KfW and Allianz launch fund for joint investments in African companies

KfW Entwicklungsbank, together with Allianz Global Investors, has set up a new fund on the behalf of the German Federal Ministry for Economic Cooperation and Development, in order to provide financial resources for African private equity and venture capital funds.

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The aim of the German based fund, called “AfricaGrow”, is to finance 150 innovative small and medium-sized enterprises (SMEs) and start-ups in reform-oriented African countries through local funds in order to promote sustainable economic and social development. By 2030, the investments are predicted to create more than 25,000 new jobs.

“The structure of the new AfricaGrow Fund is a milestone in supporting Africa’s economy. It is intended to help small and medium-sized enterprises, primarily in reform-oriented African countries, close the existing financing gap and build a solid equity base. In the African economy the small, local companies are the ones that create the most jobs and thus contribute significantly to securing people’s incomes,” said Prof. Dr. Joachim Nagel, Member of the Board of Managing Directors of KfW Bankengruppe.

When designing the fund, emphasis was placed on ensuring that the projects chosen had clear sustainability objectives. Regular and careful monitoring will ensure  a measurable positive social and/or economic impact in the form of, for example, income security and the creation of decent jobs in areas such as education, energy and financial services.

The fund volume is the result of cooperation between public and private partners and initially amounted  to $188 million (€170 million). $94 million (€85 million) comes from the BMZ, $33 million (€30 million) from the KfW subsidiary DEG and $60,8 to $77 million (€55 to €70 million) from Allianz companies. The Federal Government is providing an additional budget in the tens of millions for accompanying support measures.

For the Allianz Group, the project is an important, innovative component of its Africa strategy. Investments on the African continent are broadly diversified across countries and sectors. So far, Allianz has mainly financed infrastructure projects in emerging markets, including up to $500 million in a co-lending program with the World Bank Group, and around $100 million in Africa.

The fund is managed by Allianz Global Investors. Martin Ewald, the fund manager in charge, has been involved in so-called impact investments for more than ten years, including various rainforest projects.

Andreas Utermann, CEO of Allianz Global Investors, underlines the sustainability aspect of “AfricaGrow”: “I am proud that Martin Ewald and his team were able to bring to life this important and in its way largest project together with our partners in a very short time. Allianz Global Investors is committed to promoting impact investments by mobilizing equity. With AfricaGrow, we are offering an innovative solution that will have a sustainable positive impact on Africa’s social infrastructure on a large scale.”

As a legally independent entity, AfricaGrow is a central instrument of the Compact with Africa (CwA) initiative, which was launched in 2017 under the German G20 Presidency.

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(Featured image by AbsolutVision via Unsplash)

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First published in Vestors Capital, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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