Published: March 1, 2012
UK backs two funds to boost economic growth in sub-Saharan Africa.
CDC, the UK’s development institution, has invested US$40mn across two funds to boost economic growth in sub-Saharan Africa.
The organisation committed US$30mn to the Africa Capitalization Fund (ACF), which is managed by the IFC’s asset management company and will be invested in banks across the continent.
A further US$10mn will support institutions in Kenya, Tanzania, Rwanda, Zambia and Uganda through the Progression Eastern African Microfinance Equity Fund.
These investments are part of CDC’s mandate to support the financial systems of developing countries and increase access to capital for local businesses.
“Africa’s economic success depends upon its people and businesses having access to decent financial services,” said Hywel Rees-Jones, a CDC managing director. “A well-funded and supported private sector can make a huge difference to development in Africa.
“With over 80% of adults in sub-Saharan Africa lacking access to formal financial services, we’re confident that our investment can have both a substantial development impact and demonstrate to others investors that the sector has good commercial potential,” he added.
ACF was launched in 2010 and is designed to increase bank lending in Africa while improving corporate governance and risk management as well as increasing access to finance in areas poorly served by banking services.
The fund, which is managed by the IFC’s Asset Management Company, aims to raise US$200mn and has already secured commitments from the EIB, the African Development Bank and the Abu Dhabi Development Fund.
ACF will invest between US$5mn and US$15mn in banks and has already completed its first investment by approving US$10m for NBS Bank in Malawi.
The Progression Eastern Africa Microfinance Equity Fund, managed by Progression Capital in Nairobi, is the first investment CDC has made in a specialist African microfinance fund.