Investment of $15 Million by Swedfund in AGIF II to Boost Small and Medium Enterprises in Africa and Create More Jobs
The Africa Growth Impact Fund II (AGIF II), a unique investment vehicle, is making strides in supporting African Small and Medium-sized Enterprises (SMEs) by offering a blend of debt financing, equity participation, and guarantees from local banks. This innovative approach is aimed at fostering business recovery, aiding in job preservation, and stimulating job creation, particularly within the manufacturing, healthcare, agriculture, and telecommunications sectors.
With a target fund size of $200 million, AGIF II builds on the strategy of its predecessor. The fund has already achieved a first close of $75 million, backed by prominent investors such as Swedfund, Norfund, Bpifrance, and the International Finance Corporation (IFC).
One of the key benefits of AGIF II is its focus on supporting key sectors. By providing private credit, the fund can help manufacturing SMEs expand production capacity and improve operational efficiency, thereby increasing their competitiveness in the market. In the healthcare sector, AGIF II can support SMEs by financing medical equipment, facility upgrades, or expansion into new markets, enhancing healthcare access and quality.
In agriculture, AGIF II can aid SMEs by financing initiatives like farm mechanization, irrigation systems, or market expansion, which are crucial for improving agricultural productivity and food security. For telecommunications SMEs, the fund can support infrastructure development, network expansion, or technology upgrades, which are vital for enhancing connectivity and digital services.
AGIF II's strategy is designed to promote inclusive economic growth across Africa by bridging the financing gap faced by SMEs. By providing much-needed private credit, the fund addresses a significant challenge these businesses face in accessing funding for expansion and operational needs.
The fund's focus on job creation and preservation is essential for inclusive economic growth. In the case of Terra Aqua, an aluminium recycling company in Nigeria, AGIF II is set to provide $7.5 million in debt financing. This investment is projected to create 200 direct and 752 indirect jobs, demonstrating the fund's potential impact on employment.
SMEs in Africa employ 80% of the workforce and create nine out of ten new jobs on the continent. By supporting these businesses, AGIF II is contributing to economic growth and job creation on a significant scale.
Jakob Larsson, a Senior Investment Manager at Swedfund, one of the fund's investors, emphasised the importance of AGIF II, stating, "AGIF II's innovative structure and focus on key sectors aligns with our mission to promote economic growth and development across Africa."
AGIF II's model offers SMEs access to capital that traditional banking systems often cannot provide. The fund collaborates with local banks to provide loans with customized terms and interest rates, ensuring that businesses receive the support they need to grow and thrive.
In conclusion, the Africa Growth Impact Fund II is making a positive impact on the African economy by supporting SMEs in key sectors, promoting job creation, and addressing the financing gap these businesses face. As the fund continues to grow and attract investment, it is poised to make a significant contribution to Africa's economic development.
Investors such as Swedfund, Norfund, Bpifrance, and the International Finance Corporation (IFC) have already backed the Africa Growth Impact Fund II (AGIF II), a unique investment vehicle designed to provide private credit and foster job creation in African Small and Medium-sized Enterprises (SMEs) across sectors like manufacturing, healthcare, agriculture, and telecommunications. By offering tailored financing solutions, AGIF II enables these businesses to expand, improve operations, and upgrade facilities, ultimately increasing their competitiveness and contributing to inclusive economic growth in Africa.
