Private Credit in Africa: Working Capital, Growth & Special Situations

Credit demand across Africa is real. Supply from traditional banks can be slow or constrained. Private credit fills the gap with structures that fit how companies actually operate. If you run a distributor in Lagos or a processor in Abidjan, you care about inventory, receivables, and FX risk. If you run a towerco in Nairobi, you care about tenancy and contracts. If you operate a mine services fleet in the Copperbelt, you care about capex and maintenance cash. This guide gives a straight view of what gets funded, how deals are structured, where execution stalls, and what we do to move transactions from teaser to funds flow.

Why companies in Africa raise private credit

Liquidity gaps are common. Suppliers want cash, customers want terms, FX markets move, and local rates can spike. Banks often cap limits or ask for collateral you cannot spare. Private credit steps in with structures that tie directly to assets and contracts, not just balance sheet history. Speed matters. Bespoke covenants matter. Recourse that respects real risk matters. Pricing is higher than bank debt, yet losing a season, a contract, or an acquisition is more expensive.

Core use cases we fund

Regional patterns that change how deals are built

Africa is not one market. Legal security, FX depth, collateral registries, and enforcement speed vary widely. You win by building to the rules of each place, not by forcing a template.

• Nigeria and Ghana. Active trade, large consumer base, FX convertibility risk that must be managed, strong use of movable collateral registries for security perfection. Nigeria’s National Collateral Registry is live under the 2017 STMA. :contentReference[oaicite:1]{index=1}
• Kenya, Tanzania, Uganda, Rwanda. East Africa has depth in logistics, agriculture processing, fintech, and telco. Kenya’s Movable Property Security Rights Act created a 24/7 notice-based collateral registry in 2017. :contentReference[oaicite:2]{index=2}
• Francophone West and Central Africa. OHADA’s Uniform Act on Secured Transactions widened collateral types and allowed out-of-court enforcement, supported by RCCM registries across 17 member states. :contentReference[oaicite:3]{index=3}
• South Africa and Namibia. Strong professional services and banked corporates, yet private credit still wins on speed, bespoke covenants, or tougher stories.
• North Africa. Morocco and Egypt are deeper markets with export and manufacturing hubs. Egypt also sits in many trade and logistics flows.

Key risks and how to control them

No fluff here. Risk is real. The way you package it is the difference between full ask and no bid.

• FX and convertibility. If cash flows are in local currency and debt is in USD or EUR, you can blow your coverage when rates move. Hedge where possible, price cushions where hedges are thin, and hardwire a cash waterfall that catches leakage. Facilities like TCX can swap hard currency funding into local currency in frontier markets so borrowers pay in local terms. :contentReference[oaicite:4]{index=4}
• Transfer risk. Getting funds out on time can be tough in periods of FX scarcity. Political risk insurance can cover transfer and convertibility, expropriation, breach of contract, and war or civil disturbance. MIGA is a reference provider. :contentReference[oaicite:5]{index=5}
• Security perfection. Use the right registry and right form. Nigeria’s NCR under STMA, Kenya’s MPSR registry, and RCCM in OHADA states are core tools. If you miss perfection, you give up priority when it matters most. :contentReference[oaicite:6]{index=6}
• Contract assignment and pay block. For contract-backed loans, get assignment accepted by the payor, and route funds through controlled accounts. If you rely on side letters without control, expect a discount.
• Regulatory and sanctions checks. Non-negotiable. Miss here and deals die late. Clear KYC, UBO, and trade documentation up front.
• ESG and permits. Especially in extractives, healthcare, and food. If a project needs environmental or clinical approvals, get them in the file before you go to market.

Instruments that actually close in Africa

The tool kit is broad. The art is matching risk and tenor to the cash that pays it back.

• Senior secured term. For plant, fleet, data center buildouts, or tuck-in acquisitions. Often interest-only with a cash sweep, tenor three to five years.
• Unitranche. Single-layer debt with one set of covenants. Useful when speed matters and you do not want to coordinate multiple lenders.
• Borrowing base working capital. Revolver sized to eligible receivables and inventory. Perfect for distributors, processors, and FMCG supply chains.
• Pre-export finance. For commodity flows. Tight control on inventory, inspection, and export proceeds.
• Mezzanine and pref. When senior is capped but the plan is still compelling. Expect higher returns and governance hooks.
• Holdco PIK. For dividend recaps or acquisitions where opco cash needs to stay inside the business for a period.

Where demand is strongest by sector

• FMCG and distribution. Big working capital users. Borrowing base and receivables programs fit well.
• Agribusiness. Pre-harvest inputs, processing, storage, and export. Combine inventory control with offtake assignments.
• Telecom towers and data centers. Contract-backed cash flows, capex heavy, with strong counterparties.
• Healthcare. Equipment, expansions, and receivables from insurers or public payors.
• Mining services and logistics. Fleet capex and maintenance, tied to contract schedules and performance metrics.
• Energy and C&I solar. PPA-backed cash flows with currency and credit work to be done on the off-taker.
• Education and services. Term loans and working capital, sized to enrollment or contract cycles.

Hard currency or local currency

If revenue is in local currency and debt is in hard currency, model a real stress. Cross currency hedges exist, yet not for every tenor or every market. TCX is a reference hedge provider for frontier currencies and can swap hard currency flows into local, which can be the difference between a safe DSCR and a problem. Where hedges are not available, we size leverage and structure cash sweeps to respect that reality. :contentReference[oaicite:7]{index=7}

Security, registries, and enforcement

A clean security package is not optional. It is your price and your access. OHADA’s Uniform Act expanded collateral options and streamlined enforcement across 17 member states, supported by RCCM registries. Nigeria’s STMA and National Collateral Registry, and Kenya’s MPSR regime, give lenders clarity on priority and perfectible security over movables. Build your lien strategy with people who actually file these in practice, not just on slides. :contentReference[oaicite:8]{index=8}

Trade finance anchors and risk wraps

Afreximbank has been a consistent provider in trade and liquidity programs across the continent, with record disbursements in 2024. That matters for private credit because it helps anchor flows, co-share risk, and keep working capital moving when markets are tight. :contentReference[oaicite:9]{index=9}

For political and transfer risks, PRI cover from MIGA is a known solution. It can protect against transfer and convertibility, expropriation, breach of contract, and war or civil disturbance. We arrange deals with PRI where needed, or structure intercreditor terms that reflect the presence of PRI. :contentReference[oaicite:10]{index=10}

Market context and where we are in the cycle

Private capital deployment in Africa fluctuates with global risk appetite. 2024 was softer for equity deployments in several data sets, while credit and trade finance kept moving because businesses still needed cash to operate. The punchline is simple. Well-structured credit with real security and real contracts finds a home, even when headline flows are down. :contentReference[oaicite:11]{index=11}

Regional trade under AfCFTA continues to grow from a low base, and that creates contract flows that are fundable. Supply chains that once depended on extended supplier credit now need third party working capital. Where you have recurring sales and predictable logistics, private credit follows. :contentReference[oaicite:12]{index=12}

How we run the process

1. Scoping. We define the use case, target size, currency, tenor, and security that is realistic for your market and sector. We agree on a red, amber, green actions list.
2. Underwriting. We build the model, borrowing base or contract schedule, FX view, and covenant framework. Legal counsel maps the security path and filings.
3. Data room. We do not launch until the file is clean. Incomplete files trade down or die.
4. Soundings. Tight list of buyers who actually close. We set a calendar they can meet.
5. Term sheet. Price, fees, conditions, covenants, security, accounts, and waterfall documented in simple words. No traps.
6. Credit approval and docs. We push issues to the front, not the back. If a risk is priced, it is in writing.
7. Closing and funding. Escrow and mechanics that leave no room for confusion. First draw on a clear checklist.

What lenders expect to see

• Clean financials, tax, and aging reports, not just management accounts
• Contracts with assignment and payment mechanics that will work in practice
• Security maps and draft filings for registries, plus evidence of prior liens
• Accounts and waterfall, with independent signatories where needed
• FX plan that is believable, with hedges or cushions, not hope
• ESG and permits where relevant, especially in sensitive sectors

Pricing, leverage, and tenor

Pricing spans a wide range. Lower risk, asset-backed working capital with strong payors and hard controls can clear at tighter margins. Higher risk, unhedged, or special situations clear wider. Leverage is sized to cash generation and collateral. Tenor follows the use case. For example, revolvers for receivables turn inside a year, capex term debt sits three to five years, and acquisition or holdco paper can sit longer with PIK features. If a plan only works at peak leverage and heroic FX assumptions, do not expect signatures.

Quick case sketches

Distributor in West Africa.$60m borrowing base against receivables and inventory, daily availability reports, cash sweep, and FX cushion. Supplier discounts alone paid for a chunk of the margin.

Telecom tower carve-out in East Africa.$120m unitranche for asset acquisition and upgrades, anchor tenancy contracts assigned, minimum tenancy covenants, and a reserve for capex slippage.

Agri processor in Southern Africa.$40m pre-export facility with warehouse receipts and inspection. Export proceeds routed to a controlled collection account. Cycle risk dropped, throughput rose.

Healthcare network in North Africa.$75m capex term loan for expansion, receivables pledge from insurers, and a covenant tail for delayed reimbursements.

Common mistakes that kill price

• Launching without a perfected security plan or registry filings queued
• Relying on side letters for payment control instead of proper assignment
• FX exposure hand-waved as “should be fine” with no hedge or cushion
• Borrowing base rules that are too loose to trust
• Teaser that overpromises and a data room that underdelivers

What we need from you to move fast

• Audited financials, latest management accounts, tax status letters
• Top ten customers and suppliers, with terms and concentration
• Executed contracts, assignment provisions, and payor contact
• Collateral schedules, valuations, and registry status
• FX history and current hedges, local banking relationships
• Compliance pack, UBO charts, permits, and ESG policies

Timeline and deliverables

If you want a straight process and a real close

We are arrangers and advisors. Not a direct lender. We sit between your team and a set of specialty lenders and funds that are actually writing tickets in Africa. The difference is execution. Our forward-flow programs give qualified sponsors faster reads. Our underwriting gives buyers confidence to step in. Fees start at $25,000 for smaller scopes and rise above $150,000 when the work is heavy or multi-asset. Success fees are tied to closing, not to meetings. If your plan is real, and you can commit internal time to unlock data, we will carry the ball across the line.

FAQ

How big can a facility be

Single deals run from $25m to over $500m. Bigger tickets require stronger controls, diversified payors, and credible reporting. Where funding stacks include trade anchors or PRI, size goes up.

Do we need local currency

If revenue is local, model local. Hedge where possible or size leverage to live without one. TCX can swap flows into local currency in many markets, though not all. We push for hedges first, cushions second. :contentReference[oaicite:13]{index=13}

How do we perfect security

Use the right registry for the market. NCR in Nigeria under the 2017 STMA, MPSR in Kenya, RCCM under OHADA states. Miss perfection and your priority can vanish in a dispute. :contentReference[oaicite:14]{index=14}

Can we get cover for transfer and political risk

Yes, PRI through MIGA covers transfer and convertibility, expropriation, breach of contract, war and civil disturbance, subject to underwriting. We arrange structures where PRI sits cleanly with lenders. :contentReference[oaicite:15]{index=15}

What slows deals down

Missing assignment approvals from payors, weak FX plans, unclear collateral filings, and incomplete compliance packs. Fix these and timelines compress fast.

We are an advisory and placement firm. Not a direct lender. All financings are subject to due diligence, KYC, sanctions screening, local law advice, and executed documentation. Engagement fees for private credit mandates start at $25,000 and can exceed $150,000 based on scope. Placement fees apply on closing. Where relevant, we may coordinate with development banks, political risk insurers, and hedge providers to improve bankability. Global deployment into Africa remains small relative to private credit AUM, which rewards sponsors who present structured, audit-ready files. :contentReference[oaicite:16]{index=16}