Private equity firms in Nigeria are slowing dealmaking, with some freezing investment as they lobby the government to soften the impact of its tripling of a capital-gains tax, people familiar with the situation said.
Members of Nigeria’s Private Equity and Venture Capital Association, or Pevca, met authorities last month and are seeking further engagement after the 30% tax came into effect at the start of the year, the people said, asking not to be identified so as not to complicate the talks. One large fund has halted new investments, they said, asking that it not be identified.
Pevca declined to comment.
The industry, which saw $3 billion in deals concluded between 2020 and 2024, earns money by investing in private companies and then selling them at a profit. Those deals, the people said, were predicated on paying a 10% tax when exiting investments and the new rate will deter companies from transactions in Africa’s most populous country.
“There is now going to be a lot of planning to strategically exit from Nigeria-based platforms,” said Omobola Adu, an economist at CSL Stockbrokers in Lagos.
Pevca’s members include Actis LLP, Norrsken22 and African Capital Alliance.
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The imposition of the tax, which also applies to holdings in listed companies, has roiled Nigerian markets in recent months, with the country’s stock market tanking before the authorities softened some of the legislation.
Private equity is the sector that could be the hardest hit, the people said. Locally, these firms primarily invest in dollars and are also set to pay tax on some loss-making investments because the duty is levied on the value measured in naira, a currency that has lost two-thirds of its value over the last three years, the people said.
Nigeria has made some exemptions, Taiwo Oyedele, the chair of Nigeria’s tax-reform committee, said when contacted by Bloomberg.
Those new tax laws provide for exemption on gains in companies certified as startups in line with the Nigeria Startup Act as long as they hold the stock investment in Nigeria for at least two years. To qualify for certification, the startups need to be at least one-third owned by Nigerians, less than 10 years old and be focused on digital technology.
Limited Protection
Exemptions are also made for sales of companies or stakes worth less than 150 million naira ($112,000) and if the money is reinvested in another Nigerian company.
Those provisions would only protect a limited number of investments in small companies and overall, the tax changes will deter risk taking, the people said, adding that they want the exemptions to apply to a broader swath of investments.
“The fiscal architecture is not peripheral — it is central to capital recycling, successor-fund formation, exit feasibility, and Nigeria’s competitiveness relative to peer markets,” Pevca said in its 2026 outlook.
The government should ensure that the capital-gains tax supports “rather than inadvertently constraints — the inflow of long-term private investment essential to enterprise growth and job creation,” the organization said.
