Digital-lending startup Lidya has formally ceased operations in Nigeria, ending a near-decade run in the small and medium-sized business (SME) credit market despite raising approximately US$16.45 million from investors.
Established in 2016 by former Jumia executives Tunde Kehinde and Ercin Eksin, Lidya set out to serve Nigerian SMEs via a technology-first, collateral-free lending model.
Over its lifetime the company claimed to have reviewed more than US$50 billion in credit applications and disbursed upward of US$150 million across 32,000 businesses.
Funding & Growth
Between 2017 and 2021 Lidya secured several funding rounds:
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A seed round (~US$1.25 m) led by Accion Venture Lab.
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A Series A round of ~US$6.9 m in 2018.
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A pre-Series B of ~US$8.3 m in 2021, bringing total known equity funding to about US$16.45 m.
With that capital the company expanded into Europe (Poland and the Czech Republic) before refocusing on Nigeria by 2023.
Operational Strain & Shutdown
In a customer notice Lidya stated: “Despite best efforts to restructure and sustain operations, the company has encountered severe financial distress and is no longer able to continue in business. … Due to the company’s financial status, it is unable to process funds or settle claims at this time.”
Reported red flags included:
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Leadership exits: CEO Tunde Kehinde and CTO Cristiano Machado departed in late 2024.
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Customer complaints: frozen funds, failed transactions, and delayed repayments via the platform’s recovery product dubbed “Lidya Collect”.
Industry analysts note mounting credit risk, tightening funding conditions, and aggressive growth targets drained operational buffers.
Implications for Stakeholders
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Borrowers and users: SMEs and individuals who used the platform now face uncertainty over outstanding balances, loan servicing and access to previously credited funds.
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Investors & lenders: The collapse underscores the high execution risk in frontier-market digital lending, even with substantial equity backing.
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Fintech ecosystem & regulators: The shutdown is likely to accelerate regulatory scrutiny around digital credit, wallet-linked deposits, consumer protection and contingency planning for platforms in distress.
Forward Outlook
Regulators such as the Central Bank of Nigeria (CBN) may follow up on fiduciary obligations surrounding client funds and the wind-down process. Lenders in the SME fintech space may reassess underwriting, collections infrastructure, geographic expansion strategies, and the sustainability of growth-first models under tighter capital conditions.
Lidya’s exit serves as a cautionary tale in Nigeria’s burgeoning digital lending sector: strong equity backing and a promising value proposition do not guarantee longevity in an environment where credit risk, liquidity management and operational discipline are under intense pressure.
For stakeholders—from borrowers and investors to regulators—the episode reinforces the imperative of aligned incentives, transparent governance and robust contingency frameworks.