A majority of Kenyan firms are starved of early-stage capital and investor networks vital for growth, a new study by British International Investment and Swedfund reveals.

Companies owned by black people in the country face up to $23 billion or about KES2.97 trillion funding gap, starving the enterprises of vital capital to grow and create jobs.

According to a new research by UK’s development finance institution, British International Investment (BII) and Swedfund, Kenya ranks third among the five markets surveyed in Africa.

The study dubbed Understanding the investment gaps in Black-owned and -led businesses in sub-Saharan Africa, shows that black owned and black-led firms in Nigeria grapple with $131 billion financing gap while their peers in South Africa face $45 billion gap.

In Senegal, the funding gap is about $5.7 billion while in Côte d’Ivoire, it is at $4.6 billion. Across the five markets studied, the total gap stands at $209 billion. Across sub-Saharan Africa as a whole, the authors estimate the gap at $1.842 trillion.

While Kenya, East Africa’s largest economy remains a vibrant ecosystem, companies struggle with access to capital to accelerate growth. The survey also points out to limited access to vital investor networks besides scarcity pf early-stage funding as the biggest barriers to growth.

Currently, the research noted that black-owned and black-led companies represent between 89 and 99 percent of small scale businesses in the markets under focus.

The report identifies a persistent gap for businesses seeking between $100,000 and $1 million in growth capital—a range that falls between the grant funding available to very small enterprises and the larger institutional investments reserved for established companies. This “missing middle” is where many promising Kenyan businesses stall.

“Black-owned and -led businesses are a driving force behind African economies, yet many continue to face significant barriers to accessing capital,” said Chris Chijiutomi, Managing Director and Head of Africa at BII. “Expanding opportunity for these businesses can help reduce inequalities, contributing to SDG 10, while unlocking their potential to drive growth, create jobs and foster innovation.”

Across the five markets studied most of the black-owned and led enterprises are active in food systems, trade, services, light manufacturing and agriculture. 

These segments have less barriers to entry. In more capital-intensive sectors such as infrastructure, energy and financial services, black-owned and black-led representation in business becomes thin.

The sectors where BOLD businesses are underrepresented—energy, infrastructure, financial services—are precisely those that require large-scale investment and specialised expertise. Without access to growth capital, Kenyan entrepreneurs risk being locked out of the most productive and profitable parts of the economy.

The report identifies a range of constraints, including limited investment readiness, insufficient access to talent and networks, and investor perceptions of risk. 

On the supply side, investors often lack local representation and understanding of Kenyan markets, and financing structures are frequently misaligned with the needs of local businesses.

Barriers vary significantly by market and solutions must be locally tailored. In Kenya, the priority is strengthening access to investor networks and early-stage capital. In Nigeria, access to hard-currency financing emerged as a more prominent constraint.

The report calls for a more intentional approach to investing in BOLD businesses. This includes stronger pipeline-building and local partnerships, greater Black representation among capital allocators, and financing better suited to business needs. 

Specific recommendations include patient and local-currency capital, blended and risk-sharing structures and targeted technical assistance to help them attract and absorb investment.

“For Swedfund, the insights from this research are directly linked to our institutional commitment to contribute to SDG 10, reduced inequalities,” said Kitanha Toure, Regional Director for West Africa at Swedfund. “Our strategy focuses on increasing investment in low-income markets, improving access for the underserved, and strengthening local ownership and decision-making.”

The research forms part of BII’s wider Black Ownership and Leadership for Development (BOLD) initiative, established in 2022 to increase the flow of capital to Black-owned and -led businesses across sub-Saharan Africa. 

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