KfW starts fund for Africa

Development bank announces first fund for small business in the sub-Saharan.

Germany’s KfW development bank and the Ministry for Economic Co-operation and Development (BMZ) have set up the first regional investment fund for small businesses in sub-Saharan Africa.

The fund will offer microfinance institutions in the region financing instruments including long-term debt and quasi-equity financing such as subordinated local currency loans. In turn, those institutions will lend to growing businesses.

The fund will develop a credit portfolio of US$200mn by 2014. So far, investors have committed US$ 150mn, with BMZ and KfW contributing US$33mn. Other investors include the IFC, the European Investment Bank and the Spanish Development Agency.