Briter Bridges, a research and market intelligence company which focuses on developing nations, has stated that approximately $415 million has been borrowed by Nigerian digital entrepreneurs over the past ten years.
According to the report “Debt Financing in Africa’s Innovative Ecosystem,” between 2014 and 2023, African startups as a whole borrowed a total of $2.1 billion.
“While debt is certainly playing a role in Africa’s startup ecosystem and innovations on the financing side making it more accessible, one of the biggest drivers of debt’s rise in Africa’s startup ecosystems may be the dramatic fall in equity funding, which fell from $2.6bn in 2022 to $1.4bn in 2023,2 the report said.
The report added that, “Over the past ten years, more than $2bn in disclosed debt funding has been raised by digital, technology-enabled, and green companies in Africa from more than 140 funders for a total of more than 200 deals,”
Kenyan startups received the lion’s share of this debt, having borrowed over $800 million in 60 transactions.
The startups in Nigeria borrowed $415 million, which was the second-highest amount on the continent at that time. The report claims that the money was borrowed in more than 40 transactions.
Over 75% of the total loan investment received by African entrepreneurs came from the main four countries—Nigeria, Kenya, Egypt, and South Africa—which are known for their entrepreneurial scene.
Cleantech received about half of the stated loan capital between 2014 and H1 2023. Pay-as-you-go items and solar house kits received the most of the money. Almost 25% of debt capital in fintech has gone toward buy-now-pay-later and asset finance.
It supported electric cars in the mobility space and financed agricultural equipment in the agritech space.
The $200 million raised by the Kenyan startup Mkopa, the $130 million raised by Sunking, another Kenyan startup, and the $50 million raised by the Nigerian startup Lumos were among the top debt deals during the period covered by the research.
