Dollar-based financing is no longer sustainable in the face of currency volatility in Nigeria and the broader West African market.
This has been the focus during conversations at the West African region segment of the 21st Annual Africa Venture Capital Association Conference (AVCA) and VC Summit. According to investors, returns on dollar-based financing are no longer attractive in today’s market.
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Gbenga Hassan, managing partner at Argentil Capital Management, noted that more investments need to occur in naira for investors to be able to maximise value, since local startups raise revenue in naira. He highlighted that a fund raised in naira is more likely to return 10 times more in a couple of years than a fund raised in dollars, which would have to grapple with naira depreciation.
“We need more local investors,” he emphasised. According to Yewande Adewusi, chief operating officer and operating principal at Alitheia Capital, currency volatility occurs every six to eight years, and raising in naira can protect startups and investors, while ensuring returns.
