A report by Startups Graveyards has identified funding shortages as the primary cause of African startups’ shutdowns in 2024, the same as in 2023.
It, however, noted that a new trend emerged in 2024 with failed expansions into new product lines by startups leading to a lack of product-market fit and eventual discontinuation.
“In 2024, lack of funding still remained a major factor; however, a new problem emerged.
“Some startups expanded beyond their original product offerings to offer novel services, as seen with JumiaFood and BuyCoins Pro. These services were discontinued due to a lack of product-market fit, with the startups announcing a pivot to focus on their core services”. the report stated.
The shutdowns according to the report, 18 startups shut down in Africa in 2023. The figure, however reduced in 2024 as 11 shutdowns were recorded.
Out of the 11 startups that shut down, hibernated or entered administration in 2024, the report shows that six of them were Nigerian startups.
These include: ThePeer (Nigeria), HerRyde, Chopnownow, Cova, BuyCoinsPro, Quizac, GroIntelligence, CopiaGlobal (Kenya), RejaReja (Kenya) iProcure (Kenya) and LetsChat (multiple countries.
Aside from the funding challenge, the report identifies regulatory and structural challenges as other obstacles to startup success in Nigeria.
It noted that Nigeria’s startup ecosystem faces unique hurdles, including unreliable power supply and sudden regulatory changes.
A 2018 report found that 24% of fintech startups cited an unfavorable regulatory environment as a major obstacle.
It added that some startups in the region have changed their business models and developed innovations to suit the current regulatory policies, which has also hindered potential international investment
“Notable cases, such as the Central Bank of Nigeria’s introduction of the cybersecurity levy and Electronic Money Levy Transfer ,EMTL, as government-mandated fees for all electronic transfers, visibly affected fintech startups that gained traction for free mobile money transactions”, the report stated.
Citing Crunchbase data, the report noted that about 1,200 startups globally have achieved unicorn status (valued at over $1 billion) as of 2024.
However, only nine of these are from Africa. The report attributes this to insufficient capital for scaling and an underdeveloped venture capital ,VC, ecosystem concentrated in a few key markets : Nigeria, Kenya, South Africa, and Egypt.
It added that African startups receive significantly less funding than their counterparts in developed economies, partly because many VCs apply Silicon Valley business models without adapting to Africa’s unique challenges.
While critics argue that investors should better understand the African market, Startup Graveyard noted that startups also need to demonstrate profitability to attract more funding
Italian Investors Will Prefer Kaduna To Abuja, Ambassador Tells Deputy Governor
Italian Ambassador to Nigeria, Lacopo Foti, has expressed his country’s readiness to support Kaduna State Government’s investment drive, by encouraging Italian companies to invest in the State.
Foti made the pledge during a courtesy visit to the Deputy Governor, Dr. Hadiza Balarabe as t the Sir Kashim Ibrahim House, Kaduna on Saturday.
The Ambassador further encouraged state government to approach the Italian Embassy for support in facilitating investments.
“We have come to introduce ourselves, learn about the Government’s plans, and see if there are investments which you want the Italian Embassy to facilitate.
“If there are private investments you desire in Kaduna, especially in machinery or manufacturing, or if you have plans for the next few years, let us know. If you’re interested in agricultural machinery companies like tractor plants, we can make contact with them”, he said.
According to him, Italian investors would find Kaduna’s climate “a bit better than Abuja’s” and its people friendly.
“This is my first time in Kaduna, and I hope to return next month.We have Italians living here; this visit is an opportunity to meet them and see how we can help them and the State Government”, he added.
In response, the Deputy Governor acknowledged the long history between Italy and Nigeria, and expressed interest in establishing strong economic relations.
Balarabe directed the Kaduna Investment Promotion Agency to prepare a proposal for the Italian Embassy, aiming to kick-start substantial conversations between the state and Italy.
She said, “We have advantages in agriculture, mining, tourism, and human capital. Italy excels in manufacturing, technology, education, and renewable energy. I hope we can establish collaboration in these areas.
“We look forward to engaging with the Ambassador further, hoping that this won’t be your last visit to Kaduna”.
The Italian Embassy’s willingness to support Kaduna State’s investment drive comes as a welcome development for the state, which has been working to attract investments to boost its economy.
Kaduna State has been making efforts to attract investments, having already secured $4.3bn worth of investments through KADIPA since its establishment in 2015.
The state’s Deputy Governor expressed optimism that the visit would mark the beginning of a fruitful partnership between Kaduna State and Italy.
“We are excited about the potential for collaboration between our state and Italy. We look forward to working with the Italian Embassy to explore areas of mutual interest and benefit”, she said.
