Black-owned and led businesses in Nigeria face a funding gap of $131 billion, the largest among five African countries studied in a report by British International Investment and Swedfund, Sweden's development finance institution. The combined financing shortfall across Nigeria, South Africa, Kenya, Senegal and Côte d'Ivoire reached $209 billion, according to the study titled 'Understanding the Investment Gaps in Black-owned and -Led Businesses in sub-Saharan Africa.' South Africa accounted for the second-largest gap at $45 billion, followed by Kenya with $23 billion, Senegal with $5.7 billion and Côte d'Ivoire with $4.6 billion.
The research combined quantitative market analysis with consultations involving stakeholders to examine how black-owned and led businesses access capital and what barriers they encounter. Across sub-Saharan Africa more broadly, the financing gap for such businesses reached $1.842 trillion, approximately four times the gap for businesses outside this category. Black-owned and led businesses account for between 89 and 99 per cent of small businesses across the five markets examined. However, their representation declined sharply as companies grew in size. In Kenya, they made up only 40 per cent of larger businesses, while in South Africa this figure fell to 35 per cent.
The concentration of black-owned and led enterprises in specific sectors explains some of the scaling challenges. These businesses are heavily represented in food systems, trade, services, light manufacturing and agriculture, sectors with relatively low barriers to entry. When businesses seek to expand into capital-intensive sectors such as infrastructure, energy and financial services, they encounter higher funding requirements and demands for specialised expertise. This difficulty in moving beyond the small and medium-sized enterprise stage reflects the broader struggle to access sufficient financing.
The report identified investment readiness, limited access to suitable financing, talent shortages and inadequate business networks as key constraints facing these companies. On the investor side, obstacles included limited local representation, insufficient understanding of local markets, perceptions of risk and financing structures that do not adequately reflect businesses' actual needs. For Nigerian savers and investors, the findings suggest that capital directed toward black-owned and led businesses remains significantly constrained, potentially limiting both economic growth and job creation across the country.