After nearly a decade of promising to revolutionize small business lending in Africa, Lidya, the Nigerian digital lender co-founded by former Jumia executives Tunde Kehinde and Ercin Eksin, has officially shut down following months of financial distress, leadership exits, and mounting customer complaints.
The fintech, which had raised over $16.45 million in funding and expanded its operations into Europe, now stands as another cautionary tale in the turbulent landscape of African fintech.
“Lidya’s shutdown underscores a recurring challenge in emerging-market fintech, the difficulty of scaling digital lending sustainably,” wrote Akeem Mustapha, a data analyst, on LinkedIn.
About Lidya’s Journey
Founded in 2016, Lidya positioned itself as a solution to one of Africa’s most pressing challenges, access to credit for small and medium-sized enterprises (SMEs).
The startup offered quick, collateral-free loans through a digital platform, targeting entrepreneurs underserved by traditional banks.
Lidya quickly gained traction and global attention, expanding beyond Nigeria into Portugal, Poland, and the Czech Republic, signifying its ambition to become a cross-continental lending powerhouse.
Its model was built on the promise of leveraging data analytics and technology to evaluate borrowers’ creditworthiness, processing thousands of loan requests for small businesses.
The company’s funding journey included notable rounds from international investors, reflecting growing global interest in African fintech innovation.
However, despite its early momentum, the company’s operational and financial struggles began to unravel in recent years, ultimately leading to a full-scale shutdown in 2025.
Reasons for Lidya’s Closure: What We Know
While Lidya’s leadership has yet to release an official statement, multiple reports and online commentary suggest a mix of liquidity issues, poor governance, and internal turmoil contributed to the company’s collapse.
Customers had long complained of frozen funds and failed transactions, showing deeper financial instability.
According to Onofiok K., an expert who commented on the issue, Lidya’s downfall was rooted in mismanagement and the lack of a solid repayment structure.
“A lending company rarely fails unless there’s no solid repayment strategy in place,” he said. “Raising up to $16 million should have come with a clear structure for sustainability. Unfortunately, this is one of the recurring problems with many startups, mismanagement and poor accountability.”
Some analysts have also pointed to rapid, unsustainable expansion as a key factor. As Mustapha noted, scaling digital lending across multiple markets without strong credit risk models or disciplined capital allocation exposes companies to significant liquidity and governance risks.
Experts’ Concerns on the Broader Fintech Landscape
Industry observers say Lidya’s collapse reflects a larger pattern in Africa’s fintech scene, where early success stories are increasingly marred by governance failures and hasty expansion.
Lawrence Tega Iniemogha, Managing Consultant at MacHarrison, linked Lidya’s fate to a growing list of struggling startups like Okra, emphasizing weak corporate governance as the underlying issue.
“From my experience, the quality of the corporate governance in place must be so watertight, otherwise, it doesn’t stand the litmus test of time,” Iniemogha wrote. “Even the Chair and CEOs must bow to policies and shared values.”
Meanwhile, Dr. Shola Ogunniyi, a technology and energy expert, highlighted a deeper socioeconomic dimension to the crisis, noting that loan defaults are often driven by borrowers’ financial realities, not just institutional missteps.
“If I borrow to pay my children’s school fees or feed my family, it’s obvious I will need money in a few months to cater for the same responsibility,” he said. “The cycle of inability to repay goes on and on.”
Why It Matters
Lidya’s shutdown sends ripples across Africa’s booming fintech and venture capital ecosystem, which has attracted over $2.3 billion in startup funding in 2023 alone, according to Partech Africa.
The collapse underscores the growing tension between growth and sustainability, particularly in lending-focused fintechs where repayment risks are high and regulatory oversight remains limited.
As Mustapha observed, “This is a critical moment for founders and investors to re-evaluate growth strategies in Africa’s digital finance sector. Sustainable innovation must balance speed with resilience.”
For investors, Lidya’s fall is a sobering reminder that capital injection doesn’t guarantee success, and for Africa’s fintech community, it poses urgent questions about trust, governance, and financial discipline in a sector long celebrated as the future of inclusive finance.
Talking Point
Lidya’s shutdown marks a sobering reflection of both the promise and pitfalls of Africa’s fintech revolution. The company’s rise and fall encapsulate how rapid scaling, investor optimism, and insufficient governance often collide in emerging markets where regulatory frameworks are still evolving.
While Lidya successfully identified a critical market gap, SME access to credit, it appears to have overextended without building the structural resilience required to sustain growth.
The contrasting expert opinions reveal a systemic issue: founders chase expansion and visibility, while investors prioritize traction over due diligence. The result is a cycle of mismanagement, eroding investor confidence and undermining the credibility of Africa’s startup ecosystem.
Lidya’s collapse, therefore, is not merely a company failure but a cautionary tale urging a recalibration of Africa’s fintech growth model, one that values sustainable innovation and ethical governance as much as capital and speed.
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