Lofty-Corban's CEO Believes Private Debt Can Transform Kenya's Underserved Businesses

Kenya’s estimated KSh 2.5 trillion MSME financing gap is more than a credit-market shortfall; it is a constraint on an economic sector that accounts for 33.8% of GDP and more than 85% of non-farm jobs. With 98% of MSMEs operating as micro-enterprises, many with little capital, limited collateral and low resilience to shocks, conventional lending models are poorly suited to the businesses that need financing most. 

That gap is creating space for alternative forms of finance including private debt, which lends directly to businesses and can structure repayment around their cash flows rather than relying entirely on standardised bank requirements. In the following conversation with The Kenyan Wall Street, Stanley Mutuku, CEO of Lofty-Corban Investments Ltd., argues that private debt can widen the pool of businesses able to access formal capital by serving viable companies that may be constrained by collateral, tenor or the timing of their cash flows. 

TKWS : First, what is private debt in the easiest explanation and how different is it from other forms of debt? 

Stanley : At its core, private debt is direct lending arranged between a company and a specialized investor or private debt fund manager, rather than raising capital through public markets or relying solely on traditional financing.

A company might use private debt to expand its operations, finance an acquisition, manage a strategic transition, or strengthen its balance sheet. What sets it apart is the flexibility to structure the financing around the business’s specific needs, including its cash flows, repayment capacity and timelines.

So, unlike a standard financing product where the terms may be largely predetermined, private debt can be structured to fit the business. It can also offer greater speed and confidentiality, while giving the lender a closer understanding of the business and its objectives.

Ultimately, it gives businesses another way to access capital, while giving investors an opportunity to earn income by lending to established businesses.