Black-owned and Black-led businesses face a financing gap estimated at 209 billion dollars across Nigeria, South Africa, Kenya, Senegal and Côte d'Ivoire, according to a study published on Tuesday, 13 October, by British International Investment and Swedfund.
Nigeria accounts for the largest share of the estimated shortfall, at 131 billion dollars, or nearly 63% of the total for the five markets. South Africa follows with 45 billion, ahead of Kenya with 23 billion, Senegal with 5.7 billion and Côte d'Ivoire with 4.6 billion.
The study, carried out by Open Capital Advisors, estimates that these businesses account for about 80% of the total financing gap identified across the five countries. The figure of 209 billion dollars represents the modelled gap between their capital needs to grow and the financing they can access.
The authors use the category BOLD to refer to businesses owned or led by Black people. They find that these companies represent between 89% and 99% of small businesses in the markets studied, but that their presence declines as firm size increases. It would fall to 40% among large companies in Kenya and to 35% in South Africa.
This decline highlights the difficulty of growing a small business into a medium-sized enterprise or a group able to invest in sectors that require more capital. The businesses concerned remain strongly present in agriculture, food systems, trade, services and light industry, while barriers are higher in infrastructure, energy and financial services.
The report identifies several obstacles, including limited access to investor networks, insufficient preparation for funders' requirements, poorly adapted financing instruments and a lack of specialised skills. In Nigeria, access to foreign currency also complicates the financing of equipment and activities that depend on imports.
Needs between 100,000 and one million dollars are particularly difficult to meet, according to the study's summary. This segment often falls between grant programmes for very small businesses and the amounts sought by institutional funds, which limits growth opportunities.
British International Investment and Swedfund recommend strengthening local partnerships, the representation of Black professionals in investment decisions and data collection. The options cited also include patient capital, local-currency financing, blended finance, risk-sharing and technical assistance to help businesses prepare to receive capital.