We recently had the opportunity to speak with Amena Arif, the IFC Country Manager for Kenya, Tanzania, Uganda, Rwanda, Burundi, Somalia, and Malawi. In her role, Ms Arif oversees all advisory and investment operations in her cluster of countries, focusing on developing new investment opportunities and supporting clients to create jobs.
She spoke about the role of venture funding in Africa’s tech startup ecosystem and IFC’s new $225 million funding platform for venture capital firms and companies in Africa, the Middle East, Central Asia, and Pakistan. The fund aims to strengthen the venture capital ecosystem and invest in early-stage companies that address development challenges through technological innovations in sectors such as climate, financial services, healthcare, education, agriculture, and e-commerce. Arif stated that the platform is intended to help build the digital economy in these regions and make equity investments in tech startups to help them commercialize and become scalable ventures.
Arif also highlighted that startups in Africa, the Middle East, Central Asia, and Pakistan often face funding limitations, despite having good ideas. These regions receive less than 2% of the global venture capital fund, which is significantly lower than other regions.
Although African tech startups received about $4 billion in 2021, which is more than what they received in 2020, it is still not enough. IFC has been working in this ecosystem for several years and has invested or mobilized about $1.3 billion in the African tech ecosystem over the past five or six years. Additionally, the IFC has made approximately $2 billion in funds that invest in the venture capital ecosystem, both directly and indirectly.
In Arif’s words, “We think that Africa’s digital economy can grow to be over 700 billion dollars by 2050. So how do we help it get there? This $225 million platform is part of our effort to do that.”
Arif also emphasized that startups often need support on the policy side, such as strengthening intellectual property laws in particular jurisdictions, to protect their ideas. The IFC will work in collaboration with other partners, including the World Bank, to provide the necessary support to startups and the venture capital ecosystem.