The German development bank “KfW” has partnered with Allianz Global to launch a fund worth $188 million to help finance startups and SMEs.
The fund, dubbed “AfricaGrow”, will finance 150 innovative businesses by availing funds through African private equities and venture capital funds. AficaGrow is an initiative by the German Federal For Economic Cooperation and Development (BMZ) and KfW, managed by Allianz Group.
AfricaGrow aims at promoting sustainable growth and social development in countries associated with the G20 Compact with Africa.
According to Dr Joachim Nagel from KfW, the fund will bridge the finance gap through supporting SMEs in reform-oriented countries.
The design and structure of the new AfricaGrow Fund is a milestone to support the African economy. It is intended to help SMEs, primarily in reform-oriented African countries, close the existing financing gap and build a solid equity base. In Africa’s economy, it is mainly the small, local companies that create the most jobs and thus contribute significantly to securing people’s incomes.Dr Joachim Nagel, Member of the Executive Board of KfW
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AfricaGrow will benefit startups with innovative business models. The fund will focus on companies with strong potential, inclined to export and cluster-based growth models. Countries such as Ghana, Guinea, Morocco, Rwanda, Senegal, Togo, and Tunisia will benefit from AfricaGrow.
The fund will come from BMZ, a subsidiary of the German development bank, and members of the Allianz companies. BMZ will contribute half the funding ($94 million), whereas DEG, a KfW subsidiary will give $33 million.
Additionally, members of the Allianz Group will provide between $61 million to $78 million. Besides, the German Federal government will provide an additional budget to support the initiative.