Nigerian digital lending firm Lidya has shut down operations after nine years, citing severe financial challenges.
The closure marks the end of one of Nigeria’s early fintech pioneers that aimed to transform credit access for small businesses, according to Nairameteics.
“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 company stated in an email to its customers.
Founded in 2016 by Tunde Kehinde and Ercin Eksin, both members 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.
The company quickly stood out for its data-driven lending approach, offering loans between $500 and $50,000 with approval decisions made within 24 hours. This innovation positioned Lidya among the leading players in Nigeria’s emerging digital lending sector.
Over the years, the firm explored various business models in a bid to remain competitive as new fintech entrants flooded the market.
In 2020, Lidya expanded its operations beyond Africa, launching in Poland and the Czech Republic to broaden its market reach. The company announced plans to disburse up to €1 billion ($1.1 billion) over five years to support small businesses that struggled to access traditional bank financing in those regions.
In 2021, Lidya secured $8.3 million in a pre-Series B funding round to fuel its European expansion. The round was led by Alitheia Capital through its uMunthu Fund, with participation from Bamboo Capital Partners, Accion Venture Lab, and Flourish Ventures.
The investment brought Lidya’s total funding to $16.5 million, including a $1.3 million seed round raised in 2017 and a $6.9 million Series A completed the following year.
However, by 2023, Lidya exited its operations in Poland and the Czech Republic, citing a strategic decision to refocus on its core market in Nigeria.
“Nigeria’s tech-savvy lending ecosystem is the ideal launchpad for our solutions, which support data-driven decision-making,” co-founder Kehinde said at the time.
After pulling out of Europe, Lidya introduced Lidya Collect, a platform designed to help businesses recover loans and manage repayments. The product marked a strategic shift aimed at improving cash flow and tackling repayment issues among borrowers.
However, reports later indicated that the platform faced significant operational challenges, with customers alleging frozen funds and failed transactions that disrupted their business activities.
“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. It’s been a horrible few months just trying to recover our money,” a customer stated.
In its shutdown notice, Lidya acknowledged that it was unable to process refunds, stating, “Due to the Company’s financial status, it is unable to process funds or settle claims at this time.”
Lidya’s closure followed months of internal turmoil, including the exit of key executives and reports of unpaid staff. Co-founder Tunde Kehinde departed in October 2024, shortly after the resignation of Chief Technology Officer Cristiano Machado in September.
