The CDC Group, the UK’s publicly owned impact investor, has announced the commitment of $39.2 million to support SMEs in West Africa. CDC is backing Verod Fund III and Adiwale Fund I, West-African based private equity funds targeting SMEs in the region, with commitments of $19.2m and $20 million respectively.
In West Africa, banks and low levels of private equity activity are currently struggling to meet the financing needs of SMEs, hampering their potential as engines of economic growth in the region.
Access to finance is cited as the top barrier for doing business in Nigeria and Ghana. Increasing access to capital to this market is a core element of CDC’s Africa strategy by backing well-networked, experienced local teams.
“This should in turn support private sector development, economic growth and long-term sustainable employment, particularly for the semi-skilled and low-skilled workforce in the region, therefore contributing to Sustainable Development Goal 8: decent work and economic growth,” a statement from the company explained.
The Adiwale Fund I is an SME fund primarily targeting investments in West Africa focusing on Cote d’Ivoire, Senegal, Burkina Faso and Mali.
It is the first fund raised by Adiwale Partners and will make investments in selected industry sectors (FMCG, business services and manufacturing) with commitments of $3-10 million.
CDC has had a long-standing relationship with the Adiwale founders for a number of years and, following its creation in 2016, provided advice on setting up Adiwale’s ESG structures, business integrity team and processes, and compliance policies.