforms Spark Renewed Investor Confidence

Startup investors are increasingly optimistic about Nigeria’s economic potential, viewing current conditions as prime for investment opportunities. This renewed confidence stems from recent government reforms, particularly in the foreign exchange market, which are positioning Nigeria as an attractive destination for capital.

Recent Policy Changes and Their Impact

Since 2023, Nigeria has implemented significant economic policies including fuel subsidy removal and foreign exchange market liberalization. While these measures initially led to increased living costs – with the naira losing over 40% of its value and inflation reaching 24.23% by March 2025 – investors are now seeing signs of stabilization that suggest a potential turnaround.

AVCA Conference Highlights Investment Potential

The 21st Annual Africa Venture Capital Association Conference (AVCA) recently highlighted this growing optimism. Titled ‘Bold Moves: Powering 10x in Africa,’ the summit brought together investors who believe Nigeria’s economic challenges have bottomed out, creating an opportune moment for investment.

Key Indicators of Recovery

Several positive indicators are restoring investor confidence:

The Central Bank of Nigeria reports gross reserves exceeding $38 billion
A balance of payments surplus reaching $6.83 billion
Relative stability in the naira’s value compared to previous volatility

Investment Landscape and Future Outlook

Abi Mustapha-Maduakor, CEO of AVCA, noted: “We’re seeing stability of exchange rates for quite a sustained period. We’ve started seeing exit activity happening in Nigeria, and seeing investors that haven’t been in Nigeria before start investing over the past two years.”

Despite a challenging 2024 where African startups raised $3.6 billion (with Nigerian startups securing $417 million), AVCA describes this as a year of ‘reckoning’ and recalibration. As Africa’s leading startup hub in terms of startups and unicorns, Nigeria is expected to play a key role in this adjustment.

Investor Perspectives

Kola Aina, founding partner at Ventures Platform, called Lagos “the heart of the African startup ecosystem.” Olusola Lawson of African Infrastructure Investment Managers added: “Our view is that the cycle has bottomed. Investing is all about picking the right time. I think in Nigeria, now is the right time.”

Genievieve Sangudi of Alterra Capital Partners emphasized Nigeria’s enduring importance: “It is still the giant of Africa. While it has been a tough investing environment, particularly for dollar investors, I think it just means we have got to focus on micro and not macro.”

Challenges and Opportunities Ahead

While optimism grows, challenges remain:

AVCA’s investor sentiment survey ranks Nigeria behind Kenya, South Africa and Egypt for private capital attractiveness
The need for careful partner and sector selection
Importance of growing domestic capital pools

Mustapha-Maduakor summed up Nigeria’s outlook as “cautious optimism,” reflecting the balanced perspective of investors watching the country’s economic trajectory.

Full credit to the original publisher: Business Day