Nigerian fintech BFREE closes growth round to buy non-performing loan portfolios across Africa, backed by AfricInvest and Algebra Ventures

The company, which manages over 11 million borrower accounts across 35 transactions, will use the funding to acquire larger distressed credit portfolios and expand into new markets on the continent

BFREE, a Nigerian fintech company that buys non-performing retail and small business loan portfolios from banks and digital lenders, has closed a growth equity round led by AfricInvest through its Financial Inclusion Vehicle (FIVE), an evergreen fund focused on financial inclusion across Africa. Algebra Ventures, a Cairo-based venture capital firm managing US$154 million across two funds, also joined as a new investor, marking its first investment in a Nigeria-headquartered company. Existing backers Capria Ventures, VestedWorld, Axian CVC, Angaza Capital, 4Di Capital and DotExe Ventures participated alongside individual investors with experience in African financial services. The round size was not disclosed.

BFREE was founded to address a gap in African credit markets. For most lenders operating on the continent, non-performing unsecured loans to consumers and small businesses have had no practical resolution pathway. Legal recovery is rarely viable given the small amounts involved, so institutions typically write off these assets and carry them indefinitely. Markets for selling distressed loan portfolios to dedicated buyers, common in the United States and Europe, have been largely absent in Africa.

The company started as a technology-driven collections servicer and evolved into an institutional buyer of distressed unsecured credit, acquiring portfolios ranging from nano loans to SME facilities. Across more than 35 closed transactions and a portfolio of over 11 million borrower accounts, BFREE has built what it describes as one of the most extensive proprietary datasets of distressed unsecured borrowers on the continent outside of the credit bureau system. That data underpins both its pricing models and its ability to commit to return profiles when acquiring portfolios.

For South African lenders and fintechs, the model addresses a problem that is growing alongside the expansion of digital credit. As more institutions offer unsecured lending at scale, the volume of non-performing accounts increases, and the absence of a liquid market for those assets means they sit unresolved on balance sheets. BFREE's forward flow arrangements, where it commits to acquiring newly non-performing accounts from a lender on a recurring basis rather than through one-off transactions, offer a structured exit for that exposure. The company has not disclosed which specific African markets it will enter next, but has indicated that expansion will target countries where the structural conditions for its model are present.

On the collections side, BFREE operates differently from traditional recovery approaches in African markets. Rather than relying on pressure tactics, the company uses a technology-enabled engagement model that prioritises transparency and realistic repayment structures with borrowers. According to BFREE, this approach has consistently met or exceeded its own recovery targets and has strengthened its relationships with the institutions from which it acquires portfolios.

"The market opportunity is significantly larger than the infrastructure historically available to address it. This round puts us in a position to pursue substantially larger portfolio acquisitions, engage a broader range of institutional partners, and do so with the speed and certainty of execution that serious counterparties demand," said Julian Flosbach, CEO at BFREE.

"BFREE's approach to credit management, based on a unique set of proprietary data and a technology-enabled collection platform, closes an essential gap in the digital lending value chain. High-velocity digital lending has become a core product across markets, with financial institutions, banks and fintechs alike requiring effective ways to manage small ticket non-performing loans. BFREE's execution-driven team has brought the platform to an inflection point, which will enable them to purchase larger portfolios and become a prime partner for banks and fintechs across African markets," said Patrick Herrmann, Partner at AfricInvest.

"Billions of dollars in African retail and SME credit go unresolved every year because the institutional infrastructure to clear them simply does not exist. Healthy credit markets need a disciplined buyer for distressed debt. The founders Julian, Moses and Chukwudi have built a platform that combines rigorous portfolio pricing, risk management, and deep data infrastructure to clear distressed retail and SME debt at scale. We are backing BFREE together with AfricInvest to scale them across Africa and beyond," said Omar Khashaba, General Partner at Algebra Ventures.