BY ONOME AMUGE
A fresh equity investment worth €9.8 million has been approved by the board of the African Development Bank (AfDB) to enhance venture capital investments in African start-ups, particularly in the facilitation of seed to growth stages.
The AfDB investment is structured to accelerate the creation of a new class of successful African entrepreneurs that will serve as a model to younger innovators, and also support youth and women-led start-ups to increase access to financial and real sector services and goods through appropriate technology and innovation.
According to the multilateral finance institution, €7 million or over 70 percent of the equity investment will be obtained from its resources while the additional €2.8 million funds will be provided by the European Union (EU) through a partnership with the Organisation of African Caribbean and Pacific States (OACPS).
Stefan Nalletamby, director for financial sector development, AfDB, commenting on the approval, explained that it is a major implementation of the development bank’s Boost Africa Programme in collaboration with the EU, OACPS and the European Investment Bank (EIB), to enhance entrepreneurship and innovation across Africa, create new and quality jobs for young Africans, and contribute to developing an efficient entrepreneurial ecosystem in the continent.
“It signals the importance given to tech-enabled high growth entrepreneurs on the continent and the key role of AfricInvest and Cathay Innovation in supporting this key business segment in Africa to achieve Africa’s growth, transformation and integration objectives,” he added.
The bank’s investment is also expected to help Cathay-AfricInvest Innovation Fund, one of Africa’s leading private equity investors, meet its target of securing €110 million to invest in over 20 early-stage ventures across sub-Saharan Africa, centred on innovations such as financial inclusion (financial tech and insurance tech), retail and logistics platforms targeting online and mobile consumers, healthcare technologies, and off-grid energy technologies.
The innovation fund, which has recently expanded its focus to include start-ups that are harnessing new digital opportunities created as a result of the Covid-19 pandemic, or with high potential to help fight the coronavirus, is jointly sponsored by AfricInvest Capital Partners and Cathay Innovation SAS. Other investors include German KfW/Allianz GI’s AfricaGrow, public investment bank BPI and development finance institution Proparco, both of France, and Swiss impact investor Obviam.
