The news
- Swedfund commits $15 million to TLG Capital’s AGIF II to support African SMEs.
- The fund targets SMEs facing financial stress, offering flexible debt solutions.
- AGIF II aims to preserve and create jobs across sectors like manufacturing and agriculture.
Swedfund, Sweden’s development finance institution, has invested $15 million in TLG Capital’s Africa Growth Impact Fund II (AGIF II) to bolster small and medium-sized enterprises (SMEs) across Africa. This contribution is part of a broader $75 million first close of the fund, including investments from the International Finance Corporation (IFC), Norfund, and Bpifrance.
AGIF II is designed to provide flexible, long-term debt financing to viable SMEs experiencing temporary financial distress. By partnering with local banks, the Fund offers loans with terms and interest rates tailored to help these businesses recover and grow sustainably.
Jakob Larsson, Senior Investment Manager at Swedfund, emphasised the importance of SMEs in Africa’s economy, noting that they employ 80% of the workforce and generate nine out of ten new jobs on the continent.
“To protect existing jobs and to create new ones is crucial for poverty reduction. For African SMEs to survive and grow, it is important that there is a functioning market with the right, fit-for-purpose financial services addressing diverse local challenges.”
The Fund’s innovative structure combines debt financing with equity participation and guarantees from local banks, enabling SMEs to access capital that traditional banking systems might not provide. This approach supports business recovery and contributes to job preservation and creation, particularly in the manufacturing, healthcare, agriculture, and telecommunications sectors.
In Nigeria, the Fund has already identified potential beneficiaries. For instance, Terra Aqua, an aluminium recycling company in Ogun State, is set to receive $7.5 million in debt financing, contingent upon meeting environmental, social, and governance (ESG) benchmarks. This investment is expected to create 200 direct and 752 indirect jobs, highlighting the Fund’s impact on local economies.
AGIF II builds upon the strategy of its predecessor, Africa Growth Impact Fund I, and aims to reach a total fund size of $200 million. By focusing on SMEs, the Fund seeks to address the financing gap many small businesses face, thus fostering inclusive economic growth across the continent.
