{
  "id": 1871616,
  "title": "Private debt emerges as alternative financing for Kenyan MSMEs",
  "url": "https://urgent.news/2026/08/19/private-debt-emerges-as-alternative-financing-for-kenyan-msmes",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-19T05:20:19.000Z",
  "source": {
    "name": "Capital Business",
    "slug": "capital-business",
    "url": "https://capitalfm.africa/private-debt-emerges-as-alternative-financing-for-kenyan-msmes/"
  },
  "original_language": "en",
  "account": "Nairobi, Kenya – Private debt is becoming a viable financing option for Kenyan micro, small and medium enterprises (MSMEs) as they battle high borrowing costs, strict collateral requirements and limited access to formal credit. Teddy Yanga, Senior Investment Manager at Lofty-Corban Investments Limited, highlights private debt's growing appeal as a flexible financing solution tailored to businesses' cash flows and funding needs. Yanga notes that Kenya's MSME financing gap is estimated at around Sh4 trillion, indicating a gap that alternative financing models could fill. He emphasizes that private debt is particularly beneficial for businesses with strong growth potential but limited assets. According to Yanga, it assists businesses in accessing capital quickly to support industrial growth, value addition and regional trade, which require timely capital for expansion. Private debt, also known as private credit, involves a direct loan from an investor or private debt fund manager to a company, bypassing traditional banks and public bond markets. Yanga explains that this type of loan is ideal for businesses with strong revenues, growth potential and profitability but lacking sufficient assets to serve as collateral. Traditional banks would typically reject such businesses, but private debt lenders evaluate the company's actual cash flows. These financing models can benefit businesses in various sectors, provided they meet specific evaluation criteria like the potential of the sector, business growth prospects, profitability, cash-flow generation and compliance with financial and other covenants. For investors, private debt offers an alternative to traditional fixed-income and equity investments, providing a middle ground between lower-risk fixed-income investments like government bonds and higher-risk growth assets such as publicly traded equities. Investors can benefit from potentially higher yields and enhanced income through private debt while enjoying downside protection and capital preservation, particularly when structured as senior debt. Senior debt holders are prioritized for repayment in case of financial distress. Additionally, private debt can provide diversification since these assets are not publicly traded and are less exposed to market fluctuations. Businesses should carefully consider whether private debt aligns with their borrowing requirements, financial position, growth prospects and risk tolerance. Key factors include the cost of capital versus the expected operational return, debt servicing ability, flexible repayment terms and lender alignment with their growth plans. Yanga stresses that misconceptions about private debt persist in Kenya, including the belief that it is inherently a high-risk investment or only suitable for businesses rejected by banks. He clarifies that private debt's risk depends on its structure, management and the quality of the funded businesses. Moreover, private debt operates within Kenya's regulatory framework, overseen by the Capital Markets Authority to protect investors. Despite its growing popularity, private debt should complement existing financing channels rather than replace them, offering businesses and investors an additional option to diversify their capital sources. Looking forward, Yanga sees significant potential for private debt to expand Kenya's financing landscape, transforming it from a bank-dominated, collateral-heavy market to a more dynamic, multi-channel ecosystem.",
  "summary": "Teddy Yanga, Senior Investment Manager at Lofty-Corban Investments Limited, says private debt is gaining attention because it can provide businesses with more flexible financing structured around their cash flows and specific funding needs.",
  "key_points": [
    "Private debt gaining traction as MSME financing option in Kenya",
    "Teddy Yanga cites Sh4 trillion financing gap for MSMEs",
    "Private debt offers flexible, collateral-free capital for growth"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}