Black-owned and Black-led businesses across five African markets face an estimated $209 billion financing gap, with Nigeria accounting for $131 billion of the shortfall, according to a new report commissioned by British International Investment (BII) and Sweden’s development finance institution, Swedfund.
The study, Understanding the Investment Gaps in Black-Owned and -Led Businesses in Sub-Saharan Africa, examines access to finance in Nigeria, South Africa, Kenya, Senegal, and Côte d’Ivoire. Conducted by Open Capital Advisors, the research estimates that the funding shortfall for Black-owned and Black-led businesses represents approximately 80% of the total financing gap across the five markets.
Nigeria recorded the largest gap at $131 billion, followed by South Africa at $45 billion and Kenya at $23 billion. Senegal and Côte d’Ivoire recorded estimated shortfalls of $5.7 billion and $4.6 billion, respectively.
The findings highlight a persistent challenge for businesses seeking to expand beyond small-scale operations: securing the capital, investor relationships, and specialist support required to grow.
The challenge of scaling African businesses
The research found that Black-owned and Black-led businesses account for between 89% and 99% of small businesses across the markets studied, but their representation declines as companies grow. In Kenya, they account for 40% of larger businesses, while in South Africa the figure falls to 35%.
The report points to several barriers, including limited access to growth capital, weak connections to investor networks, and insufficient specialist expertise and financing structures that do not adequately reflect businesses’ needs.
It also identifies a funding gap for companies seeking between $100,000 and $1 million. These businesses may have outgrown grants and smaller early-stage funding options but remain below the investment thresholds of larger institutional investors.
For companies attempting to expand production, enter new markets or strengthen their operations, this gap can constrain growth even when a viable business is already established.
Chris Chijiutomi, BII’s managing director and head of Africa, said businesses unable to secure growth capital risk remaining at their existing scale rather than expanding their contribution to economic development. He also highlighted the need for institutions such as BII to make financing more accessible to Black-owned and Black-led businesses and establish targets for reaching them.
“Black-owned and -led businesses are a driving force behind African economies, yet many continue to face significant barriers to accessing capital. Expanding opportunity for these businesses can help reduce inequalities, contributing to SDG 10, while unlocking their potential to drive growth, create jobs, and foster innovation. This research gives us a clearer picture of the barriers that constrain funding and shows us how to take action.”
What the findings mean for investors
The study places the challenge beyond access to startup funding alone. It raises questions about how investors identify potential investments, which businesses qualify for institutional capital, and whether existing funding structures adequately support companies moving from small enterprises into larger operations.
For development finance institutions, commercial lenders, and private investors, the findings point to an opportunity to reconsider how growth-stage businesses are sourced, assessed, and financed.
However, the estimated $209 billion is a measure of financing needs, not a pool of committed investment or a guarantee that businesses will receive that amount. Closing the gap would require capital providers to identify viable businesses, structure suitable financing, and address the barriers preventing companies from accessing growth funding.
For African founders, the figures offer a measure of the scale of the financing challenge. They also raise a practical question for the investment ecosystem: whether more capital can reach businesses that have demonstrated commercial potential but struggle to secure the funding needed to scale.
“For Swedfund, the insights from this research are directly linked to our institutional commitment to contribute to SDG 10, reduced inequalities. Our strategy focuses on increasing investment in low-income markets, improving access for the underserved, and strengthening local ownership and decision-making,” Kitanha Toure, Regional Director for West Africa, Swedfund said.
