Black-owned and -led businesses in Nigeria face a financing gap estimated at $131 billion, the largest among five African markets examined in a new report by British International Investment (BII) and Swedfund.

The report, “Understanding the Investment Gaps in Black-owned and -led Businesses in Sub-Saharan Africa,” estimated that the combined funding gap for such businesses in Nigeria, South Africa, Kenya, Senegal and Côte d’Ivoire stands at $209 billion, highlighting the scale of unmet demand for capital across the region.

The research, released yesterday, found that Nigeria accounts for the largest share of the estimated shortfall, followed by South Africa with $45 billion, Kenya with $23 billion, Senegal with $5.7 billion and Côte d’Ivoire with $4.6 billion.

Across sub-Saharan Africa, the financing gap for Black-owned and -led businesses is estimated at $1.842 trillion, according to the report, which combines market analysis with consultations with stakeholders to examine business representation, access to capital and barriers to growth.

The findings highlighted the financing constraints facing businesses that contribute significantly to economic activity but struggle to secure the capital needed to expand operations, create jobs and compete in larger markets.

According to the report, Black-owned and -led businesses account for between 89 and 99 per cent of small businesses across the five countries. However, their representation declines as businesses grow, falling to 40 per cent of larger businesses in Kenya and 35 per cent in South Africa.

The report attributed the disparity partly to difficulties in accessing growth capital, suggesting that many businesses struggle to move beyond the small and medium-sized enterprise stage, where financing needs typically increase.

It also estimated that the financing gap for Black-owned and -led businesses is approximately four times that of businesses outside the category across the five markets.

These businesses are concentrated largely in food systems, trade, services, light manufacturing and agriculture, where entry barriers are relatively low and local participation is strong.

The report identified investment readiness, access to appropriate financing, talent shortages and limited business networks as major constraints facing smaller enterprises.

Another significant challenge is the shortage of growth capital for businesses seeking between $100,000 and $1 million. According to the report, companies in this category can fall between grant-based funding and the larger investment opportunities typically targeted by institutional investors.

The report further observed that financing constraints vary across markets, requiring investment strategies that reflect local economic conditions and business needs.

In Nigeria, access to hard-currency financing emerged as a prominent constraint, while stakeholders in Kenya highlighted limited access to investor networks and early-stage capital.

Commenting on the findings, the Managing Director and Head of Africa at BII, Chris Chijiutomi, said Black-owned and -led businesses remained important drivers of African economies but continued to face substantial barriers to accessing capital.