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Kenya, digital, African Start-ups, startups
It’s a big boost for small businesses and entrepreneurs. To help support and finance African start-ups, AFD is launching a new €15 million seed fund. It’s part of a growing commitment to expanding the continent's digital ecosystem.

The private sector is the main driver of economic growth in Africa. However, only 20% of small and medium enterprises (SMEs) are eligible for a bank loan and 87% of start-ups have no access to financing. Startups are often created in response to local, unmet needs. These digital gems are valuable generators of employment and are potentially powerful tools for social and economic development.

45 African countries could Benefit 

With such dynamic potential on offer, AFD is launching a €15 million seed fund for African digital start-ups as part of Emerging Valley – a platform for emerging innovations and partnerships between Europe and Africa. (Its third summit was held in Aix-Marseille in December.) 

AFD’s support and financing scheme will be accessible in 45 African countries, and will allow emerging start-ups to access financial support of up to €300,000 through AFD's local partners. 

The fund is part of AFD Group's broad range of support and financing for African start-ups, which includes initiatives such as the AFD Digital Challenge, Afric’innov, AFIDBA, and the Social and Inclusive Business Camp (SIBC).

See also:  Read about AFD Group’s new seed funding by downloading our PDF.

This new Digital Africa seed fund is also part of the Choose Africa initiative, through which AFD Group has committed to allocating €2.5 billion to African start-ups and SMEs by 2022.

Overall support

At the heart of these measures, Proparco plays a role of catalyst by investing in the African digital ecosystem. As AFD's subsidiary dedicated to the private sector, it joined a funding round this year, to finance the development of the Kenyan start-up Ajua (formerly mSurvey). 

This investment will enable the start-up, a specialist in real-time monitoring of consumer opinions, to consolidate its infrastructure and partnerships and expand its services outside Kenya and Nigeria, where it is already active.

In South Africa, Jumo benefited in 2018 from a direct equity investment of $3 million from Proparco. Jumo is a tech company specializing in finance and banking, which has developed a nano-loan service that is available on mobile phones. The small scale and easy access promises to enable more people to embark on entrepreneurial projects.  

See also: Proparco’s Private Sector & Development magazine - this issue focuses on start-up financing in Africa.

Proparco also supports venture capital funds that invest in African start-ups and SMEs in their growth phase. This is the case of Andela, a company specializing in the training of young IT developers on the continent, financed by the TLcom TIDE Africa fund, in which Proparco invested $5 million in 2018. 

The same is true for Lynk in Kenya, accompanied by the impact fund Novastar Ventures that is supported by AFD’s subsidiary. Through local partner funds, these start-ups have access to capital and benefit from quality expertise, local knowledge pertinent to their business model and training to continue their development.