TNP Advocates Debt Financing as a Strategic Growth Catalyst for Nigerian Startups

Law firm The New Practice (TNP) has called on Nigerian startups to rethink their growth strategies by leveraging debt markets as a viable and disciplined pathway to scale.

The firm made this case during a roundtable session at its Lagos headquarters, themed “Scaling Smarter: Debt Markets as a Growth Catalyst for Startups.” The event gathered financial experts, founders, and market operators to discuss why debt, rather than equity, may now offer stronger advantages for early-stage and scaling companies.

Debt Encourages Discipline, Not Just Capital

Leading the conversation, Bukola Bankole, Partner at TNP, emphasised that debt financing forces founders to operate with heightened discipline, responsibility, and financial structure. This discussion comes on the heels of recent revelations that many Nigerian startup founders still lack sufficient knowledge about what it takes to list on the Nigerian Exchange (NGX).

Payaza’s Debt Strategy Showcased as a Model

A highlight of the event came from Seyi Ebenezer, CEO of Payaza Africa, who shared how disciplined debt usage helped build one of Nigeria’s fast-growing fintechs.

Payaza has raised N40.37 billion across four series of its N50 billion commercial paper programme, a milestone that TNP’s Bankole described as a prime example of strategic financial discipline.

Ebenezer revealed that despite strong interest from venture capital and private equity firms, the company intentionally chose a debt-first growth path. “We looked at the prospects and said to ourselves that this thing can work on a debt level,” he said.

He stressed that business success is built on discipline, not intelligence, noting: “Disciplined people supervise smart people.” Ebenezer added that debt naturally enforces structure: “When people are in debt, they become disciplined.”

He explained that interest accrues daily, including weekends, compelling founders to maintain focus, adhere to timelines, and uphold strong financial hygiene.

Commercial Papers Gain Momentum Among Startups

Experts also examined the increasing adoption of commercial papers, a financing tool once used only by Nigeria’s largest corporations but now accessible to mid-sized and emerging businesses.

More than N1 trillion worth of commercial papers have been issued in 2025, underscoring strong confidence in short-term debt instruments.

CEO of the NGX Group, Temi Popoola, credited the shift to improved regulatory support, particularly from the Securities and Exchange Commission (SEC).

“Today, we have a regulator who supports the market more than I do as a market operator,” Popoola said.

He stated that barriers to entering the capital market have been removed, but stressed the importance of full and transparent disclosure by any company seeking to raise funds.

“As long as you want to get money from people, then you must be ready to disclose information.”

Popoola added that market education is crucial, as traditional capital market questions, like dividends and interest payments, do not always apply neatly to startup models. Nonetheless, he maintained that responsible startups should not be intimidated by disclosure requirements.