Market scoping and structuring an investment fund for agricultural SME finance in Africa
Market scoping and structuring an investment fund for agricultural SME finance in Africa
Structuring and implementing an Investment Facility for AfDB to support underserved SME agribusinesses in West- and Southern Africa. This assignment concerns the full process of developing an Investment Facility: from a market- and positioning study to preparing marketing documents and procuring fund manager/s.
The challenge
It is estimated that there are about 5 million formal SMEs based in Africa. African SMEs generate about 58% of total employment and 33% of GDP on the continent. Despite the importance of SMEs for African economical growth, access to finance remains a key challenge to their development. The current funding and credit gap is estimated to be around USD 170 billion. The global demand for agricultural smallholder finance is estimated at USD 200 billion.
The approach
Our approach consisted of three steps. At first, we conducted a market scoping- and positioning study assessing the demand and supply of finance and investment opportunities of 12 value chains in both West- and Southern Africa. Secondly, based on this study we developed a business plan including a financial model, investment strategy, organizational structure, marketing material, Theory of Change and local currency lending strategy.
Thirdly, we supported the procurement of the fund manager and assisted with the actual implementation of the fund.
We did not just ‘tick the boxes’ presented in the ToR to develop a fund. Our team went beyond the Terms of Reference (ToR), keeping the goal of our client clearly in mind: to create the highest impact with the available resources through financing agri-SMEs in Africa.
Impact
Successfully managed the development of an Investment Facility: from market scoping, to business plan, to procurement and implementation.
