catalysing innovation and enterprise throughout the continent

Regardless of accounting for 18% of the worldwide inhabitants, Africa attracts only one% to 2% of world enterprise capital (VC), in response to the European Funding Financial institution (EIB). This “VC hole” is a multifaceted problem rooted in a number of structural points. 

First, there’s a shortage of affected person capital: long-term, risk-tolerant funding tailor-made for startups in rising markets. Second, native experience in scaling companies is restricted, with many areas missing the infrastructure to help high-growth enterprises. Third, blended finance fashions, which mix private and non-private sources to mitigate funding dangers, are underutilised. Compounding these challenges is the problem of debt sustainability, which constrains African public sectors’ skill to put money into important infrastructure, reminiscent of roads, power grids, or digital networks, important for financial progress.

The non-public sector, due to this fact, emerges as a linchpin for Africa’s growth. Nonetheless, non-public buyers usually hesitate on account of perceived dangers, together with regulatory uncertainties, market volatility and restricted exit alternatives for investments. 

The Enhance Africa initiative was deployed in 2020 by the EIB and the African Improvement Financial institution (AfDB) with help from the European Fee. As a flagship programme aligned with the EU’s World Gateway technique, which promotes help to the non-public sector for creation of sustainable financial alternatives and jobs, Enhance Africa helps the UN Sustainable Improvement Objectives (SDGs), significantly SDG 8 (first rate work and financial progress) and SDG 9 (business, innovation and infrastructure). By channelling investments into enterprise capital funds that again tech startups and high-growth enterprises, Enhance Africa fosters innovation ecosystems, drives job creation and promotes inclusive financial progress throughout Sub-Saharan Africa.

Enhance Africa’s strategy is holistic, combining provision of monetary capital with technical help to empower each fund managers and entrepreneurs, construct resilient companies and appeal to non-public funding.

The broader context of Africa’s financing challenges underscores the urgency of Enhance Africa’s mission. Public sectors throughout the continent face excessive debt ranges, risky commodity costs and local weather vulnerabilities, which restrict their capability to fund growth initiatives. As an illustration, infrastructure deficits reminiscent of unreliable electrical energy or restricted web entry hinder financial progress. The non-public sector, with its agility and innovation, is well-positioned to fill this hole, but it surely requires help. Enhance Africa’s mannequin is a game-changer, making a ripple impact that strengthens entrepreneurial ecosystems and drives sustainable growth.

Programme overview

EIB’s help for personal fairness and enterprise capital funds working in Africa spans many years. The financial institution has thus far invested over €3.8bn of its personal cash throughout 178 funds working on the continent. This seed cash has attracted over €32.4bn from a pool of buyers who see the Financial institution’s early funding as a seal of approval.

Via the Enhance Africa initiative EIB appears to work with fund managers which have funding methods that create win-win outcomes for each European and African companions, in a position to generate industrial returns that will appeal to non-public capital in the long term. 

Enhance Africa’s financing mannequin is each revolutionary and catalytic, designed to maximise influence in a capital-constrained setting. The EIB has already dedicated €78m to the initiative, which has mobilised a further €382m from companions, together with the European Fee.

This funding helps six enterprise capital funds, which have invested in 73 firms throughout Sub-Saharan Africa, concentrating on high-impact sectors: data and communication know-how (ICT), agribusiness, monetary providers, well being, training and renewable power. These sectors are important for addressing Africa’s growth challenges, from digital inclusion to meals safety and local weather resilience.

The initiative’s construction is constructed on the precept of de-risking investments to draw non-public capital, on condition that the perceived threat of investing in Africa is much better than the precise threat. Via structured junior tranches or subordinated tranches, public establishments just like the EIB decide to absorbing preliminary losses ought to there be any, shielding or decreasing the danger for personal buyers and inspiring better participation in Africa’s VC ecosystem with an goal of creating it self-sustaining in the long run.

Technical Help Facility

Technical help is a cornerstone of Enhance Africa, delivered via the Enhance Africa Technical Help Facility (TAF). This offers tailor-made help to fund managers and entrepreneurs, enhancing operational expertise, refining enterprise fashions, offering networking alternatives and addressing market-specific challenges. 

For instance, TAF helps startups navigate regulatory hurdles, develop scalable applied sciences and entry new markets. The EIB World Impression Report 2024/2025 underscores Enhance Africa’s alignment with broader EU priorities, noting that 60% of EIB World’s €7.9bn of initiatives in 2024 goal local weather motion and environmental sustainability, with €6.7bn supporting World Gateway targets. Enhance Africa’s concentrate on sectors like renewable power and digital connectivity instantly contributes to those targets.

The initiative’s geographic focus spans key areas, together with East and West Africa, the place entrepreneurial ecosystems are quickly evolving. By supporting early-stage and growth-stage enterprises, Enhance Africa creates a pipeline of investable firms, fostering a virtuous cycle of innovation and funding. 

Impression and outcomes

Enhance Africa’s outcomes are quantifiable and far-reaching: 94% of funded founders have raised over $1m in follow-on capital, signalling robust investor confidence within the initiative’s portfolio, and 65% of entrepreneurs supported studied overseas and returned to Africa, bringing international experience to unravel native challenges. 

Gender and youth inclusion are central to Enhance Africa’s mission. The initiative prioritises women-led companies and younger entrepreneurs, addressing systemic inequities in entry to finance. 

By supporting incubators, accelerators and fund managers, Enhance Africa strengthens innovation ecosystems, making a ripple impact that draws non-public funding and fosters sustainable progress.

Enhance Africa serves as a replicable mannequin for supporting entrepreneurship in rising markets. As international VC flows evolve, Enhance Africa stays a beacon of hope, empowering entrepreneurs, creating jobs and advancing SDGs. With continued funding and strategic partnerships, it could possibly catalyse a continent-wide entrepreneurial renaissance, fostering prosperity for generations to return.