Black-owned and -led businesses across five African markets face a combined financing gap of $209 billion, according to 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, examines access to capital in South Africa, Nigeria, Kenya, Côte d’Ivoire and Senegal, highlighting the challenges businesses face in securing growth financing.

The research estimates that the financing gap for Black-owned and -led businesses across sub-Saharan Africa reaches $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. The estimated gaps in Senegal and Côte d’Ivoire stand at $5.7 billion and $4.6 billion, respectively.

The findings also reveal a decline in Black ownership and leadership as businesses grow. Across the five markets, Black-owned and -led businesses represent between 89% and 99% of small businesses, but their share falls to 40% among larger businesses in Kenya and 35% in South Africa.

The report identifies limited access to growth capital, investor networks, specialised expertise and appropriate financing structures as key obstacles to expansion.

A particular financing gap exists for businesses seeking between $100,000 and $1 million, where funding requirements often exceed the scope of grants and early-stage support but remain below the investment 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 research forms part of BII’s Black Ownership and Leadership for Development (BOLD) initiative, established in 2022 to increase capital flows to Black-owned and -led businesses across sub-Saharan Africa.

These businesses are concentrated in sectors including agriculture, food systems, trade, services and light manufacturing. Their representation is more limited in capital-intensive industries such as infrastructure, energy and financial services, where higher funding requirements can make expansion more difficult.

The report also finds that financing barriers differ across markets. In Kenya, stakeholders identified limited access to investor networks and early-stage capital, while Nigerian businesses face greater constraints in accessing hard-currency financing.

For investors and fund managers, the research points to challenges including limited local market knowledge, perceptions of risk and investment structures that do not adequately reflect the financing needs of businesses.

“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.

The report recommends stronger investment pipeline development, greater participation by Black professionals in capital allocation and closer partnerships with local financial institutions and investment managers.

It also calls for increased availability of patient capital, local-currency financing, blended finance and risk-sharing mechanisms, alongside technical assistance to improve investment readiness.

“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 said.