AFRICA – The Board of Directors of the African Development Bank Group (AfDB) has approved a US$5.5m equity participation in Investisseur & Partenaire pour le Développement 2 (IPDEV.2), to support Small Growing Businesses (SGBs) in Sub-Saharan Africa.
Senegal, Cote d’Ivoire, Benin, Mali, Niger, Burkina-Faso, Cameroon, DRC, Ghana, and Madagascar are among the targeted countries.
IPDEV.2 is an innovative impact investment company launched by Investisseurs & Partenaires (I&P) the Manager, to finance and support SGBs1, startups at the base of the pyramid of SMEs.
IPDEV.2 plans to launch 10 investment funds in selected Low Income Countries through which it will provide equity, quasi equity and debt to more than 500 SGBs with investment needs ranging from US$33.3 and US$333.6 over the next decade translating to 15 000 jobs to be created of which 30% will be for women.
IPDEV.2 is a 3rd generation investment company which provides financial and technical assistance to SGBs which cannot access classic lenders as they are seen to be too risky despite being great drivers of development and inclusive growth.
The project aims to address job creation needs and SGB financing gaps by kick-starting early-stage investing in African SGBs, through a model that attracts African capital toward the underserved segment of SMEs and strengthens local asset managers capacity.
The model also builds an impact investment industry in some of the least developed countries in Africa and fosters development of indigenous investment teams capable of financing early stage businesses and it will also accelerates the emergence of entrepreneurship on the continent.
Each investment vehicle will be managed by a local team identified and trained by I&P and have a capitalization, of which IPDEV.2 will take a maximum stake of 30%. The remaining 70% will be raised locally through the Manager’s established network.
The equity participation provides the Bank an opportunity to be part of an innovative program designed to broaden access to finance to a large spectrum of small start-ups in a single investment vehicle and in a flagship initiative well aligned with its High 5s.
IPDEV.2 will improve the quality of life of Africans by improving access to finance to the underserved sectors of SMEs, thereby creating jobs for the bottom of the pyramid and fostering local entrepreneurship. It will also promote industrialization and agriculture by increasing productivity of SMEs especially in the small agribusiness sector.