Good People, share with us what you think is the #1 challenge in the Nigerian entrepreneurial startup ecosystem right now? [Note: I do not mean “SME” or “small business”, I mean “startup”, and typically the bulk of the funding for this has been priced in US dollars in Nigeria]

I will begin by listing Currency. Why is that the case? Let me explain with math.

April 2023: Startup A reports N1,500,000,000 for Feb; log that as $3 million revenue. (N500/$ exchange rate)

Dec 2024: Startup A reports N3,000,000,000 for Nov; log that as $2 million. (N1,500/$ exchange rate)

So, even though this company has grown revenue by 2X, but at a dollarized pricing, its revenue is down by 50%. And using revenue multiples in calculating valuation, this company has to be marked down. In other words, if the multiple is 10 at $3m revenue, you must still use the same factor when it is $2m. And just like that,  you see valuation move from $30m to $20m despite the revenue growth!

Also, because this currency mess is beyond the startups, they cannot control the trajectory considering the fact that everything is priced in USD. As that happens, foreign investors who fund these startups stay away, and since rich people in Nigeria do not invest in startups, the system fails. You may ask: why not price in Naira? The problem is that most great startups in Nigeria have since japa’d to Delaware USA, and not legally Nigerians! Solution to this? I have shared here.

What other challenges do you see there?

What Nigeria Can Do To Save Naira Right Now

Tajudeen Abbas, Speaker of Nigeria’s House of Representatives, has withdrawn a controversial bill that sought to make voting compulsory for all eligible citizens, a move that marks a dramatic climbdown in the face of widespread public criticism.

The bill, co-sponsored by Abbas and Daniel Asama Ago, the lawmaker representing Bassa/Jos North federal constituency in Plateau State, had already passed a second reading in the green chamber on May 15.

The proposed legislation aimed to amend the Electoral Act 2022 by criminalizing voter apathy and compelling participation through fines and jail time. Specifically, it proposed a six-month jail sentence or a fine of N100,000 for eligible voters who failed to cast their ballots during elections.

According to Ago, the legislation was intended to address Nigeria’s chronic voter apathy, citing the dismal turnout figures recorded in recent elections. He argued that compulsory voting would not only enhance civic engagement and democratic representation but also curb vote-buying by increasing the voter pool. Ago’s position, he said, was based on the principle that democracy is weakened when only a fraction of the population decides the fate of the entire nation.

However, those lofty intentions met a wall of public resistance, with critics arguing that the bill missed the point entirely.

Why the Bill Collapsed

The core of the backlash, which ultimately forced the withdrawal of the bill, was rooted not in the rejection of civic responsibility, but in widespread frustration with the state of Nigeria’s electoral process. Many Nigerians, including civil society organizations (CSOs), lawyers, and political commentators, pointed out that voter apathy is not the disease — it is a symptom of a deeper institutional crisis.

They note that in a country where rigging, ballot snatching, voter intimidation, falsification of results, and widespread irregularities routinely mar elections, compelling citizens to vote under threat of punishment seemed not just misplaced, but absurd.

The Nigerian Bar Association (NBA) was among the most vocal opponents of the bill, calling it “regressive” and in direct conflict with constitutional protections.

“The NBA finds it unacceptable that a democratic government would seek to criminalize non-participation in an electoral process marred by voter apathy, mistrust, insecurity, and systemic failures. Instead of fixing the conditions that discourage voter turnout, such as electoral violence, vote buying, among others, the state is attempting to force participation through punitive legislation,” the association said, warning that coercion undermines the principles of a free and fair democratic process.

Civil society groups and rights activists similarly noted that instead of criminalizing abstention, the National Assembly should focus its energy on electoral reforms that guarantee that every vote counts. These groups cited the 2023 general elections, where over 93 million people were registered to vote, but less than 30% actually turned out, as a glaring example of the credibility gap plaguing Nigeria’s democracy.

Many of those who stayed away in 2023 did so out of despair. Despite technological improvements like the Bimodal Voter Accreditation System (BVAS) and promises of real-time result transmission, the elections were still widely criticized for lacking transparency. The Independent National Electoral Commission (INEC) failed to upload results as promised, and courts later decided several outcomes, further damaging public trust in the process.

In that context, it is believed that forcing people to vote felt not like empowerment, but like punishment.

Speaker Abbas Walks Back

In a statement issued Monday by his spokesperson Musa Krishi, Speaker Abbas said the bill was being withdrawn after “extensive consultations with a broad spectrum of stakeholders.” He said the original intention of the bill was noble — to bolster democracy by encouraging mass participation — and drew examples from countries like Australia, Belgium, and Brazil, where compulsory voting laws have pushed turnout rates above 90%.

“Nevertheless, the Speaker acknowledges that lawmaking is ultimately about the people it serves and that any reform must respect individual freedoms and public sentiment,” the statement read.

Abbas added that instead of forcing participation, the National Assembly would now explore “positive incentives and innovative approaches” to make voting more appealing and accessible. The decision to pull the bill, he said, would open space for “further dialogue” on how to encourage voluntary civic participation in a way that aligns with Nigeria’s democratic values.

A System Many Believe is Already Rigged

Underlying this entire debate is the backdrop of the notion that in Nigeria, elections are not always won by the people’s vote.

It’s a sentiment echoed across the country, in public discourse, social media commentary, and community forums — that elections often reflect the will of those who can manipulate the system, not the will of the people.

Even the introduction of the Electoral Act 2022, touted as a major reform, has failed to guarantee credible outcomes. The use of technology, though promising in theory, has been undermined by human interference and institutional failures. Political thuggery, vote suppression, and the widespread belief that the courts, rather than voters, decide the outcome of elections have all contributed to an erosion of faith.

Analysts say the National Assembly should now turn its attention to enforcing existing electoral laws, strengthening the independence of INEC, sanitizing political financing, and punishing electoral offenders.

Foreign portfolio investment (FPI) into Nigeria’s equities market took a dramatic tumble in April 2025, plummeting by 92.39% to N26.64 billion from the previous month’s N349.97 billion, according to newly released data from the Nigerian Exchange (NGX).

The steep decline marks a reversal from March when foreign activity surged due to a handful of large block trades. In April, the absence of such high-volume deals, coupled with rising global uncertainty and geopolitical risks, erased most of the gains from the prior month.

Total foreign transactions nosedived by 90.99%, falling from N699.89 billion in March to just N63.07 billion in April. Of this amount, foreign inflows accounted for N26.64 billion, while outflows stood higher at N36.43 billion—resulting in a net capital outflow of N9.79 billion.

The report revealed that foreign participation in Nigeria’s equities market shrank to a mere 13.08% in April, down sharply from 62.74% in March. Analysts say this suggests a swift change in sentiment, as global investors retreat from frontier markets amid heightened volatility, especially in light of recent U.S. policy moves that have disrupted international capital flows.

Market Activity Slashed in Half

Beyond the foreign retreat, the overall transaction value on the NGX also saw a sharp contraction, dropping by 56.79% to N482.04 billion in April from N1.115 trillion the previous month. However, on a year-on-year basis, the market still posted a 39.22% growth compared to N346.23 billion in April 2024, supported by improved liquidity conditions early in the year.

Year-to-date (YTD), total transactions on the NGX have reached N2.714 trillion, a 43.3% increase from N1.894 trillion in the same period last year. While this reflects a solid start to the year, the April downturn serves as a reminder of the fragility of capital flows into the Nigerian market.

Domestic Investors Remain the Backbone

In the face of declining foreign interest, domestic investors continued to play a stabilizing role, accounting for N418.97 billion or 86.92% of total trade in April. This was slightly up from N415.62 billion in March. Within this segment, institutional investors—comprising pension funds, asset managers, and corporations—boosted their activity by 8.77%, rising from N218.50 billion to N237.66 billion.

Meanwhile, retail investor participation dipped by 8.02%, declining from N197.12 billion to N181.31 billion. Institutional investors outperformed retail by 14% in April, continuing a trend that has defined trading so far this year. As of April 2025, institutional trades totaled N976.66 billion, compared to N860.29 billion from retail investors.

Despite March’s uptick, foreign investors are still net sellers year-to-date. Between January and April, foreign inflows totaled N420.32 billion, while outflows reached N456.80 billion, leaving a net capital outflow of N36.48 billion.

Year-to-date, foreign investors accounted for just 32.32% of market activity, while domestic players took the larger share at 67.68%. While this represents a shift from 2024, when foreign trades made up only 13.77% of the market, sustainability remains in question given the renewed volatility.

A review of trading over the last 18 years shows consistent growth in domestic transactions, rising from N3.556 trillion in 2007 to N4.735 trillion in 2024—an increase of 33.15%. Foreign transactions, by contrast, grew by 38.31%, from N616 billion to N852 billion in the same period.

So far in 2025, domestic trades have reached N1.837 trillion, nearly double the N877.12 billion recorded in foreign trades. The numbers reinforce a longstanding trend: while foreign capital brings liquidity and momentary surges, the Nigerian equity market leans heavily on domestic institutional support.

Behind the Investors’ Retreat

April’s slump comes amid global financial jitters triggered by a new wave of trade tensions. U.S. President Donald Trump announced sweeping tariffs on multiple countries, including a 14% levy on Nigerian exports. The announcement caused widespread concern in financial markets, weakening investor appetite for emerging and frontier markets.

The tariffs—which took effect in early April—have disrupted trade flows, particularly in non-oil sectors where Nigeria had begun diversifying its export base. Although oil remains dominant, sectors like agriculture, textiles, and solid minerals have come under pressure as exporters reassess their U.S.-bound strategies.

Reacting to the volatility, the Central Bank of Nigeria (CBN) intervened by injecting $200 million into the foreign exchange market to support the naira, which had come under renewed pressure. At the same time, Nigeria’s economic team convened emergency strategy sessions to assess the possible fallout from Washington’s trade policy shift.

Nigeria is expected to look at alternative export markets and explore negotiations to secure tariff exemptions for specific product lines.

Trump’s broader trade strategy included a suspension of country-specific reciprocal tariffs, replacing them with a uniform 10% baseline tariff for all imports, excluding China, until at least July 8, 2025. This was billed as a temporary measure to allow negotiations with more than 75 countries seeking adjustments to their trade terms with Washington.

The uncertainty surrounding these talks, and the potential for escalated retaliatory measures, has weighed heavily on markets like Nigeria that rely on both trade and capital flows.

However, the latest data underscores the delicate balance facing Nigeria’s equities market. While domestic investors continue to provide the bulk of support, persistent foreign capital flight could weaken market liquidity and limit access to foreign exchange buffers.

Analysts warn that unless Nigeria can deliver meaningful economic reforms—particularly around FX policy, security, and investor protections—it will be difficult to sustain the kind of foreign interest seen briefly in March.