Raising capital for small businesses, corporations, and governments in Africa should not be a daunting task.

Across Africa, more than a trillion US dollars sits in banks, pension funds, insurance companies, DFIs, and private investors, actively looking for bankable projects.

Yet many entrepreneurs, CEOs, and policymakers still say, “There is no money.”

The problem is usually not the absence of capital – it is the mismatch between:

·        The kind of capital a project needs, and

·        The way that the project is prepared, structured, and presented.

This article lays out the main sources of capital available to three groups:

I’ll keep the language simple and practical, and focus on where to look and what each source is good for.

1. Capital for Small Businesses and Startups

Most African businesses sit in this category – micro, small, and medium enterprises (MSMEs). For them, access to finance is about speed, simplicity, and flexibility, often in small ticket sizes.

1.1. Personal Networks and Community Finance

1. Personal savings
The first investor in most African ventures is the entrepreneur. Savings, sale of assets, side jobs – this “bootstrap” capital is often the most important.

2. Friends, family, and community (“FFF” capital)
Informal loans or equity-like support from people who know and trust you. Usually flexible and fast, but often undocumented – it’s wise to put simple agreements in writing.

3. Rotating savings and credit groups
Also known as motshelo, stokvels, tontines, chama, susu, depending on the country.

·        Members contribute regularly and take turns receiving a lump sum.

·        Some groups now invest in land, housing, small businesses, or buy equipment together.

4. Cooperatives and SACCOs
Savings and Credit Cooperatives often:

·        Take deposits

·        Provide small loans to members at lower rates than microfinance or digital lenders

·        Sometimes invest collectively in income-generating projects

1.2. Local Financial Institutions

5. Microfinance Institutions (MFIs)
Serve very small and informal businesses. Features:

·        Small ticket sizes, often from a few hundred to a few thousand dollars

·        Short tenors, frequent repayments

·        Higher interest rates, but more accessible than banks

6. Digital and mobile-based lenders
Using mobile money and smartphone data to score credit.

·        Very fast approvals

·        Useful for short-term working capital

·        Often very high effective interest – good servant, bad master

7. Commercial banks (SME units)
Traditional banks are cautious with small businesses, but many now have SME desks.

·        Require basic financial records, bank statements, and sometimes collateral

·        Offer overdrafts, term loans, and sometimes invoice or asset finance

·        Cost is moderate compared to MFIs and digital lenders, but access can be tougher

1.3. Trade and Supply Chain Finance

8. Supplier credit
Suppliers giving you goods on credit (30/60/90 days).

·        Common in retail, wholesale, and agriculture

·        Reduces the need for cash upfront

·        You “finance” your working capital through negotiated terms

9. Buyer / off-taker finance
Bigger buyers (exporters, processors, supermarkets) sometimes:

·        Pre-finance inputs (seed, fertilizer, packaging)

·        Deduct costs when you deliver the produce or goods

This is very common in agriculture, mining services, and FMCG distribution.

10. Factoring and invoice discounting

·        You sell or discount your invoices to a financier and get cash immediately

·        Especially useful when you supply the government or large corporates that pay slowly

·        Several banks and specialist fintechs in Africa now offer this

11. Warehouse receipt finance

·        In agriculture, you store produce in a certified warehouse

·        The warehouse issues a receipt, which a bank accepts as collateral

·        You avoid “fire sales” after harvest and can wait for better prices

1.4. Asset-Based and Alternative Finance

12. Leasing and asset finance

·        Instead of paying cash for a vehicle, machine, or equipment, you lease it

·        The financier owns the asset; you pay monthly and can often buy it at the end of the lease period

·        Common for trucks, taxis, machinery, medical equipment, and solar systems

13. Revenue-based finance (RBF)

·        Financiers provide capital, and you repay as a fixed % of your monthly revenue

·        No fixed installment; payments go up or down with your sales

·        Emerging model in African tech, creative industries, and digital SMEs

1.5. Equity and Risk Capital

14. Angel investors

·        Wealthy individuals (often entrepreneurs or professionals) invest their own money

·        Provide small equity tickets or convertible loans (e.g., $10k–$250k)

·        Often give mentorship and networks, as well as money

·        Look for: local angel networks, diaspora groups, business clubs

15. Venture capital (VC)

·        Focus on high-growth startups, especially in tech, fintech, e-commerce, healthtech, edtech, and clean energy

·        Ticket sizes range from the low hundreds of thousands to millions of dollars

·        Expect rapid growth, strong teams, and scalable models

·        Located both in Africa and abroad (often via Africa-focused funds)

16. Impact investors

·        Invest in businesses that produce both financial returns and social/environmental impact

·        Common in: off-grid solar, health, education, agriculture, affordable housing, waste management

·        Can be more flexible than pure commercial VC in terms of return expectations and tenors

17. Accelerators and incubators

·        Provide small amounts of capital plus training, mentorship, and investor introductions

·        Often backed by donors, DFIs, or corporates

·        Good for early-stage entrepreneurs building structure and networks

1.6. Public and Donor-Backed Programmes

18. Government SME funds and banks

Many governments run:

·        Youth and women's funds

·        Development banks or SME windows (e.g., Bank of Industry in Nigeria, SEFA in South Africa, national development banks in several countries)

·        Credit guarantee schemes to share risk with commercial banks

19. Grants and challenge funds

·        Donors, NGOs, and foundations provide grants for specific sectors (e.g., agriculture, climate-smart solutions, digital innovation)

·        Typically, competitive application processes

·        Non-dilutive (you don’t give up equity), but project-specific and often time-bound

20. DFIs working through local institutions

Development Finance Institutions (DFIs) such as IFC, AfDB, Proparco, DEG, FMO, DFC often:

·        Lend to local banks with instructions to on-lend to SMEs

·        Invest in SME-focused funds or platforms

·        Offer technical assistance to help SMEs become bankable

1.7. Crowdfunding and Diaspora

21. Crowdfunding platforms

·        Donation-based: supporters give money for a cause or product

·        Reward-based: pre-selling your product or service

·        Equity-based: selling small ownership shares online

·        Regulation is evolving in many African countries; always check legal requirements

22. Diaspora finance

·        Loans or equity from Africans abroad, often combined with mentorship

·        Some countries are piloting diaspora-focused SME funds

·        Strong potential where trust and family ties are high

2. Capital for Established Corporates

For mid-sized and large companies, the challenge is less about access and more about finding the right mix of cost, maturity, currency, and control.

2.1. Banks and Debt Markets

23. Commercial bank loans and overdrafts

·        Overdrafts for day-to-day working capital

·        Term loans for equipment, expansion, and acquisitions

·        Syndicated loans for larger projects, often cross-border

24. Trade finance instruments

·        Letters of Credit (LCs)

·        Bank guarantees and performance bonds

·        Supply chain finance and receivables finance

Critical for importers, exporters, contractors, and manufacturers.

25. Corporate bonds and commercial paper

·        Issued on local capital markets (e.g., JSE, NSE, EGX, BRVM, NGX, etc.)

·        Commercial paper for short-term funding (usually under 1 year)

·        Bonds for longer-term funding (3–10+ years)

Requires:

·        Audited financials

·        Credit rating (often)

·        Compliance with listing and disclosure rules

2.2. Equity and Private Capital

26. Listing on stock exchanges

·        Raise equity from the public

·        Improve visibility, governance, and liquidity for shareholders

·        Comes with reporting obligations and market scrutiny

27. Private equity (PE) and growth capital funds

PE funds invest in established businesses with growth potential:

·        Ticket sizes often range from a few million to tens of millions of dollars

·        Sectors: financial services, FMCG, healthcare, education, logistics, manufacturing, energy, etc.

·        Hands-on: help with strategy, governance, professionalisation

28. Mezzanine / hybrid finance

·        Sits between debt and equity (e.g., subordinated loans, convertible instruments, preference shares)

·        More flexible than pure bank loans, less dilutive than common equity

·        Common in management buyouts, expansion, and restructuring

29. Strategic investors and joint ventures

·        Trade players (regional champions, multinationals) investing to enter or grow in a market

·        Bring: capital, technology, skills, access to new markets

·        Often formed as JVs, minority stakes, or acquisitions

30. Corporate venture capital (CVC)

·        Established corporates investing in startups and innovation ventures

·        Growing in telecoms, banking, energy, and retail across Africa

·        Useful for startups looking for capital and a strong distribution partner

2.3. Export, Project, and Infrastructure Finance

31. Export Credit Agencies (ECAs)

If you’re importing equipment or services from abroad:

·        ECAs (e.g., from China, US, Europe, India, etc.) can provide buyer’s credit or guarantees

·        Typically long-term, with competitive rates for qualifying projects

·        Common in power, transport, manufacturing, telecoms

32. Project finance

·        Financing large projects on the basis of the project’s cash flows, not only the sponsor’s balance sheet

·        Often structured through a Special Purpose Vehicle (SPV)

·        Used in energy, infrastructure, PPPs, and large industrial plants

33. Blended finance

·        Combining concessional money (from donors/DFIs) with commercial capital

·        Tools: guarantees, first-loss capital, subordinated debt

·        Lowers risk for private investors in priority sectors such as climate, agriculture, and social infrastructure

3. Capital for Governments and State-Owned Enterprises (SOEs)

For governments, the key issues are the cost of borrowing, debt sustainability, currency risk, and terms. The menu of options is wide, but requires careful strategy and governance.

3.1. Domestic Capital Markets

34. Treasury bills and local bonds

·        Governments regularly issue short-term T-bills and longer-term bonds in local currency

·        Bought by banks, pension funds, insurance companies, and individuals

·        The foundation of domestic financing and a benchmark for interest rates

35. Municipal and sub-sovereign bonds

·        Some larger cities and regions issue their own bonds (where the law allows)

·        Used for infrastructure like water, roads, and housing

·        Requires strong creditworthiness and transparency

3.2. International Markets

36. Eurobonds and syndicated loans

·        Issued in international markets, typically in USD or EUR

·        Provide large sums for infrastructure and budget support

·        Expose the issuer to currency risk – a major issue when currencies depreciate

37. Thematic bonds: green, social, sustainability-linked

·        Use-of-proceeds linked to specific outcomes (climate, social, SDGs)

·        Often attract specialised ESG investors

·        Potentially better pricing and longer maturities if structured well

38. Sukuk (Islamic bonds)

·        Sharia-compliant instruments backed by underlying assets or projects

·        Attractive for countries with significant Muslim populations and access to Gulf and Asian investors

·        Already used by several African countries at the sovereign and sub-sovereign levels

3.3. Multilateral, Bilateral, and Development Finance

39. Multilateral development banks (MDBs)

·        World Bank (IBRD/IDA), African Development Bank (AfDB), Islamic Development Bank (IsDB), and others

·        Provide long-term, often concessional loans and grants

·        Focus on infrastructure, social sectors, policy reforms, climate, and private sector support

40. Bilateral lenders

Examples include:

·        China Exim, China Development Bank

·        AFD (France), KfW (Germany), JICA/JBIC (Japan), etc.

·        USAID/DFC, FCDO/BCI, and other national agencies

Typically linked to:

·        Infrastructure, energy, water, transport, health, education

·        Sometimes tied to goods and services from the lender’s country

41. Export Credit Agency (ECA)-backed sovereign loans

·        Used for large import-heavy projects (rail, power, ports, defense, aviation)

·        Backed by ECAs from exporting countries

·        Often long-term and relatively competitive if structured properly

3.4. Public–Private Partnerships (PPPs) and Project Structures

42. PPPs and concessions

·        Private sector finances, builds, and/or operates public infrastructure under contract

·        User fees or government payments (availability payments) repay the investment

·        Can reduce immediate fiscal pressure but still create long-term obligations

43. Blended and climate finance

·        Mix of grants, concessional loans, guarantees, and private capital

·        Deployed through global climate funds and initiatives targeting:

·        Renewable energy

·        Climate adaptation

·        Resilient agriculture

·        Urban infrastructure

44. Sovereign wealth funds (SWFs)

·        Domestic SWFs (e.g., in Nigeria, Angola, Ghana, and others)

·        Foreign SWFs from the Middle East, Asia, and elsewhere

·        Can invest in infrastructure, real assets, and co-invest with private and development partners

45. Diaspora bonds and remittance-backed structures

·        Bonds marketed to the country’s diaspora, often with a patriotic appeal

·        Can be cheaper or more stable than purely market-based funding if trust is strong

·        Some countries also use remittance flows as collateral for borrowing

4. The “Hidden Giants”: African Institutional Investors

Across Africa, pension funds, insurance companies, and asset managers control hundreds of billions of dollars. Historically, most of this money sat in:

·        Government securities

·        Bank deposits

·        Blue-chip listed equities

Regulators and policymakers are gradually opening space for:

·        Infrastructure bonds and funds

·        Private equity and venture capital

·        Real estate and affordable housing vehicles

·        Green and climate-focused instruments

For businesses and governments, this means:

·        There is a deepening pool of local long-term capital that does not have the same FX risk as foreign loans

·        But tapping it requires: robust governance, transparent structures, proper regulation, and credible project preparation

5. Matching Your Project to the Right Capital

A simple way to think about capital is to ask four questions:

Then:

·        Use short-term debt (overdrafts, trade finance, short loans) for working capital

·        Use long-term debt or leases for assets and infrastructure

·        Use equity or quasi-equity for riskier growth, innovation, and scaling

·        Use blended structures where risks are high but impact is strong (climate, frontier regions, new technologies)

6. Turning “Available Money” into Accessed Capital

Knowing the sources is only half the job. The other half is making your project bankable:

·        Clean, reliable financial statements

·        Clear ownership and governance structure

·        Realistic business model and projections

·        Proper handling of permits, land, and regulatory issues

·        Risk analysis and mitigation (e.g., FX hedging, guarantees, insurance)

·        Attention to ESG (environmental, social, governance) – increasingly non-negotiable

Across Africa today, there is no shortage of money. There is a shortage of well-prepared, well-structured, and well-presented projects that match the needs and risk appetites of that money.

If you are a small business, a corporate executive, or a policymaker, the opportunity is clear:
understand the capital landscape, choose the right instruments, and invest in making your projects truly bankable.

Here’s to closing the deal.

Stephen Lecha