After two tough years, Nigerian startups could get macro relief

Nigeria’s economy is expected to grow by 4.4% in 2026, according to the International Monetary Fund (IMF). 

If achieved, it would mark the country’s fastest annual growth rate in over a decade (outside the 5% growth recorded in Q2, 2021) and reinforce optimism that Africa’s most populous country may be turning a corner.

Startups do not operate in isolation from macroeconomic conditions, which shape investor appetite, consumer spending, and how much risk capital is willing to tolerate. 

A stronger growth outlook signals the possibility of a more supportive environment where capital flows more freely, and customers have more money to spend.

The past two years have been tough on startups and other businesses operating in Nigeria.

Following the removal of fuel subsidy and the adoption of a market-determined foreign exchange regime in 2023, the economy slid into a painful adjustment phase. Inflation surged past 30%, the Naira weakened from about ₦450/$ to over ₦1,000/$, and whatever was left of the economic progress of the 2000s was wiped out.

Economic growth slowed to 3.46% in Q4, 2023, from 3.52% in Q4, 2022. Businesses shut down, losses mounted, and investors retreated as macroeconomic risks deepened.

For startups, fewer investors were willing to take risks, and shrinking customer wallets affected revenues.

In 2025, Nigeria’s economy showed clear signs of recovery, with GDP growth up at 3.98% in Q3, 2025. Inflation eased, and the exchange rate stabilised.

In 2026, these gains are expected to present a pivotal inflection point with enormous significance for the country’s future, according to the Nigerian Economic Summit Group (NESG), which projects a 5.5% GDP growth for the year.

“At stake is the very progress that has been painstakingly achieved through rigorous reforms,” the group said in its outlook.

For startups, this means “increased investor confidence to make more investments, and improved purchasing power for customers as the economy grows, which should lead to better revenues for businesses,” said Babatunde Akin Moses, chief executive officer of Sycamore, a digital finance provider.

Prof. Adeola Adenikinju, president of the Nigerian Economic Society, noted that growth means demand, income, and returns.

“It is positive for investors, because it means that wealth is being created. It means that income will be generated. It means that demand will be positive. And therefore, there will be some returns on investments,” he said.  

This economic growth would not happen in isolation. The economic expansion of the 2000s was driven largely by services, particularly telecoms, unlocking foreign direct investment and broad-based wealth creation.

PricewaterhouseCoopers (PwC), a global management consulting company, projects that growth in 2026 will be anchored in information and communications technology, finance and insurance, and real estate, driven by digital adoption, financial deepening, and urban demand.

According to Abiodun Keripe, managing director at Afrinvest Consulting, a research and business advisory firm, startups have a crucial economic role to play in 2026.

“Startups have attracted a lot of investor dollars into the economy. The startup ecosystem would continue to support growth, building capacity, increasingly attracting more funding, and employing more Nigerians,” he said.  

The math is simple: a more stable Naira reduces the risk of capital erosion for foreign investors. Lower inflation boosts disposable income, expanding the addressable market for startups. Predictable conditions allow founders to plan, hire, and scale without constantly firefighting macro shocks.

Despite the optimism, Adenikinju cautions that a 4 to 5% growth rate is not enough to significantly reduce unemployment or poverty. The IMF expects Nigeria’s growth to slow to 4.1% in 2027.

“For an economy like Nigeria’s, economists generally agree that growth needs to be 7% or higher to make a real dent,” he said.

While the IMF is optimistic about 2026, there are risks. External shocks, especially the changing geopolitical landscape, and internal shocks, such as election-induced uncertainty, could derail projections.  

“A projection is a projection,” Adenikinju warned. “Nigeria is an open economy and highly exposed to international shocks.”

For startups, however, relative stability means that VCs, both local and foreign, can raise more funds from LPs and deploy into startups without the drag of extreme volatility.

If the IMF’s 2026 outlook holds, Nigerian startups may finally be able to move from survival back to growth.