The Pharaohs wasted a number of easy goalscoring chances during the full 90 minutes of the game that saw a complete domination from the Egyptian side.
Solomon Agbalaka punished the hosts for their lack of concentration, scoring the winner for Nigeria in the 71 st minute with a nice header.
The loss left the Pharaohs third in the Group with a single point after being held to a goalless draw by Mozambique in the tournament opener on Sunday.
Senegal who defeated Mozambique 3-0 earlier on Wednesday are leading the Group with maximum six points and have guaranteed their place in the next round.
Nigeria lie second with three points, and it is highly likely that they will book the second qualifying ticket of the Group as they will have an easy mission against minnows Mozambique on Saturday.
Egypt, however, has no choice but to win against Senegal on Saturday to keep their hopes alive in the competition.
The first two teams in the three groups will advance to the quarter-finals alongside the two best performances of teams who ended third in the different groups.
The first four teams will represent the continent in the upcoming U-20 World Cup set to be played in Indonesia next May.
Egypt last participated in the U-20 World Cup in 2013 but were eliminated from the competition’s first round.
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