Nigerian startups must rethink their growth strategies and adopt debt market financing as a core part of their capital-raising journey, according to insights shared at the 2025 Business and Finance Roundtable hosted by The New Practice (TNP) in Lagos. The event, themed “Scaling Smarter: Debt Markets as a Growth Catalyst for Startups,” brought together financial experts, market operators, and founders to examine why debt, rather than equity, is increasingly becoming the smarter route for many high-growth Nigerian companies.
Leading the conversation, TNP Partner Bukola Bankole highlighted that debt forces founders into a posture of discipline, accountability, and financial clarity—traits that are often diluted in equity-funded environments. She noted that unlike equity investors who may tolerate prolonged burn rates, debt instruments impose clear obligations and enforce operational efficiency. This, she argued, is precisely what many Nigerian startups need as they navigate an ecosystem marked by regulatory uncertainties, high operating costs, and a complex fundraising landscape.
One of the most compelling moments of the roundtable came from Seyi Ebenezer, Founder and CEO of Payaza Africa, who shared the company’s unconventional funding journey. Despite strong interest from venture capital and private equity firms in its early days, Payaza deliberately chose a debt-driven growth strategy. The fintech has since raised N40.37 billion across four tranches of its N50 billion commercial paper programme. According to Ebenezer, this strategic reliance on debt—rather than equity dilution—has been foundational to Payaza’s rapid expansion. He explained that debt instills the kind of discipline needed to run an efficient business, remarking that “disciplined people supervise smart people.” Debt, he added, forces founders to remain focused, meet deadlines, and maintain clean financial structures because interest accrues daily, even on weekends. This daily pressure becomes a catalyst for prudent management.
Industry experts also stressed the importance of commercial paper as a viable debt instrument for startups and mid-sized companies. Traditionally viewed as the domain of Nigeria’s largest corporates, commercial paper is now becoming more accessible due to regulatory support and market reforms. In 2025 alone, more than N1 trillion worth of commercial papers has been issued—evidence of the growing appetite for short-term debt financing. Temi Popoola, CEO of the Nigerian Exchange Group (NGX), attributed this shift to the proactive stance of the Securities and Exchange Commission (SEC). He noted that barriers to capital market participation are “materially lower than ever,” enabling startups to approach the market with fewer constraints. However, Popoola emphasized that while regulatory bottlenecks have reduced, startups must understand that disclosure remains a non-negotiable requirement. Any company seeking public capital, he said, must be transparent and ready to communicate financial and operational details to investors. He stressed that disclosure should not intimidate responsible founders, especially those serious about long-term sustainability.
The conversation also touched on broader market challenges. A recent TLP Advisory report reveals that many Nigerian startups lack adequate awareness of what it takes to list on the NGX, despite the establishment of the NGX Technology Board in 2022. More than half of surveyed founders (53%) admitted they are not sufficiently familiar with listing requirements. The report warns that the persistent absence of local IPOs threatens long-term value creation within Africa’s largest startup ecosystem.
Ultimately, the message from the roundtable was clear: Nigerian startups must look beyond equity and embrace debt as a strategic tool for sustainable growth. With the right structure, financial discipline, and market understanding, debt can help founders scale smarter, maintain ownership, and build resilient companies positioned for long-term success.
