Ask three data trackers whether African startups are borrowing more, and you get three answers.
TechCabal Insights says debt hit $614 million in the first half of 2026, up 37%, about 43% of all funding. Africa: The Big Deal says that over nine months debt fell 33% to $669 million, while equity rose 23% to $1.5 billion, the best nine months for equity since 2022. Partech’s 2025 report put debt at a record 41% of all capital.
The gap comes down to method: what counts as a startup, and the swings in a few huge energy deals. Energy startups raised $93 million in debt this year against $585 million last year. But the trackers agree on the point that matters: the loans are going to businesses with hard assets, not to ideas.
Who actually gets the loan?
Look at who is borrowing. GoCab raised $45 million, $30 million of it debt, to put drive-to-own vehicles in the hands of gig workers. Bisedge secured about $11 million from Finnfund to expand electric logistics. M-KOPA, which handles over two million payments a day, has extended more than $2 billion in credit. Launch Base Africa’s read: lenders are underwriting hard collateral and predictable cash flows, not venture risk.
That leaves a gap. A young company with software, customers and growth but few assets is still a hard borrower.
The new bet
On October 14, Cascador and Sterling Bank launched a $200 million SME Credit Backstop Fund to close that gap. It shares the risk of default, so the bank is more willing to lend. Venture funds nominate businesses they already know. Sterling assesses, lends and collects. Loans start in naira at up to $250,000, with a target of $1 million, and the model could support up to $1 billion in credit.
One caution: the announcements don’t confirm that the full $200 million is already raised.
What it means for founders and workers
For founders, debt means less dilution but a repayment date. The policy rate is 23% after September’s historic cut, so borrowing is still not cheap. For workers, the upside is real: the drive-to-own van, the solar panel and the phone on instalments are all financed by exactly this kind of debt.
What it means for the economy
The credit gap is wide. About one in five Nigerian businesses had a bank loan or credit line in 2025, against 36% globally. And capital remains concentrated: Kenya, South Africa, Egypt and Nigeria took 72% of all funding in 2025. A backstop only helps if it reaches beyond venture-backed companies.
So, is debt the new round?
For companies with assets and cash flow, yes. For everyone else, the equity market has been quietly coming back, with Q3 equity of $580 million, 2.5 times last year’s third quarter. The truth is a split market: asset-heavy firms borrow, asset-light firms still need investors, and the Cascador and Sterling fund is a test of whether the middle can be bridged.
Business Verge asks: If lenders back only what they can repossess, who funds the ideas that have neither assets nor a track record yet?
