This article is part of TechCabal’s ongoing coverage of the impact of Trump’s tariffs on Africa’s technology landscape. Frank Eleanya, Ngozi Chukwu, Faith Omoniyi, and Muktar Oladunmade also contributed to this report.

The zero-interest era in the US saw venture capital firms pour billions into emerging markets, including Africa, in search of outsized returns. But the US trade tariff, paused for 90 days, could dampen non-oil export volumes, create unstable exchange rates, and fuel inflation if or when resumed.

This could force investors into a ‘wait and see’ approach by withdrawing from African markets, hitting sectors like e-commerce, logistics, agriculture, fintech, and technology, where most Nigerian startups operate.

“The uncertainty would likely deter investment inflows into African startups, as potential investors assess the risks involved,” Temitope Omosuyi, a UK-based investment analyst, said. “The impact will extend to most of their prospects, particularly in logistics and cross-border payments.”

March 2025 saw one of the lowest monthly venture capital funding into the African tech ecosystem since late 2020, with just $50 million in funding announced, according to data from funding tracker Africa: The Big Deal. Funding also dropped 5% to $460 million in Q1 2025 from $486 million raised in the same period last year. VC investments in Nigeria across sectors remained unchanged in 2024 ($410 million) and are the lowest since 2021.

Maya Famodu of Ingressive Capital, a pan-African venture capital fund, noted that in the short term, high tariffs mean inflation, and with the economic dominoes happening in the West, she anticipates a recession. 

“Recession means a buyers’ market and more prudent and defensive investment strategy for US-based institutional investors, which will not benefit Africa,” she added.

But Tayo Oviosu, Paga’s CEO, believes that the tariffs will not have an outsized impact on funding for the continent’s tech ecosystem. He expects that while global capital flows may shift, investor appetite for African startups might rise due to the tariffs. 

“I think investors will look to deploy capital now because it is a good time to invest in the private market against the public markets because of the stock market decline,” he said.

Before the tariffs were suspended, returns on U.S. treasury bills had risen as prices fell, driven by increased investor demand for safer asset classes during uncertain times. Despite this shift to more stable, lower-risk assets, some investors think this might drive more funding to African startups.

“The tariff approach can lead to short-term slow growth and will lead investors to want to buy bonds, and that demand will lead to lower rates,” Oviosu added. “This, I think, helps emerging markets like Africa because investors will want a mix of safety and returns; thus, they will allocate more outside of the US and in equities outside of the US.”

Nigerian exporters remain optimistic despite tariffs

Under the African Growth and Opportunity Act (AGOA) legislation, Nigerian exporters enjoy duty-free access for non-oil sectors like agriculture and manufacturing. According to data from the National Bureau of Statistics (NBS), non-oil exports more than tripled to ₦309.1 billion ($196.6 million) in 2024 from ₦86.4 billion ($54.9 million) in 2023.

For small e-commerce players, the impact is immediate: a $100 bag of cassava flour now carries a $14 duty. This could cut margins or raise prices, depending on whether the seller decides to bear the cost or pass it on to the customer. The challenge is whether smaller exporters, including e-commerce startups exporting goods and the supply chain providers facilitating their transport, can absorb or offset the hit.

Luther Lawoyin, CEO of PricePally, a grocery startup exporting to Nigeria’s diaspora, expects the increase in landing cost to shock business, but only temporarily. The growing demand for staples and the naira’s weakness against the dollar mean businesses can quickly recalibrate for viability. 

“We will be able to make sense of it despite the initial friction, especially since the tariff is not solely on Nigeria,” said Lawoyin.

Malobi Ogbeche, founder of KadanKadan, a platform for group cargo exports, also points out that the uneven tariff spread creates a pricing advantage. He notes that Nigeria’s 14% tariff is lower than Thailand’s 46%, a competitor in cassava flour; in 2021, Thailand earned nearly $1.3 billion from exporting cassava, while Nigeria earned just $1 million. 

Some of the highest tariffs have hit other high cassava exporters like Vietnam and Cambodia: 46% and 49%. Ogheche says this tariff war provides a window of opportunity for Nigerian traders to pitch better prices to their customers.

Nigeria’s goods stay cheap globally, with the naira topping ₦1,600 to the dollar, but turning raw materials like cassava into finished products remains a challenge. Too few factories and shaky power hold the country back. “We can build that capacity,” said Ogbeche, an industry insider, though chronic underfunding signals a slow fix. 

Nigeria risks missing a chance to serve as an export hub for countries facing steeper U.S. tariffs. Omowumi Omidiji, founder of Souq OS, a supply chain platform for emerging markets, argues that routing exports through African nations with lower US tariffs could have been a solution. “Shipping from Africa could remain competitive,” she said. 

Yet, the African Continental Free Trade Area (AfCFTA) struggles to deliver. “Tariffs within Africa are still high,” Omidiji noted. Intra-African trade accounts for just 15% of the continent’s total—well below the EU’s 60%—hampered by poor infrastructure and inconsistent regulations.  

Global trade corridors could open up opportunities for stablecoins

While the crypto market had already been trending downward before Trump’s tariffs, the announcement worsened the outlook. Bitcoin dropped to $75,000, a level not seen since November 2024, as investors pulled out of what they saw as riskier bets. Over $2 billion in crypto was liquidated, with $1.36 billion vanishing during the weekend the 10% universal tariff took effect. 

The 145% tariff—including levies—on Chinese goods added fuel to the fire. With China’s economy rattled, crypto selloffs increased globally. Smaller African exchanges, which depend on trading fees to stay afloat, were hit as the liquidation trading activity pressured their reserves, impacting revenue. 

“Venture capitalists and funds are cautious,” said Ayomide Ayodele, head of marketing at crypto exchange Quidax. “Crypto startups need to cut costs, preserve runway, and wait for favourable market conditions.”

However, the crypto market saw a resurgence on April 9 after Trump announced a 90-day pause on the universal tariff, restoring investor confidence in risky assets.

Ayotunde Alabi, CEO of crypto startup Luno Nigeria, sees bigger risks ahead. Trade restrictions could choke off outside investment and make fundraising much tougher. Capital is fleeing to safer assets like U.S. Treasuries. That’s bad news for African Web3 ventures, said Alabi.

Beyond funding, rising costs now threaten the nuts and bolts of development. Blockchain development tools like GPUs, servers, and chips—mostly imported from China—are becoming more expensive. But Alabi sees an opportunity. “This may be a moment for Africa to invest in homegrown infrastructure and reduce reliance on external enablers.”

There’s a silver lining too. Francis Ogbuka, VP of sales at blockchain payments company Zone, believes the US-China rift could open new trade corridors for African countries. “The US and China are the world’s largest importers and exporters, respectively. The disruption will open new trade flows for Africa, but the continent needs more efficient cross-border payment systems.”

SWIFT isn’t built for speed or low-cost transfers. This is an area where blockchain and stablecoins can prove their real-world utility and help solve FX liquidity challenges, said Ogbuka.

Telecom sector faces indirect risks

The telecommunications sector depends on imports of equipment and infrastructure from China, the United States, and parts of Europe. It is unlikely to be directly affected by export tariffs.

“It won’t affect the industry much because the operators import everything they use. They don’t export,” said Tony Emoekpere, President of the Association of Telecommunication Companies of Nigeria (ATCON).

The indirect effects of this trade policy, however, could still be problematic. For instance, changes in foreign exchange earnings, inflation, and consumer spending patterns could impact telecom operators’ ability to manage rising operational costs and maintain affordable services.

“There is no hardware that we export, but there might be issues with charging international calls by local operators. If the Value Added Tax (VAT) on calls in the US increases, local operators will need to adjust to the rates,” said Gbenga Adebayo, President of the Association of Licensed Telecommunication Operators of Nigeria (ALTON).

The US tariff pause may offer a brief sigh of relief, but for Nigerian startups, it’s a reminder that global trade shifts can hit close to home. From rising costs to cautious investors, the ripple effects are real.