The board of the African Development Bank Group (AfDB) has approved an equity investment of €9.8 million to support venture capital investments in African startups, from seed to growth stages.
The development finance institution announced this in a statement on Tuesday.
AfDB said that €7 million of the equity investment will be sourced from its own resources while 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).
It said 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 statement reads.
“The Mauritius-based Fund is jointly sponsored by AfricInvest Capital Partners and Cathay Innovation SAS.”
Speaking on the equity investment, Stefan Nalletamby, the AfDB’s director for financial sector development, 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.”
According to the bank, the investment is expected to accelerate the creation of a new class of successful African entrepreneurs that will serve as a model to younger innovators.
The bank said it would also support youth and women-led start-ups and increase access and inclusion to financial and ‘real sector’ services and goods through appropriate technology and innovation.