South African fund manager Verdant Capital has invested $3 million in Nigerian fintech Bfree, a company focused on ethical and digital recovery of non-performing loans across Africa. The funding, made through Verdant Capital Hybrid Fund, will allow Bfree to purchase and manage distressed loan portfolios from financial institutions operating on the continent.

The goal is to provide refinancing and recovery solutions for portfolios often considered too risky or uncollectible. Bfree’s work is expected to help improve the credit ratings of borrowers in default, giving them the chance to access formal bank credit again. Verdant’s support will also include technical assistance for Bfree as part of the fund’s backing.

Verdant said the investment aligns with the Hybrid Fund’s mission to support financial institutions in emerging markets while also helping borrowers in default. Launched with $38 million in initial capital, the fund focuses on inclusive financial services in Africa, particularly fintechs and institutions that serve micro, small, and medium-sized enterprises.

Founded in 2020, Bfree has quickly grown into a major player in loan recovery by using a more ethical, tech-driven approach. Unlike traditional, often aggressive debt collection methods, Bfree offers personalized repayment solutions based on data analytics and artificial intelligence. These tools help assess each borrower's ability to repay, especially in the consumer credit and SME financing segments.

Bfree offers a solution to banks across Africa struggling with high default rates. The Central Bank of Central African States (BEAC) recently warned about the worsening quality of credit portfolios in the region. As of the end of March 2025, non-performing loans made up 17.4% of total gross loans in the CEMAC region, up from 16.6% a year earlier.

By taking over and managing troubled loans, Bfree injects new liquidity into the banking system, allowing banks to focus again on their core activity: lending. Operating in several African markets, Bfree says it has helped more than 6.6 million borrowers and manages a loan portfolio exceeding $740 million.

Distressed loan financing remains underdeveloped in Africa due to legal hurdles, lack of reliable data, and the absence of standardized processes.