Law firm, The New Practice (TNP), has urged Nigerian startups to rethink their approach to scaling by embracing debt markets as viable growth tool.
The firm made the case during a roundtable held at its Lagos headquarters, themed “Scaling Smarter: Debt Markets as a Growth Catalyst for Startups.”
Financial experts at the roundtable, led by TNP Partner, Bukola Bankole, dissected why debt is now a better alternative to equity for Nigerian startups, noting that debt forces startup founders to stay alert, responsible, and more financially disciplined.
The discussion came amid a recent revelation that most startup founders lack adequate information about what it takes to list on the NGX.
Payaza’s debt raise as a model
A standout moment came from Seyi Ebenezer, CEO of Payaza Africa, who offered a firsthand account of building a fast-growing fintech through disciplined debt usage rather than equity.
- Payaza has raised N40.37 billion across four series of its N50 billion commercial paper programme—a milestone TNP’s Bukola Bankole described as a model of strategic discipline.
- Ebenezer explained that despite early interest from venture capital and private equity firms, the company deliberately chose a debt-funded route.
“We looked at the prospects and said to ourselves that this thing can work on a debt level,” he said.
He argued that discipline, not intelligence, is the core of successful business management. “Disciplined people supervise smart people,” he noted.
Linking this philosophy to the nature of debt, Ebenezer said debt enforces structure and accountability.
“When people are in debt, they become disciplined,” he said, noting that interest accrues daily, even on weekends, forcing founders to stay focused.
He stressed that debt compels founders to plan, meet timelines, and maintain financial hygiene, creating a foundation for sustainable growth.
Commercial paper as a viable option
Experts at the meeting also discussed the rising accessibility of commercial papers—historically a financing tool reserved for Nigeria’s largest corporates but now increasingly used by mid-sized and emerging companies.
- More than N1 trillion worth of commercial papers have been issued in 2025, highlighting strong market adoption and growing reliance on short-term debt instruments.
- CEO of NGX Group, Temi Popoola attributed this shift to regulatory support.
“Today, we have a regulator who supports the market more than I do as a market operator. That’s a material statement,” Popoola said, praising the Securities and Exchange Commission (SEC) for lowering barriers and enabling broader participation.
While emphasizing that all entry barriers to the capital market have been removed, Popoola harped on the need for proper disclosure by any company or startup coming to the market.
“The reality is you really can’t run away from disclosure in our ecosystem, and rightly so. As long as you want to get money from people, then you must be ready to disclose information,” Popoola said.
“One of the things that we’re also trying to do as a business is a lot more education because today, the traditional people who run capital markets will ask you one or two questions typically: Where are my dividends? Where is the interest? In reality, for this world of startups, it’s not a question that you can answer fairly easily,” he added.
He, however, noted that these questions targeted towards disclosures should not scare any responsible startup that wants to raise money from the market.
What you should know
A recent report by TLP Advisory had cited regulatory barriers as one of the issues preventing Nigeria’s high-growth startups from listing on the Nigerian Exchange (NGX), despite efforts to attract tech companies through the launch of the NGX Technology Board in 2022.
- The report, titled “Rethinking Funding & Exits: Nigeria’s Missing IPOs and the NGX,” warns that the absence of local listings poses a major threat to long-term sustainability and wealth creation in Africa’s largest startup ecosystem.
- According to the findings, most founders lack adequate information about what it takes to go public, as the majority (53%) of surveyed founders say they are not sufficiently aware of the NGX listing process.
