Nigeria Drops to Fourth in Africa Startup Funding as LCCI Warns of Risks

Nigeria Drops to Fourth in Africa Startup Funding as LCCI Warns of Risks

Speaking at the 12th ICTEL Expo 2026 in Lagos, Kupoluyi stated that while the digital economy is the fastest-growing driver of Nigeria’s non-oil sector, declining investor confidence and policy uncertainty are hindering its potential. He noted that the Information and Communication Technology (ICT) sector’s contribution to Nigeria’s real Gross Domestic Product (GDP) rose to 10.07 per cent in 2025, up from 9.79 per cent in 2024, with telecommunications accounting for 7.29 percentage points of that figure.

Digital Infrastructure vs. Economic Value

Despite the drop in funding rankings, Nigeria has seen growth in connectivity. As of April 2026, the country recorded 188 million mobile connections, 154.7 million active internet subscribers, and a broadband penetration rate of 55.67 per cent, an increase from 48.81 per cent the previous year. However, Kupoluyi argued that these connectivity gains are outpacing our ability to convert access into economic value, emphasizing that infrastructure alone cannot create globally competitive firms without policy certainty and access to capital.

To improve the investment climate, the LCCI President urged the government to:

• Implement the Nigeria Startup Act.
• Treat broadband infrastructure as a strategic public utility.
• Accelerate last-mile connectivity.
• Increase regulatory coordination to reduce overlapping regulations, multiple taxes, and inconsistent foreign exchange access for technology payments.

Continental Funding Trends in 2026

The broader African startup ecosystem raised approximately $1.4 billion in the first half of 2026, a figure broadly matching the first half of 2025. However, data from TechCabal Insights indicates a significant shift toward risk aversion. The number of deals fell 42% year-on-year, with venture capital increasingly concentrating on a small group of mature businesses. The 30 most-funded startups absorbed 84% of all disclosed capital raised in the first half of the year.

Investors are writing fewer but larger cheques, with mid-sized rounds between $10 million and $99 million accounting for 66% of total funding. Conversely, early-stage rounds below $500,000 represented only 19% of deals in H1 2026, down from 52% in the first half of 2021. Additionally, the number of ventures raising more than $100,000 fell to 190 startups, the lowest tally since at least 2021.

Sector Dominance and Geographic Shifts

Investment remains heavily concentrated in a few high-growth sectors. According to a report by Africa: The Big Deal, fintech and logistics & transport combined for 76% of the $1.36 billion raised in H1 2026. Fintech remained the top destination with $556 million (41% of total funding), while Logistics & Transport captured 35%, far exceeding its 2024 annual peak of 13%.

While the “Big Four”—Egypt, Nigeria, Kenya, and South Africa—still accounted for 58% of all startup funding in the first six months of 2026, their combined share is shrinking. New markets are emerging as investors seek untapped opportunities:

• Tanzania, Côte d’Ivoire, and Morocco: Each attracted more than $25 million in startup funding.
• Morocco, Tanzania, and Ghana: Each recorded at least 10 startups raising $100,000 or more.

Egypt became the top funding destination in H1 2026 with $327 million, though this was largely driven by a single mega-round from EV company Spiro. In contrast, Nigeria led the continent in pure equity investment with $214 million, outpacing Egypt’s $183 million. Nigeria also recorded the highest number of startups securing at least $100,000, suggesting capital in Nigeria is more widely distributed across companies than in other major hubs.