In a move aimed at bolstering the economic backbone of the African continent, Swedfund, Sweden’s development finance institution, has announced a significant EUR 15 million (USD 16.3 million) commitment to the AfricInvest Small Cap Fund. This private equity initiative is specifically designed to fuel the growth of small and medium-sized enterprises (SMEs) across Africa, a sector widely recognized as crucial for job creation and fostering innovation.
The investment comes at a critical time for many African SMEs, which despite their potential, often struggle to secure the necessary capital for expansion and development. These businesses, ranging from burgeoning tech startups to established agricultural enterprises, face numerous hurdles in accessing traditional financing avenues. Swedfund’s indirect investment through the AfricInvest fund aims to bridge this gap, enabling more growth-oriented investments that can unlock the considerable potential held within Africa’s SME landscape.
“This investment will allow Swedfund to expand its support for underserved businesses across Africa,” stated Sofia Gedeon, Investment Director for Sustainable Enterprises at Swedfund. Emphasizing the strategic alignment between the two organizations, she added, “AfricInvest aligns its investments with measurable sustainability outcomes, allowing us to drive economic growth, create jobs and promote greater inclusion. At the same time, we set new benchmarks for responsible investing.”
The AfricInvest Small Cap Fund brings decades of experience and a robust pan-African presence to the table. With a focus on key sectors such as agribusiness, healthcare, education, consumer goods, manufacturing, and services, the fund is strategically positioned to contribute to both economic advancement and social progress across the continent. Its investment strategy reflects a deep understanding of the diverse needs and opportunities within the African market.
Beyond traditional financial metrics, the AfricInvest fund places a strong emphasis on Environmental, Social, and Governance (ESG) principles. Notably, the fund has set an ambitious target of investing at least 30 percent of its portfolio in companies that are either led by women or have significant female ownership. This focus on gender equality recognizes the vital role women play in economic development and seeks to empower female entrepreneurs and business leaders. Furthermore, climate-related objectives will be integrated into the fund’s investment process, underscoring a commitment to sustainable and responsible growth.
Swedfund’s support is expected to provide African SMEs not only with much-needed financial resources but also with valuable guidance and expertise to facilitate their responsible and effective growth. This partnership underscores the increasing recognition within the international development community of the pivotal role that private equity can play in fostering sustainable economic development in emerging markets.
AfricInvest, established in 1994, has grown into a leading pan-African investment platform with activities spanning private equity, venture capital, private credit, and listed equities. Over the past three decades, the firm has successfully raised over $2.3 billion, channeling this capital into nearly 230 companies across 38 African countries. This track record demonstrates AfricInvest’s ability to identify and nurture promising businesses, delivering both financial returns for investors and positive impact within the communities where these businesses operate.
Swedfund, as Sweden’s development finance institution, operates with a clear mission: to reduce poverty through sustainable investments in developing countries. Aligned with the United Nations’ 2030 Agenda and the Paris Agreement on climate change, Swedfund plays a crucial role in Sweden’s broader development cooperation efforts. While sharing the overarching goal of poverty reduction, Swedfund utilizes the distinct tools of private sector investment and technical feasibility studies. Its investments aim to create decent jobs and improve access to essential products and services, while its Project Accelerator supports sustainable public infrastructure development and promotes trade opportunities for Swedish solutions. As a state-owned entity managed by the Swedish Ministry of Finance, Swedfund’s commitment to measurable results and long-term impact makes its partnership with AfricInvest a significant step towards empowering African SMEs and fostering sustainable economic growth across the continent.