Swedfund, a development finance institution in Sweden, has made a significant investment of $15 million in TLG Capital’s Africa Growth Impact Fund II (AGIF II) to support small and medium-sized enterprises (SMEs) across Africa. This investment is part of a larger $75 million first close of the fund, which also includes contributions from the International Finance Corporation (IFC), Norfund, and Bpifrance.
AGIF II is specifically tailored to provide flexible and long-term debt financing to viable SMEs that are facing temporary financial challenges. By collaborating with local banks, the Fund offers loans with customized terms and interest rates to help these businesses recover and thrive sustainably.
Jakob Larsson, Senior Investment Manager at Swedfund, highlighted the crucial role of SMEs in Africa’s economy, as they employ 80% of the workforce and create nine out of ten new jobs on the continent. Larsson emphasized the importance of preserving existing jobs and creating new ones to reduce poverty, underscoring the need for appropriate financial services to address diverse local challenges.
The innovative structure of AGIF II combines debt financing with equity participation and guarantees from local banks, enabling SMEs to access capital that may not be readily available through traditional banking channels. This approach not only supports business recovery but also contributes to job preservation and creation, particularly in key sectors such as manufacturing, healthcare, agriculture, and telecommunications.
In Nigeria, the Fund has already identified potential beneficiaries, such as Terra Aqua, an aluminium recycling company in Ogun State, which is set to receive $7.5 million in debt financing subject to meeting environmental, social, and governance (ESG) criteria. This investment is expected to create 200 direct jobs and 752 indirect jobs, showcasing the Fund’s positive impact on local economies.
AGIF II builds on the success of its predecessor, Africa Growth Impact Fund I, with a goal to achieve a total fund size of $200 million. By focusing on SMEs, the Fund aims to address the financing gap that many small businesses face, thereby fostering inclusive economic growth across the African continent.
