Closing Africa’s Missing Continuum of Capital

The core of the issue is a systemic mismatch. Banks, cautious and reliant on short-term deposits, often demand collateral and financial histories that growth-stage firms cannot yet provide. This creates a paradox where companies must be bankable to receive funding, yet they need that very funding to build the governance and assets required to be considered bankable. While recent data suggests the maturity structure of lending is improving, the allocation of capital remains skewed. Heavy government borrowing, as seen in Kenya, often crowds out the private sector, incentivizing banks to favor the safety of public securities over the risks of corporate growth.

Bridging this gap requires more than simply urging commercial banks to lend more. It demands a sophisticated financial architecture that includes venture debt, mezzanine finance, and robust trade supply-chain instruments. By linking finance directly to commercial activity—such as verified orders and inventory rather than balance sheets alone—lenders can bypass traditional collateral hurdles. However, the path to integration through the African Continental Free Trade Area (AfCFTA) remains fragile. Without a functional continuum of capital that supports a firm’s evolution from local operations to regional expansion, the continent risks creating a market that only the already well-capitalized can navigate.