Digital Lending App Shuts Down After 10 Years, Sends Message to Customers
- Lidya, a digital-lending startup founded by ex-Jumia executives, has shut down its Nigerian operations
- The company has been in operation for nearly a decade, but has been under financial distress recently
- Analysts blamed the collapse on credit risks, tight funding conditions, and unsustainable growth targets
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Following financial crises, Digital lending startup Lidya has officially ceased operations in Nigeria, bringing to a close nearly a decade of activity in the small and medium-sized enterprise (SME) credit space.
The company, founded in 2016 by former Jumia executives Tunde Kehinde and Cristiano Machado, raised approximately US$16.45 million from investors in its final years.
Source: Getty Images
What did Lidya achieve in fintech sphere?
Over the years, Lidya built its model around collateral-free, technology-driven lending for small businesses.
The company said it had reviewed more than US$50 billion in credit applications and disbursed over US$150 million to 32,000 businesses since its inception.
Between 2017 and 2021, Lidya raised several rounds of funding, including a seed round led by Accion Venture Lab, a US$6.9 million Series A in 2018, and a US$8.3 million pre-Series B in 2021.
The funding enabled expansion into Poland and the Czech Republic, though the company had later refocused on the Nigerian market by 2023.
Source: Getty Images
Why did Lidya shut down?
In a notice to customers, Lidya disclosed that it was shutting down due to serious financial challenges that made it impossible to continue operations or meet outstanding obligations.
Before the announcement, several users had raised complaints about withheld funds, unsuccessful transactions, and delayed repayments, especially through the company’s loan recovery platform, Lidya Collect.
Industry observers linked the company’s downfall to rising credit defaults, limited investor funding, and overly ambitious expansion goals.
According to reports, Lidya’s financial crisis deepened over several months, marked by the resignation of co-founder Tunde Kehinde in October 2024, followed shortly by Chief Technology Officer Cristiano Machado, and the dissolution of its Portugal-based technology team earlier that year.
The shutdown has left many Nigerian SMEs uncertain about their loan balances and fund recovery, while investors view the development as another reminder of the fragility of fintech ventures in emerging markets.
The Central Bank of Nigeria (CBN) is expected to increase regulatory scrutiny, particularly regarding client fund protection and crisis management in digital lending.
Thepeer shuts down operations
Earlier, Legit.ng reported that Nigerian fintech startup Thepeer is shutting its operations nearly two years after raising $2.1 million in a Seed round.
In a statement on its website after news broke, the company's founders cited compliance issues that hindered it from launching key wallet providers.
Management also blamed the slow acceptance of wallets as a viable payment option, resulting in the diversification of resources into enlightenment.
This round of funding came less than a year after Thepeer raised a $220,000 pre-seed round from angel investors, including the co-founder of Paystack.
Proofreading by Bruce Douglas, copy editor at Legit.ng.
Source: Legit.ng
