What do Nigeria's FX reforms mean for startups?

Jun 26, 2023|Nnamdi Ifechi-fred

Key questions this article answers:

  1. Nigerian startups typically receive investment in foreign currency (read: USD). How will the new FX reforms affect them?

  2. Startups that have raised investment have a reporting obligation to their investors. How will they approach this function under the new FX regime?


Vladimir Lenin, the first Premier of the Soviet Union, has a timeless quote that goes thus, “There are decades where nothing happens and weeks where decades happen.”

I believe that decades have happened in the last few weeks under President Bola Ahmed Tinubu (BAT). Since taking office and keeping his word to “hit the ground running,” BAT has made bold moves; first, we witnessed the petrol subsidy’s abrupt removal and, shortly after, the reforms to Nigeria’s foreign exchange regime.

Through the Central Bank of Nigeria (CBN), the government announced changes to the structure of the foreign exchange markets. These changes included collapsing multiple windows into the Investors & Exporters (I&E) and allowing market determination of exchange rates between buyers and sellers. As a result, we saw a 22% fall in the naira’s value in one day.

In Stears’ usual fashion, we have kept our finger on the pulse and analysed how it would affect stakeholders, from foreign investors to Fast Moving Consumer Goods (FMCG) companies and even cross-border fintech. Today we look at how this policy affects startups more broadly and what this means for Nigeria’s thriving startup ecosystem.

First, we look at why it matters for startups.

Policy-induced silver lining

US investors have historically dominated startup funding in Africa. As the table below shows, these investors have participated in one of every three deals

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