How Silicon Valley Bank’s Downfall Would Impact Nigerian IT companies
The collapse of Silicon Valley Bank has increased the unease among Nigerian IT firms, especially after Treasury Secretary of the United States Janet Yellen announced yesterday that the Federal Government would not save the bank. The IT firms in Nigeria, which are among the major players in Africa’s tech startup ecosystem, may be adversely affected by the crisis even though US banking behemoth HSBC has purchased SVB UK.
Yet, experts claim there won’t be much impact on the project capital initiative in Africa’s most populous country. So far, it is still unknown how the collapse would impact the vibrant local startup industry. Fintech firms in Nigeria got $507 million in total between January and August 2022, a significant increase from the sums given from 2015 to 2020. According to reports, the nation had over 140 fintech startups as of 2021.
Adedeji Olowe, the founder and CEO of the fintech company Lendsqr was cited as saying that while some startups may have money stranded in the bank, the money has not vanished when discussing the reality of the issue. Instead, Silicon Valley Bank’s demise began when its clients, primarily technology firms needing cash as they battled to obtain financing, began withdrawing their deposits.
To fund the withdrawals, the bank had to sell bonds at a loss, resulting in the greatest failure of a US financial institution since the peak of the financial crisis.