Digital-lending startup Lidya has officially ceased operations in Nigeria, bringing an end to nearly a decade of activity in the small and medium-sized enterprise (SME) credit space despite raising about US$16.45 million from investors.
Founded in 2016 by former Jumia executives, the company built its model around collateral-free, technology-driven lending for small businesses. Over the years, Lidya claimed to have reviewed more than US$50 billion in credit applications and disbursed over US$150 million to 32,000 businesses.
Between 2017 and 2021, the startup raised several funding rounds, including a seed round led by Accion Venture Lab, a US$6.9 million Series A in 2018, and a US$8.3 million pre-Series B in 2021. The funding enabled expansion into Poland and the Czech Republic, though the company later refocused on Nigeria by 2023.
In a customer notice, Lidya cited “severe financial distress” as the reason for its shutdown, stating it could no longer continue operations or settle claims. Reports of frozen funds, failed transactions, and delayed repayments had already raised concerns among users, particularly around the company’s recovery product, Lidya Collect. Leadership exits, including those of CEO Tunde Kehinde and CTO Cristiano Machado in late 2024, further signalled operational strain.
Industry analysts point to mounting credit risks, tightening global funding conditions, and unsustainable growth targets as major contributors to the collapse.
The closure leaves Nigerian SMEs uncertain about outstanding balances and access to funds, while investors face another reminder of the volatility in frontier-market fintech. The shutdown is also expected to draw increased regulatory attention from the Central Bank of Nigeria, particularly regarding client fund protection and crisis management in the lending sector.
Lidya’s exit highlights a growing concern for Nigeria’s digital-lending ecosystem: strong investor backing and early growth are not enough to guarantee resilience in a high-risk environment. For fintech players, the lesson is clear: long-term sustainability requires not just innovation, but also disciplined credit management and robust financial safeguards.
