$209 Billion Funding Gap for Black-Owned African Firms

Diverse team of African women collaborating in an office meeting. Photo: PICHA Stock/Pexels

A new joint study by British International Investment (BII) and Swedfund indicates that Black-owned and -led businesses in five African markets need $209 billion in funding. Titled Understanding the Investment Gaps in Black-Owned and -Led Businesses in Sub-Saharan Africa, the analysis covers South Africa, Nigeria, Kenya, Côte d’Ivoire, and Senegal.

The Scale of the Financing Gap

The report estimates that the total financing gap for these businesses across sub-Saharan Africa reaches a staggering $1.842 trillion. In the five countries studied, the $209 billion gap is approximately four times larger than that faced by businesses outside this category.

Nigeria accounts for the largest shortfall at $131 billion, followed by South Africa at $45 billion and Kenya at $23 billion. Senegal and Côte d’Ivoire have estimated gaps of $5.7 billion and $4.6 billion, respectively.

Challenges and Barriers

The findings show a decline in Black ownership and leadership as businesses grow. While Black-owned and -led businesses make up between 89% and 99% of small businesses, their share drops to 40% among larger businesses in Kenya and 35% in South Africa.

Several obstacles hinder expansion, including limited access to growth capital, investor networks, specialized expertise, and suitable financing structures. A significant financing gap exists for businesses seeking between $100,000 and $1 million. In this range, funding needs often surpass grants and early-stage support but fall below the thresholds of larger institutional investors.

“Black-owned and -led businesses are a driving force behind African economies, yet many continue to face significant barriers to accessing capital,” said Chris Chijiutomi, Managing Director and Head of Africa at BII. “This research gives us a clearer picture of the barriers that constrain funding and shows us how to take action.”

The study is part of BII’s Black Ownership and Leadership for Development (BOLD) initiative, launched in 2022. BOLD aims to increase capital flows to Black-owned and -led businesses across sub-Saharan Africa. These businesses operate primarily in sectors like agriculture, food systems, trade, services, and light manufacturing.

Market-Specific Challenges and Recommendations

Financing barriers vary by market. In Kenya, stakeholders cite limited access to investor networks and early-stage capital. Nigerian businesses face greater challenges in securing hard-currency financing.

“Our strategy focuses on increasing investment in low-income markets, improving access for the underserved, and strengthening local ownership and decision-making,” said Kitanha Toure, Regional Director for West Africa at Swedfund.

To tackle these issues, the report suggests stronger investment pipeline development, increased participation of Black professionals in capital allocation, and closer partnerships with local financial institutions and investment managers. It also advocates for more patient capital, local-currency financing, blended finance, risk-sharing mechanisms, and technical assistance to enhance investment readiness.

Sector Representation and Investment Challenges

Black-owned and -led businesses are mostly in agriculture, food systems, trade, services, and light manufacturing. They have fewer businesses in sectors like infrastructure, energy, and financial services, where high costs can limit growth.