AfDB Invests USD 7m in Private Equity in Southern African SME Fund

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The Board of Directors of the African Development Bank (AfDB) recently approved a USD 7 million equity investment in the Business Partners International Southern African SME Fund (BPI SA). This contribution will allow BPI SA to increase access to finance and capacity building for small and medium-sized enterprises (SMEs) within various sectors in the southern Africa sub-region, thereby boosting income generation and job creation.

The Mauritius-based BPI SA Fund will be managed by Business Partners International, a subsidiary of Business Partners Limited, a South African provider of SME financing solutions. This fund, which has targeted capital commitments of USD 40 million, invests in SMEs with annual revenues of under USD 10 million and fewer than 300 employees.  It has wholly-owned local subsidiaries in Namibia, Zambia, Malawi and Zimbabwe.  Target investment size will range between USD 50,000 and USD 1 million, diversified across industries and sectors.

The fund manager has a track record of setting up and managing funds in various sub-Saharan African countries. These funds have helped create private sector growth through job creation, skills transfer and mentorship.  Of more than 32,700 investments in South Africa, almost 524,000 jobs were created.

The percentages of female and indigenous entrepreneurs supported were 34.5 percent and 37.5 percent respectively. In Kenya, more than 5,800 jobs were created and sustained.  Of the entrepreneurs supported, 38 percent were female and 93 percent were indigenous.  The BPI SA Fund approach has been tailored to achieve similar results including facilitating real property acquisition by SMEs through its property partner products.

Tim Turner, AfDB’s private sector and microfinance director said: “The project’s main development outcomes are expected to stem from private sector development and positive effects on inclusive growth through its focus on sectors such as construction, tourism, health, education and business services, as well as support to a fragile state and rural areas, all of which are expected to produce positive social effects. Collectively, the fund’s investee companies are expected to create over 1,000 new jobs, and almost a third of investee companies will be run by women entrepreneurs.”

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