Consider three businesses operating in different parts of Africa.
In Kenya, a manufacturer has been profitable for eight years. Customers keep returning, suppliers get paid, and the business has grown without much external financing. Its owner understands the operation intimately but has limited audited financial records and little experience dealing with institutional investors.
In Ghana, a property owner holds land that has appreciated considerably. There is genuine demand for it, but uncertainty around the ownership documentation makes it difficult to use as collateral.
And in Nigeria, a music producer receives regular royalties from commercially successful recordings. The income is real, but establishing ownership, historical earnings and future payment rights to a financier’s satisfaction is another matter.
All three have something of economic value. Yet each may struggle to raise capital against it.
Having something valuable and having something that another person or institution can confidently finance are not quite the same thing.
That gap may explain part of the continent’s financing challenge. It may also create opportunities for investors and asset owners who understand how to bridge it.
What investors actually need to know
A bank considering a business loan wants to know whether the borrower can repay, how reliably, and what can be recovered if things go wrong.
An equity investor is concerned with future earnings, ownership, governance and the prospect of eventually realising a return. A pension fund has to consider those commercial questions alongside its obligations to retirement savers and the rules governing what it can invest in.
Their objectives differ, but all need reliable evidence on which to base a decision.
Hence the importance attached to audited accounts, credit histories, collateral, recognised valuations and documented operating records. These allow institutions to evaluate businesses without relying entirely on personal relationships or the assurances of their owners.
A credit history provides evidence of repayment behaviour. It is not repayment capacity itself. Audited accounts help establish financial performance, but they do not create that performance. A registered property title helps establish ownership; it says relatively little about whether the property is commercially attractive.
But their usefulness depends, at least partly, on the systems within which they operate. And the standards we now take for granted were not always available, even in today’s developed economies.
Today’s financial standards have a history
In nineteenth-century America, merchants regularly extended credit without modern credit bureaus, digital banking records or today’s financial reporting infrastructure.
In 1841, Lewis Tappan established the Mercantile Agency, a predecessor of Dun & Bradstreet. It relied on networks of local correspondents, including lawyers, who gathered information about merchants’ commercial standing and reputation.
It was an early attempt to solve a problem that remains familiar to lenders today: how do you assess someone you do not know well enough to trust with your money?
When financial institutions in today’s developed economies operated with less mature information systems, how did they establish the economic facts that modern underwriting indicators are designed to measure? And might some contemporary African technologies and commercial practices provide credible alternative ways of establishing those facts?
The historical comparison has obvious limits. Nineteenth-century American commerce is hardly equivalent to modern African markets, and earlier credit systems were often unreliable, discriminatory and prone to substantial losses.
But the underlying lesson holds: the objectives of prudent lending and investing have remained relatively consistent, while the methods used to establish the necessary facts have evolved.
Recognising value through different evidence
Take a Kenyan distributor supplying goods to hundreds of retailers.
Its financial statements may be incomplete, but its bank transactions, mobile-money records and customer purchase histories could reveal a great deal about the business: how much it sells, how often customers return, how quickly they pay and whether demand is becoming more predictable.
A conventional investor might place considerable weight on several years of audited financial statements. Another might supplement the available accounts with verified transaction records and direct evidence of customer behaviour.
The second investor could end up with a more complete picture.
Or a misleading one.
Money entering an account is not necessarily revenue. Revenue is not profit. And a customer who paid reliably last year may default next year.
Transaction records can also be incomplete, manipulated or unrepresentative of future performance. Any alternative evidence needs to be tested against actual outcomes, not merely accepted because it is digitally generated.
Research into digital transactions and other non-traditional information has found that such data can improve assessments of creditworthiness, including for borrowers with limited conventional credit histories. But performance varies across markets, data sources and models.
The lesson is not that mobile-money records should replace audited accounts. It is that the underlying economic question ought to determine which evidence is useful, rather than the other way around.
Different assets require different forms of proof. What matters is whether an independent investor can establish their economic value and the risks attached to it with sufficient confidence.
The opportunity before the market catches up
If some assets are difficult for conventional investors to assess, those who develop better ways of evaluating them may gain an advantage.
A profitable B2B services company might have operated for eight years without institutional funding. It has recurring customers, generates cash and has expanded steadily, but does not resemble the typical high-growth venture-backed startup.
One investor may pass because the company lacks the growth trajectory, funding history or potential exit size required by its strategy. Another may examine its customer relationships, operating margins, cash generation and realistic acquisition prospects, and conclude that it represents an attractive opportunity at the right price.
Neither assessment is necessarily wrong. The investors may simply be looking for different outcomes.
This brings to mind the distinction between unicorns and camels.
Unicorns are privately held startups valued at $1 billion or more, commonly associated with the pursuit of exceptional growth and very large investment outcomes.
Camels are businesses built around resilience, capital efficiency and the ability to survive difficult operating conditions.
A camel may never deliver a billion-dollar exit. It could still produce attractive returns through profits, distributions, debt repayment or an eventual acquisition.
There is nothing inherently superior about either model. They serve different investment strategies, and some businesses will combine characteristics of both.
Prominent venture investments can also develop their own momentum. Backing from recognised investors may attract further financing, customers and talent. That can genuinely improve a company’s prospects, while also encouraging subsequent investors to follow.
This question of what makes an African business genuinely investable also came up in my conversation with Louis Furtwängler on Term Sheet Tapes. Using OPay’s potential IPO as a starting point, we discussed African fintech valuations, the economics behind the growth narratives, and how investors might assess opportunities in these markets. You can watch the conversation here.
For investors willing to look beyond the most visible opportunities, the advantage might come from superior information, relationships that provide access to opportunities outside conventional investment channels, or the ability to improve an asset’s finance-ability.
An investor who helps a profitable business strengthen its reporting, formalise governance and establish a credible operating history may, for example, make it attractive to a wider pool of future buyers.
But there is an important distinction between finding an overlooked asset and finding an undervalued one.
A business may be cheap for perfectly good reasons: unreliable earnings, concentrated customers, weak legal protections, currency exposure or limited opportunities to exit.
The investor still needs to acquire it at an appropriate price, manage those risks and ultimately realise a return.
Better information can reveal a bargain. It can just as easily reveal why something that looks cheap deserves to be cheap.
What business owners can do about it
A business owner may spend years creating economic value without making that value particularly easy for outsiders to establish.
Consider a Ghanaian company generating substantial annual revenue. Its owner knows the customers, understands the suppliers and has a reasonably accurate sense of the business’s profitability.
But personal and business transactions are mixed together, records are incomplete, and important customer relationships are rarely documented.
The owner may be confident about the company’s prospects. An investor has to establish them independently.
That uncertainty can have a price. It may mean a lower valuation, more restrictive investment terms, additional collateral requirements or no financing at all.
Now imagine the owner begins separating business finances, documenting customer relationships, maintaining reliable accounts and establishing verifiable transaction histories.
The underlying commercial activity may barely change. Yet the business could become considerably easier to assess.
And that may improve its financing prospects, negotiating position and eventual sale options.
There are really two jobs involved in building an investable business: creating economic value and making that value independently verifiable.
A producer with properly documented music rights and reliable royalty statements may have more financing options than one receiving similar income through poorly documented arrangements.
A property owner with clear, enforceable title may have greater flexibility to sell, mortgage or otherwise finance the property.
None of this means that better paperwork guarantees better financing. Formalisation costs money, and some businesses simply do not generate sufficient returns to justify outside capital.
But the ability to demonstrate ownership, performance and enforceable rights can itself have economic value.
Evidence alone will not make an asset financeable
There is a reason financial institutions cannot simply replace conventional documentation with bank statements and payment-platform records.
Understanding an asset’s value is one thing. Having the legal right and practical ability to recover money from it is another.
A Nigerian supplier with ₦1 billion in verified invoices payable by established corporate customers in 90 days may have a valuable asset on its books, yet lack the liquidity to finance its next round of orders.
If the receivables meet a financier’s eligibility criteria, an advance of ₦750 million against those invoices could release working capital before the customers settle their obligations.
The figures are illustrative. Whether the financing is commercially viable depends on the creditworthiness of the debtors, the enforceability of the receivables and their assignment or security arrangements, collection controls, pricing and the supplier’s ability to absorb the financing costs.
Mexico’s Nacional Financiera has operated a reverse-factoring programme through which approved payment obligations from large corporate buyers can support financing for smaller suppliers.
The basic idea is that a financier can assess the payment obligation of an established buyer rather than relying entirely on the smaller supplier’s financial standing.
But verifying that the invoices exist is only the beginning.
Were the goods delivered and accepted? Can the customers dispute payment? Has the supplier already pledged the invoices to someone else? And can the lender legally receive and control the money when the customers pay?
If those questions cannot be answered satisfactorily, the invoices may remain difficult to finance, however creditworthy the customers appear.
The economics must also work. Interest, verification costs, collection expenses and potential losses can make a transaction unattractive even where the underlying obligations are genuine.
The ₦750 million advance is illustrative, not a suggested market rate or evidence that such a transaction would qualify for financing.
A property investor needs enforceable ownership rights. An equity investor needs credible governance arrangements and protections against the misuse of company assets. A royalty investor needs confidence that the relevant rights and income can legally be transferred or financed.
Better information helps an investor understand the risk. Appropriate legal and financial arrangements determine what happens when things go wrong.
When the investor is constrained too
Even an attractive, well-documented asset may be unsuitable for a particular institution.
A pension fund, for instance, cannot necessarily invest directly in a profitable private business merely because its managers believe the business offers good returns.
It must operate within rules governing permitted investments, concentration, liquidity and risk.
In a February 2026 addendum to its pension investment regulations, the National Pension Commission identified a shortage of qualifying alternative investment instruments as a constraint on pension-fund allocations, contributing to unused investment limits and excess liquidity.
Its response included increasing permitted allocations to ordinary shares for several pension fund categories.
That does not mean every excluded business or asset would become attractive if packaged differently. Some investments are inappropriate for pension funds regardless of their structure.
But it does raise a wider question about how African economies convert productive activity into assets that institutions can responsibly hold.
An economy may have profitable businesses, income-producing property, commercial receivables and other valuable assets. It may also have banks, pension funds, insurers and private investors looking for suitable opportunities.
Yet capital can struggle to move between them because too few assets meet the necessary information, legal, financial or regulatory requirements.
A shortage of capital and a shortage of suitable investable assets can therefore coexist.
Increasing the supply of money addresses one problem. Improving the mechanisms through which economic activity becomes financeable addresses another.
From economic activity to investable wealth
A functioning business creates economic value. But for that value to support wider capital formation, other parties must be able to establish what the business owns, what it earns, what obligations it can meet and what rights an investor would receive.
Those rights must be enforceable. The risks must be measurable and appropriately allocated. And the investment must be suitable for the institutions expected to finance or hold it.
It depends on accountants, lawyers, financial institutions, payment providers, registries, courts, investment managers and regulators doing their respective jobs effectively.
When these systems work, businesses gain financing options, asset owners can sometimes raise capital without selling everything they own, and investors can access opportunities that might otherwise have remained outside their reach.
As reliable information, legal structures and transaction histories become more widely available, more institutions may become comfortable financing assets they previously struggled to assess.
Competition can then increase, potentially reducing the unusually attractive returns available to those who recognised the opportunity earlier.
Some assets are mispriced. Some are difficult to assess because the available information is inadequate. Others carry risks that are understood but cannot be sufficiently controlled.
Currency depreciation, weak enforcement, customer concentration, poor governance and limited exit opportunities are real economic risks. Better documentation cannot make them disappear.
The challenge is to distinguish these situations rather than treating them all as evidence of either investor conservatism or entrepreneurial weakness.
The investability question
Discussions about Africa’s capital needs tend to focus on how much investment the continent can attract.
That remains an important question. But I think another deserves more attention:
How much existing economic activity can be converted into assets that investors can confidently assess, finance and hold?
For entrepreneurs, the implication is that demonstrating value can be almost as important to financing as creating it.
For investors, it suggests opportunities may exist where sound economic performance is not yet captured by conventional indicators, particularly outside the most competitive investment segments.
And for financial institutions and policymakers, it points towards the infrastructure needed to make more economic activity financeable without compromising prudential standards.
The principle I would apply is straightforward:
Localise the evidence, not the prudential objective.
Financial discipline should remain rigorous. But the methods used to establish that discipline should be capable of evolving with the markets they serve.
The opportunity lies in becoming better at distinguishing economic value that is genuinely too risky to finance from economic value that our existing systems have not yet learned to assess, protect or accommodate.
Currency note: All monetary examples are hypothetical. USD equivalents are approximate, using an illustrative exchange rate of ₦1,360/$1 as of October 2026.