The International Finance Corporation (IFC), member of the World Bank Group, has pledged to invest € 10million (US$ 13million) in a fund dedicated to helping small and medium enterprises (SMEs) in North Africa.
The Capital North Africa Venture Fund II (CNAV Fund II), managed by Morocco-based Capital Invest, will use the equity investment to help invest in SMEs across North Africa, particularly medium-sized companies who can demonstrate growth potential.
Launched in 2006, the fund also has the mandate to pursue opportunistic investments into West Africa and Egypt.
“Supporting small and medium businesses will positively contribute to the economic growth and stability of the region, as SMEs have strong growth potential that, when realized, will attract more investors,” said Omar Chikhaoui from Capital Invest.
A total of € 75million (US$ 98million) has already been committed to the fund, which has a maximum total of € 100million (US$ 131million).
According to a number of studies, SMEs in the Mena region suffer a funding shortfall estimated at around US$ 150billion and the unemployment rate is the highest in the world.
“Investment funds, with their unique provision of both equity capital and expertise, have a significant impact on company growth and job creation,” said Joumana Cobein, IFC Principal Country Officer in Morocco.
“Unemployment is a huge challenge for North Africa, and supporting funds can help address this challenge.”
The fund’s strategy is to target high growth companies, which will make a positive contribution to job creation and economic growth.
The IFC will be working closely with the fund manager to ensure the fund’s structure and terms are in line with IFC and international standards to ensure investor protection is adequate.
“Investment into African private equity funds has been rising throughout the decade and indicates the strong interest from international investors due to the continent’s fast growing economies,” said Imara in an update to investors.
“We see the latest investment by the IFC as a further vote of confidence in Africa’s Private Equity Industry and it will go a long way to encourage further economic growth and development in Africa.”