Black-owned and black-led businesses across five African markets face a funding gap of $209-billion, according to a new report from British International Investment (BII) and Swedfund.
The report – Understanding the investment gaps in black-owned and -led businesses in sub-Saharan Africa – combines quantitative market analysis with stakeholder consultations to examine where these businesses are represented, the scale of their funding gaps, and the factors shaping access to capital.
Covering South Africa, Nigeria, Kenya, Côte d’Ivoire and Senegal the findings provide investors, fund managers, and development finance institutions with a clearer picture of the barriers to capital and the scale of the investment opportunity across the five markets.
The research forms part of BII’s wider Black Ownership and Leadership for Development (BOLD) initiative, established in 2022 to help increase the flow of capital to black-owned and -led businesses across sub-Saharan Africa.
BOLD businesses are underrepresented as companies scale
Across the five markets, BOLD businesses account for between 89% and 99% of small businesses. By contrast, BOLD representation falls to 40% of larger businesses in Kenya and 35% in South Africa. This highlights the challenges they face in growing into larger businesses, where greater volumes of finance are typically available.
Significant financing gaps constrain growth
The financing gap is similarly concentrated. BOLD businesses account for an estimated $209-billion financing gap across the five African countries – around four times larger than for non-BOLD businesses. Across sub-Saharan Africa the gap is estimated at $1,842-trillion.
Of the five countries, Nigeria has the largest BOLD funding gap at $131-billion, followed by South Africa at $45-billion and Kenya at $23-billion; gaps of $5,7-billion in Senegal and $4,6-billion in Côte d’Ivoire show that the challenge is also significant in smaller markets.
BOLD businesses are mainly concentrated in food systems, trade, services, light manufacturing, and agriculture where local participation is strong and barriers to entry are relatively low. In more capital-intensive sectors, including infrastructure, energy and financial services, specialised expertise and higher funding requirements can make it harder for businesses to grow beyond the SME stage.
Barriers differ by market and require tailored solutions
BOLD businesses, particularly smaller firms, face barriers around investment readiness, access to appropriate financing, talent, networks and relationships. At the same time, investors often experience limited local representation, insufficient understanding of local markets, perceptions of risk and financing structures that are poorly aligned with business needs, contributing to underinvestment.
The report also identifies a persistent financing gap for businesses seeking approximately $100 000 to $1-million in growth capital, where opportunities can fall between grant funding and larger institutional investment.
The report finds that these barriers vary significantly by market, reinforcing the need for locally tailored investment strategies, financing solutions, and technical assistance. 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.
Chris Chijiutomi, MD and head of Africa at British International Investment, says: “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.
“At BII, we are using this evidence to strengthen our pipeline, develop more appropriate ways of reaching these businesses and work with partners across the investment ecosystem to broaden access to capital,” Chijiutomi says. “The wider investment ecosystem must also play its part in creating a more equitable playing field for BOLD businesses with the potential to grow and scale.”
Kitanha Toure, regional director for West Africa at Swedfund, adds: “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.”
The report calls for a more intentional approach to investing in BOLD businesses – including stronger pipeline-building and local partnerships, greater Black representation among capital allocators, and financing better suited to business needs. This includes patient and local-currency capital, blended and risk-sharing structures, and targeted technical assistance to help businesses attract and absorb investment.