Africa doesn’t just need more startups. It needs ways to help viable businesses survive

I started a babysitting business in Lagos, Nigeria, when I was 16 and fresh out of high school. I brought together a few friends, we agreed on basic rules, and we advertised to parents in our housing estate. The business worked partly because there was demand, but mostly because there was trust. The parents knew us, knew our families and knew where accountability sat.

A few months later, I left Lagos for Accra, Ghana, to begin my undergraduate degree. Rather than let the business die, I handed it over to my younger sister. She continued running it successfully until she also left for university. At the time, I did not think of this as a business transfer. But that is what it was. The business survived because the trust around it survived.

Years later, after studying and working abroad, I returned to Nigeria and wanted to furnish my apartment cheaply. I began scrolling through local “declutter pages”, where people sell household items, often before relocating abroad. Among the sofas, fridges and bed frames, I started noticing something else: industrial ovens, bread pans, commercial mixers, freezers, salon equipment.

These were not just household clear-outs. Some were the remains of small businesses being dismantled. In one case, the listings suggested the closure of a small bakery because the owner was leaving the country. The business was not being sold as a going concern. Its assets were being broken up and sold piece by piece.

Not long after, I found myself in a similar position. I left Nigeria again to pursue further study and closed a small consultancy business that had served clients across Africa, the EU and the UK. It had not failed in the commercial sense. It simply could not transfer.

This is an under-discussed but consequential problem. Across Nigeria and other economies marked by high migration and founder-dependent businesses, owners often shut down viable enterprises when they relocate, retire, burn out or face personal shocks. The result is not only the loss of one entrepreneur’s income. It can mean lost jobs, broken supplier relationships, abandoned customer networks and a decline in local economic activity.

Much of Africa’s entrepreneurship conversation focuses on helping people start businesses. That remains important. But many economies also need stronger systems to help existing businesses survive transitions.

In Nigeria, micro, small and medium-sized enterprises are central to the economy. According to PwC, citing a national survey from 2021, such enterprises account for 96.9% of businesses, 87.9% of employment and 46.32% of GDP. Yet many of these firms remain deeply dependent on their founders. Their records may be informal. Their processes may be undocumented. Their customer and supplier relationships may live largely in the owner’s head. When that owner leaves, the business may have no practical pathway to continue.

At the same time, the migration story has another side. African diaspora communities around the world often retain strong financial and emotional ties to home markets. Remittances remain a major source of external finance: the World Bank estimated that remittances to sub-Saharan Africa reached about $54 billion in 2023, with Nigeria accounting for roughly a third of those flows.

But remittances are overwhelmingly directed at consumption, education, healthcare, housing and family support. These flows are vital, but they are not usually structured to preserve operating businesses. The question is whether some diaspora capital could be connected more formally and securely to viable small businesses that need continuity.

One possible model comes from entrepreneurship through acquisition, or ETA. In the traditional search fund model, an entrepreneur raises capital to search for, acquire and operate an existing private company. Stanford’s 2024 Search Fund Study reports on 681 search funds formed in the US and Canada since 1984 and describes the model as a path to becoming an owner-operator of a privately held company.

But African markets cannot simply copy the US search fund model. For one, the deal sizes are different. Stanford’s study reported a recent median purchase price of $14.4 million for search-acquired companies. In many African small-business transfer contexts, the relevant deal size may be far smaller. Early market-sizing work I have conducted in Nigeria focuses on a potential acquisition band of about $10,000 to $50,000.

That changes the economics of everything. Due diligence must be much cheaper. Verification must be practical. Legal processes must be simple enough for small transactions. Financing must work across currencies. And because many buyers may be outside the country, the system must solve for distance, trust and accountability. What is needed is not only a marketplace, but trust infrastructure.

That infrastructure could include verified listings, standardized business profiles, basic financial tracking, customer and supplier references, site visits, legal templates, escrow arrangements and vetted accountants, lawyers and valuers. For more informal firms, retrospective financial statements may not be enough. Prospective verification – for example, tracking revenue through digital payments or point-of-sale systems over a defined period – may be more useful than trying to reconstruct imperfect historical records.

There is also the challenge of owner dependency. In many small firms, the owner is not just the shareholder. The owner is the salesperson, operator, bookkeeper, negotiator and reputational anchor. Any transfer model must therefore include handover periods, management documentation, staged payments, local operator partnerships or seller advisory roles. The objective is not perfect certainty, but rather enough trust for responsible transactions to happen.

If built well, small-business transfer infrastructure could mobilize diaspora capital, preserve jobs, retain supplier and customer networks, and allow founders to exit with dignity rather than dismantle what they have built. It could also create new pathways for return entrepreneurship: Instead of starting from scratch, diaspora investors and local operators could acquire businesses that already serve communities.

Governments have a role to play, but they do not need to build everything themselves. Their role could include improving business registries, supporting digital financial records, clarifying transfer procedures, enabling secure escrow mechanisms, reducing friction around small-company ownership changes and working with private platforms, banks, law firms and SME agencies.

Africa does not only need more businesses to be born. It needs more of its viable businesses to survive. A bakery should not disappear because its owner emigrates. A clinic should not close because its founder retires. A school, workshop or small manufacturer should not be reduced to asset listings because no trusted buyer could be found. The current frontier of SME development is business continuity: helping good businesses outlast their founders.