BFree Secures New Funding to Buy Up Africa’s Bad Loans

Nigeria’s BFree has secured fresh capital to expand its unconventional approach to one of Africa’s most persistent financial problems: the mountain of non-performing loans sitting on bank balance sheets with nowhere to go.

The Lagos-headquartered ethical debt recovery startup has secured a $3 million debt investment from the Verdant Capital Hybrid Fund, the Johannesburg-based private equity vehicle focused on inclusive finance across emerging markets. The funding will enable BFree to purchase and restructure distressed loan portfolios from African financial institutions — a niche but fast-emerging market segment that few have been able to crack at scale.

Founded in 2020 by Julian Flosbach, Chukwudi Enyi, and Moses Nmor, BFree has built an AI-powered platform that profiles borrowers, predicts their capacity to repay, and customises engagement based on behavioural data — all while maintaining strict ethical standards. To date, the company has handled over $740 million worth of distressed loans, reaching 6.6 million borrowers across Nigeria, Ghana, and Kenya. Its clients include over 30 financial institutions, from digital lenders to regulated banks.

By taking over and managing troubled loans, BFree injects new liquidity into the banking system, allowing banks to focus again on their core activity of lending. Bfree’s work is also expected to help improve the credit ratings of borrowers in default, giving them the chance to access formal bank credit again

Historically, the distressed loan segment has been held back by poor borrower data, legal bottlenecks around loan transferability, and pricing opacity. BFree is carving out a scalable model through proprietary repayment prediction algorithms and ethical communication with borrowers — avoiding late fees, debt blacklisting, and excessive penalties that contrast sharply with legacy practices in many emerging markets

The deal also gives BFree access to Verdant Capital’s technical assistance facility. As microfinance and buy-now-pay-later products proliferate across Africa, effective and ethical debt recovery is becoming an increasingly important piece of the continent’s financial infrastructure — and BFree is betting that specialising in collections, rather than lending, will define the next wave of credit-focused startups on the continent