A new report by British International Investment (BII), the United Kingdom’s development finance institution, and Swedfund has identified an estimated $209 billion financing gap for Black-owned and -led businesses across five African countries, with Nigeria accounting for the largest share.
The report, titled ‘Understanding the investment gaps in Black-owned and -led businesses in sub-Saharan Africa’, found that Nigeria has a financing gap of $131 billion, followed by South Africa at $45 billion and Kenya at $23 billion.
Senegal and Côte d’Ivoire account for smaller but significant gaps of $5.7 billion and $4.6 billion, respectively.
The research combines quantitative market analysis with stakeholder consultations to assess the representation of Black-owned and -led businesses, their access to capital and the barriers limiting their growth across the five markets.
Businesses underrepresented as they scale
According to the report, Black-owned and -led businesses account for between 89% and 99% of small businesses across the five countries.
However, their representation declines as businesses grow. They account for 40% of larger businesses in Kenya and 35% in South Africa, highlighting the challenges they face in scaling up and accessing the larger volumes of financing typically available to bigger enterprises.
- The report estimates that Black-owned and -led businesses account for a combined financing gap of $209 billion across the five countries, approximately four times the gap for businesses outside this category.
- Across sub-Saharan Africa, the financing gap is estimated at $1.842 trillion.
- Chris Chijiutomi, Managing Director and Head of Africa at BII, said Black-owned and -led businesses play a significant role in African economies but continue to face 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,” he said.
The research forms part of BII’s wider Black Ownership and Leadership for Development (BOLD) initiative, established in 2022 to increase the flow of capital to Black-owned and -led businesses across sub-Saharan Africa.
Financing barriers limit business growth
The report found that Black-owned and -led businesses are concentrated in food systems, trade, services, light manufacturing and agriculture, where local participation is strong and barriers to entry are relatively low.
However, businesses in more capital-intensive sectors, including infrastructure, energy and financial services, face greater challenges in expanding beyond the small and medium-sized enterprise stage because of higher funding requirements and the need for specialised expertise.
- The report identified several barriers to growth, including limited investment readiness, inadequate access to appropriate financing, shortages of skilled talent and weak investor networks.
- Investors also face challenges such as limited local representation, insufficient understanding of local markets, perceptions of risk and financing structures that do not adequately reflect businesses’ needs.
- One of the most persistent gaps affects businesses seeking between $100,000 and $1 million in growth capital. According to the report, these businesses often fall between grant funding and the requirements of larger institutional investors.
The report also highlighted differences between markets, suggesting that financing strategies should reflect local conditions.
- “In Kenya, stakeholders pointed to limited access to investor networks and early-stage capital. In Nigeria, access to hard-currency financing was a more prominent constraint,” the report said.
Report calls for targeted investment strategies
To address the financing gap, the report recommends a more deliberate approach to investing in Black-owned and -led businesses, including stronger business pipelines, deeper local partnerships and greater representation of Black professionals among capital allocators.
It also calls for financing structures better suited to businesses’ needs, including patient capital, local-currency financing, blended finance, risk-sharing arrangements and targeted technical assistance.
According to the report, these measures could help businesses become investment-ready, attract funding and deploy capital more effectively.
The findings suggest that improving access to finance will require action from investors, fund managers and development finance institutions, alongside solutions tailored to the circumstances of individual markets.
UK launches £15 million Nigeria growth programme
The report comes shortly after the United Kingdom announced a £15 million Growth Programme for Nigeria aimed at accelerating economic transformation, attracting private investment and supporting reform-driven growth.
The three-year initiative emerged from a meeting between UK representatives and Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
According to the UK government, the programme is designed to help Nigeria move from macroeconomic stabilisation towards sustained economic growth driven by reforms and investment.