Black-owned businesses across five of sub-Saharan Africa’s biggest economies are falling $209-billion short of the capital need for expansion, hindering economic growth and limiting financial inclusion, a new study showed.

The deficit represents 80% of the funding gap seen in Nigeria, South Africa, Kenya, Senegal and Ivory Coast, the study commissioned by British International Investment Plc and Swedfund International AB showed.

The challenges faced by Black businesses are diverse. They range from the way many are structured to a lack of access to investor networks. There is also a bias among capital allocators, few of whom come from the same social or ethnic backgrounds, researchers at Open Capital Advisors, which carried out the study on behalf of the development finance institutions, said.

“If these businesses aren’t getting capital for growth, they’re just plateauing. They’re still working as businesses, but they’re not able to grow,” BII’s Africa head Chris Chijiutomi said in an interview. “They’re not helping to contribute to broad economic development.”

Nigeria Dominates

The researchers found that Black-owned and Black-led businesses, or BOLD, are mainly small “with representation declining as businesses scale.”

The biggest funding gap for BOLD businesses was in Nigeria at $131-billion followed by South Africa at $45-billion. Kenya had a deficit of $23-billion while Senegal and Ivory Coast have gaps of $5.7-billion and $4.6-billion respectively.

“Nigeria has 200 million-plus people,” said Chijiutomi. “Some of the things we’ve seen from the reports in Nigeria are more pronounced because of the volume of businesses that exist” there, he said.

Organisations such as BII will need to make sure the funding they offer is more accessible to BOLD businesses and should set targets, he said.

“Closing these funding gaps is not only a matter of inclusion,” the researchers wrote. “It is an opportunity to unlock growth, innovation and development impact at scale.”