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Africa's economic landscape is dominated by SMEs, which constitute 75% to 90% of businesses, according to the World Economic Forum. These enterprises drive growth, innovation, and employment, yet limited access to financing constrains their ability to scale and contribute fully to development. Against this backdrop, private debt emerges as a promising solution to bridge the continent's massive financing gap.
Private debt, particularly mezzanine financing and direct lending, offers SMEs flexible alternatives to both traditional loans and equity. Unlike equity financing, it does not dilute ownership, while providing lenders with predictable returns and portfolio diversification. Globally, private credit markets have surged to USD 1.5 trillion, yet Africa captures just 0.3%, highlighting untapped potential.
Examples such as FSD Africa's Private Equity and Debt Programme and South Africa's growing mezzanine debt market show how private debt can unlock SME growth, preserve jobs, and attract institutional investors.
To realise this potential, policymakers and regulators must strengthen legal frameworks, build investor confidence, and encourage institutional participation. Unlocking private debt markets could catalyse SME growth, job creation, and inclusive economic development across Africa.
In this article, we explore the role of private debt in unlocking SME growth and driving broader economic transformation across the continent.
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