Nigerian startups are finding it increasingly difficult to secure cheaper funding in Nigeria as interest rate remain high and lender insist on physical guarantees before extending any form of credit to entrepreneurs.

No one knows this better than Babajide Ipaye, an internet service provision owner in Lagos. After setting up his business in 2011 using his own fund he has been struggling since last year to get funds to expand his business in the west Africa n nation that is expected to overtake South Africa as the largest economy in Africa after rebasing in April.

“We also approached foreign companies, for example the Export Development Bank of Canada. They were willing to fund allot of equipment we wanted to bring into the country but they need a local bank to guarantee us and that eventually turned to the whole issue of collateral. It was just a vicious circle. They asked all other things that we had, but once the issue of collateral came up that was a dead end,” Ipaye told CCTV Africa.

The high interest rates that Nigerian banks extend loans to their customers has also been a big hindrance for start ups.