Nigerian Tech Startups Receive $672 Million Boost With New Fund

By Jonathan Ntege Lubwama

  • Nigeria launched a $672M fund to support tech startups after three U.S. banks collapsed
  • The DCEP program reduces Nigeria’s reliance on US funding and helps cushion the impact of the banking crisis on startups

Nigeria has launched a $672 million fund to support its tech startups following the collapse of three U.S. banks that had been providing funding to this part of the African business sector. The banks, Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank, had been instrumental in supporting tech-focused venture capitalism on the continent, and their collapse has been a significant blow to the African startup ecosystem. The Digital and Creative Enterprises Programme (DCEP) was launched on less than a month ago, with contributions of $170 million from the African Development Bank, $116 million from the Agence Francaise de Development, $70 million from the Islamic Development Bank, $271 million from Nigeria’s private sector, and $45 million from the government through the Bank of Industry. 

Why This Matters: The collapse of U.S. banks such as Silicon Valley Bank, Silvergate Bank, and Signature Bank has had a negative impact on many startups across Africa, including fin-tech heavyweight Chipper Cash. With reduced cash flow, more than 10,000 startups, including those associated with Y-Combinator, have struggled to stay afloat. It is not just the banks, the collapse of FTX, a major backer of African Web III startups including Nigeria’s Nestcoin, sent shockwaves across the continent. 

The goal of this new fund, DCEP, is to reduce Nigeria’s reliance on startup funding from the U.S. and to mitigate the impact of the crisis on the local business ecosystem. Nigeria’s government wants to curb the “when the USA sneezes, Nigeria catches a cold” adage. Also, it wants to get ahead of the growth contractions in Nigeria’s tech industry, which is the most funded on the continent, having received $976 million in funding in 2022, accounting for nearly 30% of the $3 billion the continent received.

What’s Next: DCEP’s $672 million fund will support tech founders aged 15 to 35. It is expected to attract investments in more than 200 startups in Nigeria and non-financial services to 450 small and medium digital technology firms.

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