Beyond ideas: Why Nigerian startups must embrace business analysis to survive

BY CHISOM ONYEKWERE

Every few months, a Nigerian startup makes headlines for raising millions of dollars in funding. But just as often, the news that follows is of layoffs, stalled growth, or outright closure. From logistics companies shutting down operations to fintech firms quietly scaling back, the cycle has become familiar. The reality is that great ideas and capital injections are not enough. What many of these ventures lack is rigorous business analysis—the discipline of translating ideas into sustainable, data-backed decisions.

Nigeria’s startup ecosystem has earned global recognition. Between 2015 and 2022, Nigerian startups attracted more than $2 billion in venture capital, making the country Africa’s largest hub for tech investment, according to Partech Africa’s annual report.

Yet survival rates tell a different story. Research by the African Private Equity and Venture Capital Association shows that up to 54 percent of African startups fail by their fifth year, with Nigeria among the most affected. The reasons range from regulatory uncertainty to infrastructure gaps. But beneath these factors lies a common thread: weak business analysis.

Business analysis is not just about crunching numbers. It is the structured way of asking hard questions: Who exactly is the customer? What is the cost of acquiring and keeping them? How resilient is the business model under inflationary pressure or currency volatility? In a country where the naira has lost more than half of its value against the dollar since 2023, these questions cannot be left unanswered.

The fintech sector offers a striking example. Over the last decade, fintech startups in Nigeria have enjoyed explosive growth, attracting more than one-third of all venture capital inflows into the continent. But as McKinsey noted in a 2023 report, many of these firms focus heavily on user acquisition without fully analysing the economics of retention and compliance costs.

The result is that when regulatory changes or funding slowdowns occur, these startups face liquidity crunches. The shutdown of OPay’s ride-hailing unit and the retrenchment at Kuda Bank illustrate the danger of scaling without sober business modelling.

Contrast this with Flutterwave, which, despite facing controversies, has shown resilience partly because it invested early in compliance and business structuring. Its valuation surge was not only because of technology but also because of decisions grounded in data and scenario planning. Startups that survive turbulence tend to have strong business analysis baked into their DNA.

It is not just fintechs. In the e-commerce space, Jumia’s struggles in Nigeria were never about a lack of ambition. They were about misjudging consumer behaviour, underestimating last-mile delivery costs, and over-relying on a “growth before profit” narrative.

A more robust business analysis might have flagged these weaknesses earlier. On the other hand, small but data-conscious ventures like ThriveAgric and Farmcrowdy have been able to pivot by reassessing market realities and adjusting their models, even if imperfectly.

The need for business analysis becomes more urgent when one considers the harsh Nigerian operating environment. Inflation is at a 28-year high, reaching 33.4 percent in April 2024, according to the National Bureau of Statistics.

The central bank’s tightening policies have pushed lending rates upward, making cheap credit scarce. Logistics costs are inflated by high diesel prices, and consumer purchasing power has been eroded. In such a volatile climate, decisions taken without thorough analysis are little more than guesses.

International investors are also paying attention

A 2024 PwC report on African startups noted that investors are increasingly demanding not just pitch decks but detailed business analysis before committing funds. They want to see sensitivity tests, cash-flow projections under different exchange rate scenarios, and clear risk management strategies. This shift is forcing Nigerian founders to move beyond storytelling into measurable performance.

There is also the question of talent. Nigeria has a vibrant pool of software engineers and product designers, but far fewer trained business analysts. Universities and training institutes still treat business analysis as an afterthought, often folding it into general business administration courses. Yet, as Deloitte emphasised in its 2023 global outlook, business analysis is now seen as a critical skill for navigating uncertainty. Nigerian startups that ignore this are competing with one hand tied.

Some founders argue that the hustle spirit and adaptability of Nigerians make up for the lack of structured analysis. But the record suggests otherwise. Hustle may keep a venture alive in the short term, but scaling sustainably requires discipline. Without business analysis, companies risk burning investor funds, eroding trust, and reinforcing scepticism about African startups.

The good news is that the tide may be turning. The proliferation of accelerator programmes, from Google for Startups to Techstars Lagos, is introducing more founders to the discipline of analysis and testing. These platforms now emphasise metrics such as customer lifetime value, unit economics, and break-even analysis, not just app downloads or sign-ups. This is a healthy development.

But responsibility ultimately rests with the founders. They must recognise that in today’s Nigeria, where macroeconomic shocks are frequent and regulatory surprises common, survival is less about who raises the biggest round and more about who plans the best. Business analysis is the bridge between vision and viability. Without it, even the brightest ideas risk becoming statistics in Nigeria’s startup graveyard.

Startups are often celebrated as symbols of youthful innovation, and rightly so. But innovation must be grounded in realism. Ideas ignite the journey, but analysis lights the path. For Nigeria’s startups to outgrow the hype cycle and truly transform the economy, they must embrace business analysis not as an afterthought but as a core part of their identity. Anything less is gambling with survival.

Chisom Onyekwere is a UK-based business analyst and AI enthusiast.