After nearly a decade of operations, Lidya, one of Nigeria’s earliest fintech startups, has officially ceased operations due to severe financial distress.
The digital lender, which once aimed to redefine small business financing in Nigeria and beyond, confirmed the shutdown in an email to customers, stating:
“Despite best efforts to restructure and sustain operations, the Company has encountered severe financial distress and is no longer able to continue in business. As a result, the Company has ceased all operations.”
The closure marks the end of a notable chapter in Nigeria’s fintech evolution, highlighting the challenges startups face in sustaining growth amid a tough funding climate.
How Lidya Began
Founded in 2016 by Tunde Kehinde and Ercin Eksin, both part of Jumia’s founding team, Lidya set out to provide fast, collateral-free loans to small and medium-sized enterprises (SMEs) through a digital platform.
Using data-driven credit assessments instead of traditional collateral, Lidya quickly became one of Nigeria’s most visible players in digital lending. Businesses could access loans ranging from $500 to $50,000, with approval decisions delivered within 24 hours.
International Expansion and Funding
In 2020, Lidya expanded into Poland and the Czech Republic, aiming to disburse over €1 billion ($1.1 billion) in five years to underserved small businesses.
By 2021, the company had issued over 32,000 loans worth nearly $150 million, leveraging data from 100,000+ customers and analyzing more than $50 billion in credit applications.
To fuel its growth, Lidya raised a total of $16.5 million in funding, including:
- $1.3 million seed round (2017)
- $6.9 million Series A (2018)
- $8.3 million pre-Series B (2021) led by Alitheia Capital’s uMunthu Fund, with participation from Bamboo Capital Partners, Accion Venture Lab, and Flourish Ventures.
Refocus on Nigeria and the Launch of Lidya Collect
After scaling back from Europe in 2023, Lidya announced it was refocusing on Nigeria’s fintech ecosystem.
Co-founder Tunde Kehinde described Nigeria as the “ideal launchpad” for the company’s data-driven lending model. Following this, Lidya introduced Lidya Collect, a platform designed to help businesses manage repayments and recover loans.
However, the product soon ran into major operational issues. Customers reported frozen funds and failed transactions, disrupting business operations and eroding trust.
One business owner told reporters:
“Our money is stuck. Apart from the money that’s locked up, we’ve layered millions of transactions on the platform, and now that it’s failing, we have to recover those debts manually.”
In its shutdown notice, Lidya admitted it was unable to process refunds or settle claims, citing its dire financial situation.
Internal Collapse and Leadership Exodus
Lidya’s downfall was preceded by months of internal turmoil marked by executive resignations and unpaid salaries.
- Co-founder Tunde Kehinde left the company in October 2024.
- Chief Technology Officer Cristiano Machado resigned in September 2024.
- The Portugal-based technology team was disbanded between May and September 2024 after payroll obligations went unmet.
These challenges exposed deep financial instability and management struggles that eventually culminated in the company’s shutdown.
A Cautionary Tale for Fintech Startups
Lidya’s collapse underscores the difficult realities of scaling fintech operations, especially in emerging markets facing currency volatility, funding shortages, and repayment risks.
Once hailed as a trailblazer in SME lending, Lidya’s exit serves as a reminder that innovation alone cannot sustain a fintech without strong financial management and trust from users.
