Startup investors are increasingly optimistic about Nigeria, believing that now is the best time to invest in the country. They attribute the renewed confidence to recent government economic reforms, particularly in the foreign exchange market, which they say are positioning Nigeria as a prime destination for capital.
Since 2023, Nigeria has implemented significant policies, including the removal of the fuel subsidy and the liberalisation of the foreign exchange market. While these reforms have jacked up the cost-of-living, marked by the naira losing over 40 percent of its value and inflation rising to 24.23 percent as of March 2025, investors are beginning to see signs of a turnaround. This cautious optimism was recently echoed by the International Monetary Fund (IMF).
This investor’s optimism was the focus of conversations at the opening ceremony of the 21st Annual Africa Venture Capital Association Conference (AVCA) and VC Summit themed, ‘Bold Moves: Powering 10x in Africa,’ which started on Monday.
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Participants at Africa’s largest private capital gathering, which is focused on the continent, believe that Nigeria’s economic challenges have bottomed out, making now an opportune moment to invest. Also, the relative stability of the naira compared to the previous volatility is helping to restore investor confidence in the country.
Recently, the Central Bank of Nigeria (CBN) disclosed that the country’s gross reserves exceeded $38 billion. The balance of payments surplus reached $6.83 billion, the strongest in many years, showcasing renewed capital inflows.
According to Abi Mustapha-Maduakor, chief executive officer of AVCA, Nigeria has seen some of the strongest deal activity in the past two years despite macroeconomic and geopolitical headwinds on the continent.
She said, “But what’s very important now is that the tide is turning. We have seen stability of exchange rates for quite a sustained period. We have started seeing exit activity happening in Nigeria, and seeing investors that haven’t been in Nigeria before start investing over the past two years.
“The time is now for capital to start coming to Nigeria, and it is fortuitous that we are organising a conference at this time, where we are seeing sentiments change. We are seeing more hope about the investment landscape in Nigeria, more deal activity, and hope to see even more.”
In 2024, African startups raised $3.6 billion across 487 deals, including $1 billion in venture debt. Nigerian startups secured $417 million of that total. Despite a challenging year, with deal value down 22 percent and deal volume falling 28 percent year-over-year, AVCA described 2024 as a year of ‘reckoning,’ characterised by “cautious steps, tempered expectations, and quiet recalibration.”
As Africa’s leading startup hub in terms of the number of startups and unicorns, Nigeria is expected to play a key role in this recalibration.
“Lagos is, in fact, the heart of the African startup ecosystem,” said Kola Aina, founding partner, Ventures Platform.
Olusola Lawson, co-managing director at African Infrastructure Investment Managers, acknowledged that Nigeria has faced significant economic strain in recent years, with currency devaluation eroding investor value.
“But looking forward, I think our view is that the cycle has bottomed. And investing is all about picking the right time. I think in Nigeria, now is the right time.
“So we’re very interested in some of the opportunities that this space has to offer,” he said.
Genievieve Sangudi, partner at Alterra Capital Partners, emphasised that despite the ups and downs in the country, it is impossible to give up on Nigeria.
“It is still the giant of Africa. It is still really important to showcase all of Nigeria’s potential. So, 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.”
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Sangudi noted that the difficult economic environment has encouraged a realignment within the investment space. “You have to choose the right partners, the right sectors, and back market leaders who can endure economic cycles. And you need to plan for quick exits.”
She also highlighted the importance of growing the continent’s domestic capital pool, which can help startups build financial buffers.
In 2024, local players out-invested their foreign counterparts on the continent, with their stake accounting for 31 percent of the total investor pool, from just 19 percent a decade ago. In Nigeria, African investors accounted for 73 percent of private capital investments.
Despite the growing optimism, AVCA’s investor sentiment and outlook for 2025–2027 ranked Nigeria behind Kenya, South Africa and Egypt in terms of attractiveness for private capital. Nigeria placed fourth.
When asked to sum up Nigeria’s outlook in a few words, Mustapha-Maduakor, CEO of AVCA, stated, “Cautious optimism.”
