The African Development Bank, AFDB, has earmarked about €10 million to boost investments which are expected to drive the continent’s technological growth.
A breakdown of the figure reveals that €7 million will be sourced directly from the resources of the African Development Bank.
The additional €2.8 million represents funds provided by the European Union (EU) through a partnership with the Organisation of African Caribbean and Pacific States (OACPS).
According to a press release issued April 19th, 2023, AFDB’s investment is expected to give birth to a new class of successful African entrepreneurs who will serve as model to younger innovators.
The Board of Directors of the African Development Bank took the decision to approve an equity investment of €9.8 million in Abidjan, Ivory Coast.
The Board expressed optimism that the move would support venture capital investments from seed to growth stages among African start-ups.
African Development Bank’s Director for financial sector development, Stefan Nalletamby said, “The Bank’s approval is another milestone in the implementation of the Boost Africa Program and its partnership with the EU, OACPS and the European Investment Bank.
“It signals the importance given to tech-enabled high growth entrepreneurs on the continent and the key role of AfricInvest and Cathay Innovation in supporting this key business segment in Africa to achieve Africa’s growth, transformation and integration objectives.”
Experts say the investment will help Cathay-AfricInvest Innovation Fund meet its target of securing €110m to invest in over 20 early-stage ventures across sub-Saharan Africa.
The Innovation Fund focuses on financial inclusion (financial tech and insurance tech), retail and logistics platforms targeting online and mobile consumers, healthcare technologies, and pay as you go, off-grid energy technologies.
More recently, the Innovation Fund has expanded its focus to include start-ups that are harnessing new digital opportunities created as a result of the Covid-19 pandemic, or with high potential to help fight the coronavirus.
The Mauritius-based Fund is jointly sponsored by AfricInvest Capital Partners and Cathay Innovation SAS.
In its current pipeline, over 40% of projects cover more than one African region.
Roughly another third of start-ups it invests in are in West Africa. A quarter of investee start-ups are in the health care sector.
Although venture capital firms invested $2 billion in African tech in 2019, a 73% increase over the previous year, funding from this source for innovative start-ups remains very low in Africa.
In addition very few venture capital funds focusing on early-stage tech start-ups have successfully closed rounds.
The African Development Bank’s investment aligns with the Boost Africa program goals to enhance entrepreneurship and innovation across Africa, create new and quality jobs for young Africans, and contribute to developing an efficient entrepreneurial ecosystem in Africa.
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