The UK’s publicly owned impact investor, CDC Group on Monday announced its commitment to invest $39.2 million in support of Small and Medium Enterprises (SMEs) in West Africa.
The aim is to support West-African based private equity funds targeting SMEs in the region. Therefore, it will support the Verod Fund III and Adiwale Fund I, with commitments of $19.2m and $20m respectively.
In her statement, “it has been discovered that banks and low levels of private equity activity are currently struggling to meet the financing needs of SMEs, and this is hampering their potential as engines of economic growth in the African region.”
It further stated that “Access to finance is basically the top barrier for doing business in Nigeria and Ghana. Increasing access to capital to these markets is a core element of CDC Group’s Africa strategy by backing well networked, experienced local teams.”
Aim For CDC Group Investment In Africa
According to Nick O’Donohoe, CEO of CDC Group, he said; “In West Africa, SMEs should be the engine room of regional economies but they are being held back by lack of access to finance. As the largest private equity investor in Africa, CDC is committed to boosting access to finance for these businesses. Investing in SMEs enables our capital to go further and we expect that positive returns will generate an important demonstration effect and help mobilise further capital into these markets, encouraging more commitments towards the United Nations Sustainable Development Goals.”
This support will help in developing the private sector in the West African region. Also, it will help in growing the economy and creating a long-term sustainable employment for the semi-skilled and low-skilled workforce. Furthermore, it will in return contribute to the Sustainable Development Goal 8 which is ‘decent work and economic growth.’
About CDC Group
The CDC Group is the UK’s publicly owned impact investor and the world’s first impact investor. For over 70 years, it has successfully supported the sustainable, and long-term growth of businesses in Africa and South Asia.
Altogether, it has investments in over 1200 businesses in emerging economies and total portfolio value of £5.8bn. Also, this year, the group will invest over $1.5bn in companies in Africa and Asia. The focus will be on climate change, women empowerment, jobs and opportunity creations for people.
Basically, the group is funded by the UK government and all proceeds from its investments are usually reinvested to improve the lives of millions of people in Africa and South Asia. It advocates for the adoption of renewable energy in Africa and South Africa in the fight against climate change and is a UK champion of the UN’s Sustainable Development Goals – the global blueprint to achieve a better and more sustainable future for us all.
As a private investor looking to devote capital for a measurable environmental and social impact in countries in need of investment, CDC is the perfect group to partner with because they have the right expertise.
This time, the group will be partnering with the Adiwale Partners and Verod Capital Management.
Adiwale Fund I
Adiwale Fund I is a Small Medium Enterprises fund that primarily targets investments in Francophone West African countries. It is the first fund of the Adiwale Partners. It is for investments in selected industry sectors like FMCG, Business Services and Manufacturing, with commitments of $3-10 million.
CDC Group has a long standing relationship with the Adiwale Founders. Therefore, after the creation of the fund in 2016, the group advised on creating the ESG structures, business integrity team and processes and compliance policies.
Verod Fund III
This is another fund raised by Verod Capital Management to invest in Small and Medium Enterprises in West Africa. Over time, the company has built a strong investment track record, and has committed capital to 18 companies in Nigeria and Ghana and concluded 10 successful exits.
Also, this time, Verod Capital Growth Fund III will make private equity investments in middle market companies in Anglophone West Africa. Some of the countries they have investment in include: Nigeria, Ghana, Liberia, Sierra Leone and the Gambia.
The fund III will be active for industry sectors like consumer goods and services, agribusiness and financial services with investments of up to $20 million concentrating on themes including regional expansion and import substitution.
In conclusion, the mobilisation of capital in to the SMEs in West Africa will definitely support the private sector development, aid economic growth and long-term sustainable employment for the semi-skilled and low-skilled workforce. In return, it will fulfill the Sustainable Development Goal 8 and Goal 17 which states ‘Decent work and economic growth’, and ‘partnership for the goals’.