Why TLG Capital is doubling down on African SMEs—Zain Latif

Africa’s small and medium-sized enterprises (SMEs) represent one of the largest untapped investment frontiers globally, with funding gaps continuing to constrain businesses that drive jobs and economic activity across the continent.

In this interview with Nairametrics, TLG Capital founder Zain Latif outlines why they see the SME segment as a trillion-dollar opportunity and how flexible private credit is emerging as a critical financing tool in markets where traditional lending remains limited.

The firm, which has deployed more than $250 million across African markets, says its strategy focuses on refinancing expensive debt and providing growth capital to viable companies that struggle to access affordable funding.

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With interest rates in some markets exceeding 30%, many businesses face capital costs that stifle expansion, making structured financing solutions increasingly attractive.

Latif also highlights Nigeria as a cornerstone of TLG Capital’s portfolio, citing deep banking relationships, active capital markets, and policy momentum supporting innovation. Excerpts:

**Nairametrics: How big are the market opportunities in Africa, and which sectors do you find more attractive for investment and why? **

Zain Latif: The SME market is the backbone of Africa’s economy and represents a $1 trillion+ opportunity. Despite accounting for over 90% of all businesses and generating 80% of job opportunities in many countries, SMEs face persistent funding challenges. At TLG, we position ourselves as a solution here.

Although our financing appeals to working capital-intensive businesses – we’ve recently invested in agriculture, lending, and manufacturing companies – the reality is that the need for capital cuts across sectors.

TLG’s focus is on catalytic investments that unlock expansion, crowd in additional capital, and accelerate viable African businesses of all kinds. To date, we’ve invested $250 million+ across the continent and are continuing to grow, because the demand for our capital is abundantly clear.

**Nairametrics: How long does it take for your firm to invest in a company, and what usually informs your investment decisions? What are your specific investment strategies? **

Zain Latif: Our strategy is backing promising businesses with flexible loans that promote growth. To do so, we partner closely with local banks to identify creditworthy companies that need refinancing or expansion capital. The businesses we look for have robust fundamentals and strong leadership that meet market demand.

Throughout this process, TLG is constantly aiming to understand partners’ needs and structure solutions around those needs. By remaining attuned to real market conditions and leveraging our deep partnerships with local entities, we can close impactful transactions in as little as 10 weeks.

**Nairametrics: What has been the average growth rate of these companies you have invested in? Has it been consistent? You can also walk us through the challenges that may have hindered some of the growth plans **

**Zain Latif: **Growth is rarely easy in illiquid markets with challenging macroeconomic conditions. But our investments are set up to support growth by refinancing crippling debt and providing tangible value creation.

Across markets, we see companies paying capital costs that are simply incompatible with growth – that can mean 30%+ interest rates. Our investments alleviate the burden for companies that are caught in a debt trap. For instance, a recent refinancing brought down one borrower’s debt costs from 54% to 28% of their EBITDA, enabling them to retain more earnings and reinvest them into the business.

For value creation, we partner with high-quality technical assistance providers like BDO and Manufacturing Africa, a FCDO-funded and McKinsey-led program aimed at driving inclusive growth in Africa. Depending on industry and business needs, we are ready to facilitate a right-sized level of operational support to ensure that companies have what they need to thrive. We combine the best of British technical support systems with strong commercial returns.

**Nairametrics: What are your exit plans for some of these companies you have invested in, if any? **

Zain Latif: There is a clear exit path for every investment. By bringing flexible structuring and operational discipline, all deals are designed to position borrowers for loan repayment. We also consider refinancing pathways that support companies to graduate to other sources of capital from local banks or institutional investors.

TLG complements this strategy by attracting co-investor participation into the existing portfolio: facilitating secondary transactions on these investments forges new partnerships, and crucially, deepens capital markets in geographies where liquidity is scarce.

Our approach has delivered outcomes. For instance, we invested in Grace Lake Partners in 2018, providing capital that supported the launch of Moove, a fantastic business that is now a global mobility fintech. TLG’s investment helped institutional investors to join Moove’s journey and delivered a strong return.

Ultimately, our eyes are on returning hard dollars to our investors on any and every deal.

**Nairametrics: What is your current market outlook for the region, and how will this impact your portfolio? **

Zain Latif: TLG has always been optimistic about Africa’s growth story: we continue to see strong economic development, the benefits of a young workforce, and burgeoning innovation sectors.

Today, what excites us is the bullishness of many global investors, with more foreign dollars flowing in across high-potential sectors. We have no doubt that this will be a huge tailwind for our portfolio, as well as our targets of facilitating primary and secondary transactions in African markets.

**Nairametrics: What has been the performance of the current portfolio you have, is it consistent with your expectations? **

Zain Latif: A long-time investor has shared that TLG provided among the highest realized returns they’ve seen in Sub-Saharan Africa funds, counting equity and debt. Although we cannot disclose numbers, we can say we are proud of that.

**Nairametrics: TLG recently closed a US$15 million facility for Kijenge Animal Products in Tanzania. What made this transaction particularly compelling for TLG, and how does it fit into your broader investment thesis in Africa?  **

Zain Latif: What stands out about the Kijenge Animal Products investment is its scale and setting. At $15 million, this is a landmark facility in a country classified as a UN Least Developed Country (LDC) and experiencing a challenging moment. It’s a market where deals of this magnitude are rare and transformative.

Kijenge’s agro-processing services play a critical role in regional food systems, and with Kijenge and CRDB, we had a group of dedicated partners that wanted to strengthen the company’s work. We are proud that getting this deal across the finish line honoured TLG’s ethos of finding innovative capital structures in frontier markets where growth matters most.

**Nairametrics: Manufacturing Africa was brought in as a strategic partner. How critical are such technical assistance programmes in scaling African businesses, and do you see similar opportunities for Nigerian firms? **

Zain Latif: For manufacturing businesses in Africa, operational efficiency is a prerequisite for scale. Manufacturing Africa provides comprehensive support to TLG’s portfolio companies: it advises on governance systems, supply chain optimization, on-site conditions, and all things ESG.

It’s been transformative in enabling businesses to grow, including one of our Nigerian portfolio companies.

These businesses are major regional employers – in some cases, entire communities are built around them. That’s why we ensure that our partner companies, in Nigeria and beyond, have access to best-in-class technical assistance from Manufacturing Africa, FCDO, and our other trusted partners.

**Nairametrics: Many SMEs in Africa struggle with access to affordable capital. From your experience, what are the biggest barriers, and how can structured capital solutions help overcome them? **

**Zain Latif: **Unfortunately, African SMEs carry high perceived risk and rarely have the collateral that banks require. Furthermore, banks often have thin deposits and investment alternatives in local markets, which they prioritize over SME lending. Taken together, we are left with an unfavorable lending environment and the well-known SME financing gap.

Still, it is one that we can structure around. We have found that downside protection and incentive alignment can bridge that gap between banks and SMEs. With tailored solutions, TLG builds ecosystems that direct flexible capital to the entrepreneurs and businesses that deserve it most.

**Nairametrics: Nigeria has a large agricultural base but faces bottlenecks in processing and value addition. What lessons from the Kijenge transaction could be applied to unlock growth in Nigeria’s agro-processing industry? **

Zain Latif: The Kijenge transaction underscores a few takeaways for the sector. Firstly, access to tailored financing is vital. This deal worked because the loan matches Kijenge’s longer-tenor working capital needs, rather than relying on short-term facilities.

Secondly, partnerships are at the heart of unlocking growth: banks, investors, and technical assistance providers all have key roles to play to scale Kijenge’s business. Lastly, an investment in agro-processing has ripple effects. In the coming months, we will see benefits in nutrition and agriculture across Arusha, while positioning a local agribusiness for regional leadership.

**Nairametrics: How does Nigeria’s investment climate compare with Tanzania’s, particularly in terms of regulatory frameworks, access to local banking partners, and investor confidence? **

Zain Latif: Nigeria is a country that’s very close to TLG’s heart – it’s home to 25 of our investments and some of our deepest relationships. Last year, we also launched Nigeria’s first Naira-denominated debt fund, in partnership with FCMB and 19 local pension funds, that lends to strong companies across critical industries.

Its structure harnesses the strength and relationships of Nigerian banks while mitigating exposure to currency volatility, and we’re proud to have funded some fantastic deals from it.

These milestones are made possible by an attractive ecosystem. We’ve partnered with sophisticated banks that are adapting alongside a quickly evolving financial landscape. Combine that with deep capital markets and a number of pro-innovation policies, and it’s no surprise that we love working in Nigeria.

Tanzania also holds a lot of promise for TLG, following the landmark Kijenge deal. Its economy is growing steadily, and opportunities continue to present themselves in manufacturing, agriculture, and other promising sectors. We hope to build on our relationships with CRDB Bank and other local entities for many Tanzanian investments to come.

**Nairametrics: TLG has now crossed US$250 million deployed since inception. What sectors or geographies are you prioritising for future investments, and where does Nigeria fit into that roadmap? **

Zain Latif: As I said, Nigeria will always be a cornerstone of TLG’s portfolio. We continue to tap our pipelines in familiar countries like Nigeria and Kenya; that being said, we’re also seeing traction in new markets, and hope to make investments in Guinea, Benin, and Sierra Leone in the coming months.

Though there is no explicit sectoral focus, we naturally see demand where there are financing gaps, such as energy, manufacturing, and agriculture. It’s clear that our model resonates across geography and industry.

Looking ahead, local currency credit is one of the most promising strategies in our roadmap, as evidenced by the FCMB-TLG Private Debt Fund. We have already deployed capital in Nigeria and are now scaling up this approach: earlier this month, the SEC approved Series II of the fund up to N20 billion. It’s a new paradigm in African investing.

By backing local currency solutions in domestic markets, we’re shifting the narrative towards sustainable, locally-driven outcomes. Given strong support from domestic banks and pension funds, we’re focused on continuing to build out this solution.

**Nairametrics: Africa presents both high risks and high rewards. How does TLG balance financial returns with developmental impact, especially in fragile or capital-constrained markets? **

Zain Latif: The strongest form of impact is sustainable and commercially grounded. Fundamentally, our model aligns financial upside with development impact by mobilizing private capital into underserved sectors in underserved markets…without compromising on returns.

As we say at TLG, if you take care of the risk, returns will take care of themselves – so we are laser-focused on downside protection and risk-sharing mechanisms to safeguard investor capital. That’s how you crowd investors into markets where they have historically perceived risk.

Still, we go further to ensure that impact is embedded within every deal. We are guided by robust ESG frameworks that create and protect local jobs, strengthen gender equity at our portfolio companies, and ensure that borrowers are positioned for resilience in the long-term.

**Nairametrics: You mentioned empowering local entrepreneurs as a core part of TLG’s model. What qualities do you look for in African business leaders before committing capital, and how do you support them post-investment? **

Zain Latif: TLG looks for strong business fundamentals, visionary leadership, and proven relationships with local entities. Credit is about character; working with local banks enables us to understand our counterparties’ creditworthiness and track record, which is a key piece of our diligence process.

Once the relationship is established, we work with company leadership on a range of needs – whether it’s the value creation work I detailed above, support with additional fundraising, or simply thought partnership. We are a hands-on partner for any and all seasons.

**Nairametrics: Impact investors often struggle to mobilize commercial co-investment. What practical proof points from this deal demonstrate that your model can truly “crowd in” 3–10x commercial capital as projected? **

Zain Latif: Our recent deal in Djibouti is attractive on several fronts, all of which help to crowd in commercial capital. Firstly, it addresses a strategic sector of digital infrastructure, which holds promise for many investors. It is a project finance deal that comes with high growth potential. And crucially, it breaks boundaries in a market like Djibouti, where many commercial investors would like to invest, but lack ample opportunities to do so. TLG’s investment lays the pipes for commercial investors in a highly appealing deal.

**Nairametrics: Given Africa receives less than 1% of global VC funding, what does this structure reveal about why traditional capital markets continue to underestimate African SMEs? **

Zain Latif: Africa still carries a perceived risk in many investing circles. Traditional capital allocators often rely on outdated, legacy assumptions about what markets are investable, rather than remaining in touch with realities on the ground. What TLG has demonstrated over the past few years is simple: you can invest commercial capital in Africa and get your money back.

A more reasonable hesitation we see among VCs is that exits are challenging in less liquid markets. We want to spur the solution to that. Not only does our credit structure bypass the constraints of a shallower capital market, but we believe that by partnering with banks, bringing in an array of investors, and building sustainable businesses, more funders will see Africa for the opportunity that it is.

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