Nigeria Faces $131bn Funding Gap for Black-Owned Businesses, Report Finds
Report Identifies $131bn Financing Gap for Nigerian-Owned Businesses
Nigeria faces an estimated $131 billion financing gap for Black-owned and led businesses, the largest share of a combined $209 billion shortfall across five African countries, according to a report by British International Investment (BII) and Swedfund released in October 2026.
The report, titled Understanding the Investment Gaps in Black-Owned and -Led Businesses in Sub-Saharan Africa, examines the challenges businesses face in accessing capital and expanding their operations. It identifies barriers to financing that could limit business growth, job creation and investment across Nigeria, South Africa, Kenya, Senegal and Côte d’Ivoire.
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Nigeria Accounts for the Largest Share of the Funding Gap
Nigeria accounts for approximately 63% of the estimated $209 billion financing gap across the five markets, highlighting the scale of the capital shortfall facing businesses in the country.
South Africa follows with an estimated funding gap of $45 billion, while Kenya accounts for $23 billion. Senegal and Côte d’Ivoire have financing gaps of $5.7 billion and $4.6 billion, respectively.
The report estimates that Black-owned and -led businesses across the five countries face a financing gap approximately four times larger than that of businesses outside the category. Across sub-Saharan Africa, the financing gap for these businesses reaches an estimated $1.842 trillion.
The research combines market analysis with consultations involving industry stakeholders to examine business ownership, access to finance and the factors preventing companies from securing the capital required to expand.
Funding Access Declines as Businesses Grow
Black-owned and -led businesses account for between 89% and 99% of small businesses across the five countries studied. However, their representation declines as companies expand into larger enterprises.
In Kenya, these businesses account for 40% of larger companies, while their share in South Africa stands at 35%. The report identifies this declining representation as an indication of the difficulties businesses encounter when seeking the larger investments required to scale their operations.
Small businesses may establish themselves with limited capital but often require more substantial financing to expand production, enter new markets, employ additional workers or invest in equipment and infrastructure.
The report identifies a particularly persistent financing gap among businesses seeking between $100,000 and $1 million in growth capital. These companies can struggle to secure funding because their requirements fall between grant-based support and the investment thresholds of larger institutional investors.
This funding gap can prevent otherwise viable businesses from expanding, even when opportunities exist to increase revenue, production and employment.
Foreign-Currency Financing Remains a Challenge in Nigeria
The report identifies limited access to appropriate financing, inadequate investment readiness, shortages of skilled workers and weak investor networks as major obstacles to business growth.
It also highlights challenges on the investor side, including limited local representation, insufficient understanding of domestic markets, perceptions of investment risk and financing arrangements that do not adequately reflect the needs of businesses.
In Nigeria, access to foreign-currency financing emerged as a particularly prominent constraint.
Businesses that require foreign currency to purchase equipment, import inputs or meet other international obligations may face additional difficulties when they cannot secure suitable financing. These challenges can complicate expansion plans and increase the financial burden on companies operating in capital-intensive sectors.
The report also notes that businesses encounter different constraints across the countries studied. In Kenya, for example, stakeholders highlighted limited access to investor networks and early-stage capital.
The findings indicate that financing solutions must account for differences in local markets rather than apply a uniform approach across the region.
Infrastructure and Energy Businesses Face Higher Capital Requirements
Black-owned and -led businesses are concentrated in food systems, trade, services, light manufacturing and agriculture, where local participation is strong and barriers to entry are comparatively low.
However, the report identifies infrastructure, energy and financial services as sectors where businesses face greater challenges in expanding beyond the small and medium-sized enterprise stage.
These sectors typically require larger initial investments, specialised expertise and more complex financing arrangements. Companies seeking to enter or expand within them may therefore face greater difficulties securing the capital needed to compete with established operators.
The findings are relevant to Nigeria’s broader investment environment, where infrastructure delivery and energy development require substantial funding.
Improving access to finance for locally owned businesses could widen participation in these sectors, although the report stresses the need to address both business-level constraints and the limitations of existing investment structures.
Report Recommends More Targeted Financing Solutions
BII and Swedfund recommend a more targeted approach to financing Black-owned and -led businesses, including stronger pipelines of investment-ready companies, deeper local partnerships and greater representation of Black professionals among investment decision-makers.
The report also calls for financing arrangements that better reflect businesses’ needs. These include patient capital, local-currency financing, blended finance, risk-sharing mechanisms and targeted technical assistance.
Patient capital provides businesses with longer investment horizons, while blended finance combines public or development funding with private capital to help attract investment. Risk-sharing arrangements can also reduce the exposure investors face when financing businesses they consider difficult to assess.
Technical assistance can help companies strengthen financial reporting, business planning and governance, improving their ability to meet investor requirements.
The report argues that these measures could help businesses become investment-ready, attract capital and deploy funding more effectively.
UK Announces £15m Growth Programme for Nigeria
The findings come shortly after the United Kingdom announced a £15 million Growth Programme for Nigeria aimed at supporting economic transformation, attracting private investment and advancing reform-driven growth.
The three-year initiative followed discussions between UK representatives and Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The programme seeks to help Nigeria move beyond macroeconomic stabilisation towards sustained economic growth supported by reforms and investment.
Although the growth programme and the financing gap report are separate initiatives, both highlight the importance of mobilising investment to support Nigerian businesses and strengthen economic activity.
Closing the Financing Gap Remains a Major Challenge
The estimated $131 billion financing gap in Nigeria highlights the scale of the challenge facing Black-owned and -led businesses seeking capital to expand. The wider $209 billion shortfall across five African markets also points to constraints that extend beyond individual countries.
The report's recommendations focus on improving access to suitable financing, strengthening businesses' investment readiness and encouraging investors to adopt structures that reflect local market conditions.
Addressing these barriers could help more businesses expand their operations, create jobs and participate in capital-intensive sectors. However, closing the gap will require sustained engagement from investors, fund managers, development finance institutions and businesses themselves.
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