By Deji Opeola

Thousands of well-managed, growth-ready companies with ambitious leadership and teams in Nigeria are systematically blocked from accessing the capital they need to scale. Over time, they will be classified as businesses that failed. But they are not.

They are still generating real revenue, employing thousands of Nigerians and servicing the Nigerian markets and communities with goods and services that are daily essentials. This is the quiet crisis that is unfolding across Nigeria’s corporate landscape. For better or worse, it does not make the same headlines that currency volatility or commodity shocks would.

And yet the consequences are longer lasting. These companies are a part of the “missing middle”. They are too large and have operations too complex for microfinance. But they are also too small to access public capital markets or attract conventional credit from commercial and merchant banks.

This specific gap stalls their growth and evaporates their potential, leaving unrealised value on the table. Private credit in the most direct sense is a solution to the missing middle problem.

For Nigeria and Africa, this is particularly a lifeline because today’s mid-caps will go on to become Africa’s multinationals.

The structural root
Nigeria’s commercial banking sector has, for decades, been a pillar of the formal economy. But the evolution of global regulatory frameworks, particularly Basel III, has changed how banks can deploy capital.

Today, capital adequacy requirements, sector concentration limits and obligatory thresholds that are tightened to strengthen banks from failure have also recalibrated how banks can deploy capital.

These same guardrails established to protect systemic stability are now narrowing the funnel for bankable credit.

Consequently, there is a predictable hierarchy with the largest corporates able to access credit with relative ease but the lower mid-corporates with turnovers between N3 billion and N5 billion struggling to gain the same access. But a N3 billion turnover is not a joke.

Nigerian banks are not to be blamed as they are operating rationally within a framework that requires them to be prudent. Unfortunately, this means there is a category of corporates that the current configuration of the banking system is not incentivised to serve.

And this is where private credit exists –to complement the commercial banks and fill the space that the current regulatory architecture has left vacant.

Disciplined capital is the framework behind private lending. It has long been assumed and even asserted that flexibility equals a relaxation of credit discipline.

This is false. Private credit transactions exist within a rigorous framework of prudential credit risk guidelines that govern the investment process from its origination to exit.

Transactions are anchored on a simple credit analysis: borrowers must be operating a real business in a viable industry and demonstrate a track record of positive cash flow generation. Private credit does not service pre-revenue and speculative ventures.

It is underwritten because the business has proven that it can service its obligations from its generated cash flow and not on any projections or the liquidation of its assets alone. The covenant architecture is central to private credit’s discipline.

Transactions are governed by carefully structured maintenance and incurrence covenants, financial ratio tests, reporting obligations, restrictions on additional indebtedness, limitations on dividend distributions and change-of-control protections, serving as the early warning systems and helping to preserve lender rights throughout the lifecycle of the transaction.

Collateral sufficiency is another non-negotiable. Private credit transactions are structured so they can satisfy stringent asset-based lending principles. Security interests over sufficient and realisable collateral, real property, plant and equipment, receivables, inventory, bank guarantees and where appropriate, share pledges and personal guarantees, must be established, perfected and regularly stress-tested against recovery scenarios.

These principles are not mere formalities; they are the structural foundation allowing institutional capital to be deployed while providing the downside protections to make long-term investors comfortable.

Building next generation of African corporate champions
The companies that will list on the Nigerian Stock Exchange in the 2030s are right now the lower mid corporates waiting for the capital that disciplined private credit can reliably provide.

There is an opportunity to build an entirely new generation of large and diversified regionally dominant corporate champions. With patient, structured private credit behind it, a business that has proven its model in Lagos can expand to Abuja, Port Harcourt and Kano.

It can execute strategic acquisitions of complementary businesses that would otherwise remain fragmented competitors. It can professionalise its operations, attract senior talent, and build the institutional depth that transforms a founder-led enterprise into a durable corporate institution.

This is the organic growth pathway and private credit is uniquely positioned to fund it. There is a second, equally powerful pathway: the rollup platform strategy, the deliberate consolidation of multiple smaller businesses within a sector, whether logistics, healthcare delivery, agro-processing, FMCG distribution or business process outsourcing, under a single well-capitalised platform.

Individual companies may be too small to be investable on a standalone basis. Combined, they become a compelling large-cap story.

Private credit provides the acquisition financing, the working capital bridging, and the patient capital horizon that allows a consolidation thesis to play out over multiple years without the short-termism that equity markets can impose.

Capital market destination
Nigeria’s capital markets need new listings, companies of genuine scale, quality, and institutional depth that attract foreign investors and signal African economic confidence.

Private credit is the pipeline to that outcome. When a lower mid-corporate company accesses private credit to execute its growth strategy and does so within the governance framework that institutional lenders demand, it simultaneously builds the track record, financial discipline and reporting standards that will make it IPO-ready.

The companies that list on African exchanges in the coming decade will, in significant part, have been built on the foundation of private credit extended today.

Nigerian pension funds, insurance companies, and development finance institutions who anchor this ecosystem early will not only generate strong risk-adjusted returns, but they will also become co-architects of the corporate Nigeria they wish to inhabit.

Path forward
We are at an inflection point where the structural conditions constraining Nigeria’s lower mid-corporates, the regulatory recalibration of bank lending, the immaturity of domestic institutional participation in alternative assets, and the absence of a scaled private credit ecosystem are precisely the conditions that create the most compelling entry point for those with the foresight to act now.

The companies that will dominate Nigeria’s capital markets in 2035 are, at this moment, lower mid-corporates with proven models and growth trajectories being held back by a lack of appropriate capital.

Private credit, deployed with rigor, structured with discipline, and anchored in the credit fundamentals that protect all stakeholders, removes that constraint.

The talent is here; the opportunity is vast and the capital is available. What is required now is its deliberate and optimistic deployment as the foundational instrument of the next era of African corporate development.

Those who move with clarity and conviction in this moment will not merely participate in that era. They will define it.