The devaluation of Nigeria's currency, the naira, has had significant negative impacts on the country's startups. The Central Bank of Nigeria's decision to allow the market to determine foreign exchange rates led to a sharp decline in the naira's value from around 460 naira per dollar to over 770 naira per dollar. This currency devaluation has severely affected Nigerian startups that raise funds in dollars and earn revenue in naira.

Startups are struggling to keep their companies afloat due to the rapid depreciation of the naira. This situation is especially challenging for startups that need to report their financial figures in dollars for international investors. Despite their businesses growing, their revenue in dollars has almost halved due to the currency devaluation.

Nigerian startups are caught between reporting growth using a constant exchange rate or reflecting the current exchange realities, which erases growth. For many startups, their revenue is now reported at a significantly lower rate, causing a dip in earnings. The high exchange rates have also led to increased operational costs as imported items, cloud servers, and software have become more expensive. Some startups have been paying up to 200% more for these services.

Investors are concerned that the currency devaluation could lead to some startups shutting down, as the costs of operations have risen dramatically while their revenues remain low in dollar terms. Some startups are considering exploring business abroad to avoid the challenges posed by the devalued naira. The situation is seen as one of the worst economic challenges faced by startups in Nigeria, with the potential for many businesses to struggle and even close down.

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