Law firm The New Practice (TNP) has advised Nigerian startups to rethink how they scale by turning to debt markets as a structured and sustainable alternative to equity funding.
This recommendation was made during a roundtable hosted at the firm’s Lagos office, themed “Scaling Smarter: Debt Markets as a Growth Catalyst for Startups.” The session brought together founders, financial analysts, and market regulators to examine why debt financing may now offer more strategic benefits for growing companies.
Why Debt Promotes Discipline and Efficiency
During the event, Bukola Bankole, Partner at TNP, noted that debt financing pushes founders to be highly disciplined, financially responsible, and more deliberate in their operations. Her remarks follow recent findings that many founders still lack adequate understanding of listing requirements on the Nigerian Exchange (NGX).
Payaza as a Case Study in Effective Debt Utilisation
One of the event’s most notable insights came from Seyi Ebenezer, CEO of Payaza Africa, who shared how his company scaled rapidly by relying on debt rather than equity.
Payaza has successfully raised N40.37 billion out of its N50 billion commercial paper programme, which TNP’s Bankole described as a strong example of strategic financial discipline.
Ebenezer explained that even though investors showed interest early on, Payaza deliberately chose a debt-driven growth path. “We looked at the prospects and said this could work on a debt level,” he said.
He stressed that discipline outweighs intelligence in business success, adding: “Disciplined people supervise smart people.”
He further noted that debt naturally enforces structure and accountability. “When people are in debt, they become disciplined,” he said, pointing out that daily interest charges, even on weekends, force founders to stay organised and committed.
Commercial Papers Becoming More Accessible to Startups
Participants also highlighted the growing adoption of commercial papers, once reserved for top-tier corporations but now increasingly used by mid-sized and emerging companies.
In 2025, more than N1 trillion worth of commercial papers have been issued, indicating strengthening confidence in Nigeria’s short-term debt market.
CEO of NGX Group, Temi Popoola, attributed this growth to strong regulatory support, especially from the Securities and Exchange Commission (SEC).
“Today, we have a regulator who supports the market more than I do as a market operator,” he said.
While confirming that most barriers to market entry have now been removed, Popoola emphasised that companies seeking capital must be transparent. “If you want to collect people’s money, you must be ready to disclose information.”
He added that more education is needed because traditional investors typically demand clarity on dividends and interest, questions that don’t always align with startup models. However, he stressed that responsible startups should not be deterred by disclosure requirements.
