IFC launches $225m platform to strengthen Africa’s VC ecosystem
IFC launched a US$225 million platform for strengthening venture capital ecosystems in Africa and the Middle East, Central Asia, Pakistan. It will invest in early-stage companies that address development challenges through technological innovation in climate, agriculture, education, ecommerce and other areas.
These regions will receive less than 2 percent of the US$643 billion in global venture capital funding by 2021. However, their growth potential is immense. In Africa, for example, the digital economy has the potential to contribute US$712 billion to the continent’s gross domestic product (GDP) by 2050.
IFC’s new platform aims to strengthen the regions’ nascent venture capital markets, which have demonstrated early growth potential but face challenging global economic conditions. IFC will invest in equity or equity-like ventures in tech startups to help them become scalable ventures that are able to attract debt and mainstream equity financing. IFC will also collaborate with other World Bank Group teams to build and strengthen venture capital ecosystems via regulatory reforms, sector analyses and other tools.
The platform will build on IFC’s investments and efforts to build tech ecosystems in Africa, Middle East, Central Asia, and Pakistan through initiatives such as the IFC Startup Catalyst Programme. IFC has invested in companies such a Twiga, a Kenya-based technology-based food distribution platform; TradeDepot a e-commerce startup connecting African retailers with international brands; and Toters, an on-demand delivery platform in Lebanon, and Iraq.
“Support for entrepreneurship and digital transformation is essential to economic growth, job creation, and resilience,” said Makhtar Diop, IFC’s managing director. “IFC’s Venture Capital Platform will help tech companies and entrepreneurs expand during a time of capital shortage, creating scalable investment opportunities and backing countries’ efforts to build transformative tech ecosystems. We want to help develop homegrown innovative solutions that are not only relevant to emerging countries but can also be exported to the rest of the world.”
The Blended Finance Facility will provide additional US$50 millions to the platform. International Development Association’s Private Sector WindowThe IFC helps lower the risk of investing in low-income countries. IFC will also mobilize capital from private sector and other development institutions to support entrepreneurs and tech-based companies in these countries.