In the past 10 years, Nigerian tech startups have accessed more than $415 million in debt, according to a report by Briter Bridges, a research and market intelligence firm focused on emerging economies. Titled “Debt Financing in Africa’s Innovative Ecosystem,” the report highlighted that African startups collectively borrowed a total of $2.1 billion between 2014 and 2023. Kenya led the continent by securing over $800 million through 60 deals, while Nigerian startups ranked second with $415 million borrowed in more than 40 deals.
The report emphasized the significant role debt financing has played in Africa’s startup ecosystem, attributing the surge to a decline in equity funding. Over the last five years, debt, as a share of total funding to ventures in Africa, grew from 4% to 26%, largely due to a substantial decrease in equity funding from $2.6 billion in 2022 to $1.4 billion in 2023.
The Big Four countries – Nigeria, Kenya, Egypt, and South Africa – accounted for over 75% of the total debt funding volume by African startups. Most debt funding flowed to companies with collateral, with nearly 75% directed to asset-heavy businesses in cleantech, mobility, agriculture, and logistics. Cleantech received nearly 50% of disclosed debt funding, primarily directed at solar home kits and pay-as-you-go products. Fintech and mobility sectors also attracted substantial debt financing, indicating a shift in funding dynamics within the African startup landscape.
Notable debt deals during this period included a $200 million raise by Kenyan startup Mkopa, $130 million secured by another Kenyan startup, Sunking, and $50 million acquired by Nigerian startup Lumos. The report signifies the changing financing landscape for African startups and the increasing importance of debt instruments in supporting innovative ventures.
