As Nigeria experiences a surge in commercial paper issuance among corporates, one startup is challenging norms and setting a new precedent. Payaza, a Nigerian fintech company that provides payment and collection tools for SMEs, has successfully repaid its ₦14.9 billion Series 1 commercial paper—in under six months.
While commercial paper has become a popular short-term debt instrument among corporates like Access Bank and Dangote Cement, it remains a rarity in Africa’s startup ecosystem. That makes Payaza’s move both bold and significant.
A Debt Play Rooted in Strategy, Not Desperation
Unlike many startups that rely heavily on equity financing or traditional bank loans, Payaza made commercial paper issuance a core part of its long-term financial strategy. According to CEO Seyi Ebenezer, this was a calculated decision aimed not just at raising capital but at instilling operational and financial discipline.
“In technology today, we talk about speed, artificial intelligence, and innovation. But when it comes to the world of finance, where you handle people’s hard-earned money, then we talk about trust,” Ebenezer said in an interview with Techpoint Africa.
Since its inception, the bootstrapped startup has prioritized strong internal structures. It has been audited by Deloitte from day one, a rarity in Nigeria’s startup space. Ebenezer believes this foundation was essential to gaining the trust of capital market stakeholders.
Structure as a Core Business Philosophy
Payaza’s success reflects a broader philosophy: that structure is the backbone of sustainability. Drawing from his corporate background—having worked at KPMG, Access Bank, and Keystone Bank—Ebenezer has long observed that structured businesses outlast their peers, even in volatile markets.
“Companies with structure were able to stand the test of time despite their issues,” he explained. “While those without it often collapsed under pressure.”
This commitment to discipline and structure helped Payaza secure a favorable credit rating—essential for issuing commercial paper—from agencies like DataPro, GCR Ratings, and Agusto & Co.
Meeting Traditional Investors Where They Are
Payaza’s funding model could signal a mindset shift in how African startups access capital. Rather than pushing traditional investors to change their risk appetite, the company is meeting them on familiar ground—capital markets governed by transparency, ratings, and accountability.
This strategy may offer a viable alternative in a region where startup investment still faces skepticism. While Ghana’s pension reforms and Egypt’s ValU stock exchange listing show progress, Payaza’s commercial paper success offers a replicable path—particularly for startups willing to build trust and governance from day one.
The Call for African Credit Rating Agencies
On a broader level, Ebenezer emphasized the importance of developing homegrown credit rating institutions that reflect Africa’s unique risk profile. He pointed out that Africa has one of the world’s lowest default rates, yet still suffers from underrepresentation and sometimes skewed assessments by global rating firms.
“Western Europe has a default rate of about 9.1%. Africa deserves to write its own story,” he said.
“Supporting African rating agencies with capital and regulatory collaboration could drive fairer assessments.”
A Model for Startup Finance in Africa?
When asked if other startups should consider issuing commercial paper, Ebenezer was clear:
“I would definitely want a lot of startups to join this because it creates financial discipline. When you know you’re running on debt, you manage costs and operate responsibly.”
However, he cautioned that a supportive ecosystem—built on trust, transparency, and credibility—is essential for this model to scale.
“Once you begin to honour your obligations and you believe that these funds are not yours, then capital keeps chasing you.”
Payaza’s repayment of its commercial paper may be more than just a financial milestone—it could mark the beginning of a new funding pathway for African startups ready to embrace discipline, accountability, and long-term thinking.
Source: TechPoint Africa
