Emmanuel Ukudolo l Thursday, October 23, 2025
LAGOS, Nigeria – A wave of private equity (PE) and venture capital (VC) investment is fundamentally reshaping Nigeria’s startup landscape, with private capital transactions soaring to US$3 billion between 2020 and 2024, according to a new report from the Rome Business School Nigeria.
This flow of funds, which has seen Nigeria consistently attract over $1 billion in startup funding annually, positions the nation as the dominant private capital destination in West Africa, accounting for 66% of the region’s deal volume and 52% of its deal value.
The surge is driven by high-profile deals like Moniepoint’s $110 million and Moove Africa’s $100 million funding rounds. In 2024, Nigeria led Africa in VC deals, attracting approximately $1.18 billion in startup funding out of the continent’s total $3.6 billion.
Furthermore, private equity investments in the country surged by 322% in the first quarter of 2024.
Tech Sector Takes the Lion’s Share
The technology sector has been the biggest beneficiary, capturing 82% of all VC activity, amounting to US$2.7 billion between 2020 and 2024. The fintech sub-sector is particularly enticing to investors, accounting for approximately 60% of all VC transactions, with major players including Flutterwave, Opay, and Moniepoint.
The report notes that beyond financial capital, PE and VC firms are providing essential resources like strategic mentoring, operational advice, and market access, thereby filling a crucial funding gap and enabling enterprises to scale. The average private capital deal size between 2020 and 2024 was US$9.7 million.
The growing market and demographic dynamics, coupled with the digital revolution, have led to a pivot in investment focus towards non-oil sectors.
Evidence of deepening domestic interest was also highlighted, with Nigerian pension funds spending over ₦22 trillion (about $13 billion) on private equity investments in October 2024.
Headwinds Persist Despite Growth
However, the report cautions that the private capital landscape continues to be challenged by significant structural and economic constraints. Foreign exchange volatility, regulatory uncertainty, and high costs of business operations remain major deterrents for international investors who seek stability and predictability.
The corporate tax rate of 30%, one of the highest in Africa, coupled with a Value Added Tax (VAT) of 7.5%, has increased running costs.
Furthermore, infrastructural deficits, particularly in power—with Nigeria supplying just around 4,500 megawatts against a need of nearly 30,000 megawatts—force businesses to rely on costly alternatives. The cost of energy alone can account for approximately 40% of business spending in several industries.
These challenges contributed to a 26.7% decline in foreign direct investment inflows in 2023. Even amid 2024’s strong performance in deal volume, the report notes a 22% year-on-year decline in deal value and a 28% drop in deal volume compared to 2023, underscoring the impact of economic instability.
Future Outlook and Digital Foundation
Despite the hurdles, the future outlook for private equity and venture capital is one of sustained transformative growth. The government’s commitment to economic diversification, the continuing bank recapitalization initiatives, and the increasing role of pension funds are creating new opportunities.
“Technology is likely the most transformational force affecting the future of PE and VC in Nigeria,” the report stated. With internet usage hitting over 45% and a youth-dominated population—over 60% are below the age of 25—the digital infrastructure supports the rapid growth of tech firms across banking, healthtech, and transportation.
The report concludes that by providing substantial capital and strategic guidance, PE and VC are making enormous contributions to job creation and economic diversity, stating that every $1 million spent in PE and VC-backed companies leads to the creation of about 40 direct and secondary jobs.
