Nigerian digital lender Lidya has ceased operations nearly a decade after launch, citing severe financial distress and the inability to continue business. Customers were informed by email that the company had made best efforts to restructure but could no longer sustain operations. The shutdown marks a stark reversal for a startup once viewed as a bellwether for data-driven lending in emerging markets.
Background and Growth
Founded by Jumia alumni Tunde Kehinde and Ercin Eksin, Lidya set out to provide small and medium businesses with fast, collateral-free loans through a digital platform. The company positioned itself as an analytics-first lender, using alternative data to underwrite credit for underserved merchants. Over time, it experimented with business models as competition intensified and funding conditions shifted.
Funding and Prominence
Lidya raised a cumulative $16.45 million, including an $8.3 million pre-Series B round in 2021 that was intended to accelerate expansion and product development. Investors were drawn to the company’s promise of technology-enabled underwriting and a growing pipeline of SME borrowers. Those resources proved insufficient to offset operational strain and credit risk as market dynamics became more challenging.
European Expansion and Refocus
In 2020, the startup entered Poland and the Czech Republic to extend its lending playbook beyond Africa and diversify revenue. By 2023, it exited those European markets and pledged a renewed focus on Nigeria’s tech-savvy lending ecosystem. At the time, co-founder Kehinde said the country offered an ideal launchpad for data-driven solutions and localized product execution.
Product Pivot and Operational Strain
Following the strategic reset, Lidya introduced Lidya Collect, a loan recovery platform designed to improve repayment rates and streamline debt collection for businesses. The initiative sought to bolster unit economics by addressing delinquencies and automating workflows that had become increasingly costly. Despite that pivot, the product appears to have struggled to meet expectations as operational issues mounted.
Customer Impact and Frozen Funds
Reports from affected customers described frozen funds, failed transactions, and a growing backlog of manual recoveries as platform reliability deteriorated. One customer said their money was stuck and that teams were forced to chase debts without the promised automation, calling the past few months horrible. The shutdown email added that the company was unable to process funds or settle claims at this time, deepening concerns for users.
Leadership Departures and Team Disbandment
Internal turbulence preceded the closure as key executives departed and core teams were wound down. Co-founder Tunde Kehinde left in October 2024, and Chief Technology Officer Cristiano Machado exited in September 2024 amid broader restructuring. Lidya’s Portugal-based technology team reportedly disbanded between May and September 2024 as payroll obligations went unmet.
Market Context and Structural Pressures
Digital lending across frontier markets has faced rising customer acquisition costs, tighter capital, and heightened regulatory attention on repayment practices. Models reliant on rapid growth have struggled when repayment discipline weakens and refinancing windows narrow, particularly during cyclical funding slowdowns. In this environment, even well-backed lenders have found it difficult to balance scale, risk controls, and unit economics.
Communications and Stakeholder Uncertainty
The company’s email to customers emphasized that operations had ceased after attempts to restructure and sustain the business. Without the ability to process funds or settle claims, borrowers and merchants now face practical and legal uncertainty about next steps. Stakeholders will be watching for follow-up guidance that clarifies claims processes, data access, and potential remediation paths.
Lidya’s shutdown closes a chapter for a once-prominent Nigerian fintech that sought to prove the durability of data-driven SME lending. The combination of market headwinds, operational challenges, and leadership turnover ultimately outpaced the company’s funding and product pivots. For customers and the broader ecosystem, the episode underscores the importance of resilient collections, liquidity planning, and transparent communications when stress conditions emerge.
Source: Techpoint Africa