Lidya’s Collapse Highlights Challenges Facing Nigeria’s Fintech Lending Sector

In a surprising turn of events, Nigerian digital lending startup Lidya has shut down its operations, marking a significant setback for the country’s fintech ecosystem. The closure comes despite the company having raised a total of $16.45 million in funding from international investors, including major venture capital firms that once viewed Lidya as a promising force in Africa’s digital finance revolution.

Founded in 2016 by Tunde Kehinde and Ercin Eksin, Lidya positioned itself as a data-driven platform designed to provide quick and collateral to small and medium-sized enterprises (SMEs). The company sought to bridge Nigeria’s financing gap by using technology to assess creditworthiness based on alternative data such as transaction history and business performance. Over the years, Lidya expanded its operations to other markets, including Poland and the Czech Republic, signaling its ambitions to become a global digital lender.

At its peak, the startup claimed to have processed over 100,000 loan application and disbursed millions of dollars in credit to businesses across various sectors. Its innovative model and cross-border expansion attracted substantial investor confidence, leading to multiple funding rounds — including a $6.9 million Series A in 2018 and an additional $8.3 million round in 2021.

However, industry insiders suggest that the company struggled with loan recovery challenging,high default rates, and an increasingly competitve lending landscape. The macroeconomic instability in Nigeria, coupled with currency devaluation and tighter regulatory oversight in the fintech space, reportedly compounded Lidya’s financial difficulties. Attempts to restructure operations and pivot toward new markets failed to yield sustainable results.

The shutdown underscores the growing risks in Africa’s digital lending sector, where rapid growth has often outpaced financial discipline and risk management. While Lidya’s closure represents a cautionary tale, it also highlights the need for more sustainable business models in fintech — balancing innovation with sound credit governance.

As the Nigerian startup ecosystem continues to evolve, Lidya’s story serves as a reminder that even well-funded ventures are not immune to the harsh realities of operating in emerging markets.