## The $230 Million Question: What's Really Happening in Nigerian Fintech

Nigerian fintech raised $230 million in 2025—a staggering 44% decline from 2024's $410 million haul. On the surface, the numbers tell a story of retrenchment. But dig deeper, and you'll find something more instructive: a market reckoning that separates genuine problem-solvers from rent-extractors.

The paradox is stark. Over 500 fintech companies now operate in Nigeria, yet only 27 managed to secure funding of $100,000 or more this year. In a landscape where fintech startups account for 40% of all tech ventures, just 5% convinced investors their vision was viable. Something fundamental shifted in 2025, and it wasn't just capital availability.

### When Mega Deals Vanished

The 2024 narrative was dominated by outsized cheques. Moniepoint's $110 million Series C. Moove's massive raise. These mega-rounds created an illusion of sector health while masking a harder truth: very little capital was flowing toward genuinely experimental models that might expand economic opportunity for ordinary Nigerians.

2025 stripped away the illusion. Moniepoint captured another $90 million in October—representing nearly 40% of the year's entire fintech funding. LemFi ($53 million), Kredete ($22 million), and Raenest ($11 million) followed. Then came the micro-rounds: Carrot Credit ($4.2 million), PaidHR ($1.8 million), Accrue ($1.58 million). The surviving winners. Everyone else—over 430 active fintech companies—received nothing.

### Market Correction, Not Collapse

Austin Okpagu, Nigeria Country Director at Verto, frames this retrenchment as a necessary correction. "The funding dip is much about market correction rather than a definitive decline," he explains. "2024's heavy concentration in mega deals masked a broader reality: most fintech companies were burning cash by design. The current environment is forcing that same cohort to pivot—back to revenue generation and profitability, which is now core to investor expectations."

The shift from vanity metrics to unit economics wasn't voluntary. Simultaneous pressures squeezed the sector. The Central Bank of Nigeria imposed onboarding bans, stricter KYC enforcement, and substantial monetary penalties. Inflation hit 34.8% by December 2024. Foreign exchange volatility made naira-denominated returns nearly impossible to model. Capital repatriation became harder.

Generalist venture capitalists either paused or dramatically narrowed their Nigeria exposure. "Stricter CBN and FCCPC regulations functioned as a filter, favoring institutional-grade startups over high volumes of smaller, non-compliant entrants," Okpagu notes. The regulatory squeeze worked exactly as designed—separating infrastructure-backed operators from those running on borrowed time and borrowed capital.

### The Economics Question Nobody Wants to Answer

Kristin H. Wilson, Managing Partner at Innovate Africa Fund, articulates what most are thinking but few state publicly: "Smart capital is now asking whether fintechs are solving real problems that expand the economy or simply extracting rent from existing fragility."

It's an unflinching assessment that explains the funding collapse. Nigeria hosts 500+ fintech companies, yet most peddle variations on identical products. Digital wallets. Payment apps. Lending platforms targeting the same thin slice of bankable consumers. Productive credit for manufacturers remains scarce. Cash-flow solutions for agricultural value chains are underfunded. Cost-reduction infrastructure for real business operations often goes unnoticed.

"The question shifted from 'Can we digitise existing behavior?' to 'Are we creating new economic capacity?'" Wilson argues. "There were more apps, but not demonstrably more genuine financial resilience for households, productive capacity for SMEs, or expansion of economic opportunity."

The funding numbers suggest investors agree.

### The Long-Term View

Nikolai Barnwell, founder and CEO of pawaPay, has witnessed this cycle before. "We've seen several bubbles and busts since mobile internet arrived in Africa in the early 2010s. People get excited about the continent, but their attention span is short. When immediate investor returns don't materialize, they disappear."

He describes a recurring pattern: new fund cohorts discover Africa, sell the vision, raise capital on continental promise, deploy aggressively. Reality sets in. Returns take longer. The next batch arrives with fresh enthusiasm and selective memory.

"The future potential is immense," Barnwell insists, "but we're in very early days—comparable to the US internet in the mid-1990s. The upside is years away and requires patience to hang on long enough."

### What 2026 Brings

Tomi Davies, Chief Innovation Consultant at TVCLabs, rejects framing 2025 as failure. Instead, he anticipates "recomposition"—not mere consolidation. "M&A will accelerate, particularly mid-market acquisitions that won't make global headlines but matter locally. Simultaneously, we'll see layered capital stacks: local angels, diaspora syndicates, development finance institutions, venture debt, and revenue-based instruments working in tandem."

The emerging ecosystem won't depend on single large foreign VC cheques. It will blend multiple funding sources, requiring startups to demonstrate value at every stage. "Ecosystems that thrive will be those that finance growth with multiple tools, not one cheque size."

Okpagu concurs the market evolves, not dies. "The fintech sector is sustained by M&A-led consolidation—Paystack acquiring Brass exemplifies this—allowing the ecosystem to recycle talent and assets into more efficient models."

### The Real Test Ahead

Nigerian fintech's $230 million narrative in 2025 isn't ultimately about the funding gap. It's about an industry forced to answer harder questions about genuine value creation. The 27 companies that raised capital presumably have answers. The other 473 are searching.

Wilson's question lingers. Are Nigerian fintech entities expanding economic opportunity or extracting rent from existing fragility?

The companies that answer correctly won't just survive 2026. They'll define what African fintech becomes for the next decade. Future potential remains immense, as Barnwell emphasizes. But patience alone isn't sufficient anymore. Investors now demand proof that digital wallets become economic engines.

That's the real test. Not whether Nigerian fintech can raise money, but whether it deserves to.