Journal of Economic and Social Dynamics

Abstract

The recent wave of fintech failures in emerging markets, exemplified by the collapse of well-funded ventures such as Lidya and Okra in Nigeria, has exposed critical vulnerabilities in the digital financial services ecosystem. This study examines the complex causes of fintech failures across emerging markets, analyzing governance deficiencies, capital structure challenges, regulatory inadequacies, and macroeconomic pressures. Drawing from recent empirical evidence and case studies, we identify five primary failure mechanisms: premature international expansion, currency volatility exposure, leadership instability during critical periods, overdependence on continuous venture capital funding, and inadequate regulatory frameworks. Our thematic analysis of qualitative data from failed ventures reveals that despite raising substantial capital averaging $16 million, these companies collapsed within 3 to 5 years of operation, leaving customers without access to funds and investors facing significant losses. We triangulate findings from case documentation, academic literature, industry reports, and regulatory frameworks to strengthen validity. We propose an integrated framework combining regulatory sandboxes, enhanced governance structures, and sustainable business models that prioritize unit economics over growth velocity, while addressing scalability across diverse socioeconomic contexts. The findings contribute to both theoretical understanding and practical policy development for building resilient fintech ecosystems in emerging markets. This work advances interdisciplinary dialogue on governance, economics, and regulatory spaces, with significant implications for stakeholders including marginalized communities affected by these failures.