New $40m impact investment fund targets high-potential startups in rural Africa

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Global consultancy firm Palladium has announced a US$40 million impact investment fund aimed at bridging the financing gap for small businesses in Sub-Saharan Africa.

The Palladium Impact Fund I will provide capital for SMEs in emerging markets, focusing on agribusiness value chains and off-grid clean energy in Nigeria, Ghana and Kenya. Palladium said it aims to alleviate poverty and economically empower over 500,000 rural households, creating at least 3,500 full-time jobs.

Investors will include foundations, family offices, pension funds, and institutional investors, while Palladium will manage the fund, anchored by a US$5 million investment of its own capital. The new fund will make debt and mezzanine investments of between US$250,000 and US$2 million into small companies.

“Fifty-four years of experience has taught Palladium that for an investment to have impact, it has to be sustainable, which means it needs to generate a financial return. For this first fund, we’ve chosen to invest in empowering African women, as women perform the majority of agricultural activities, own a third of all firms and are key to the welfare of their families. Gender equality and empowerment in the region can raise productive potential and boost the continent’s development,” said Andrew Tillery, head of impact investments at Palladium.

Palladium has already made two direct impact investments, in Naasakle, a mother and daughter-owned shea nut harvesting and processing business in Ghana, and PEG Africa, an off-grid solar energy project. The company has a further 10 investments under due diligence.

“Solar and clean energy technology is hugely important, particularly in rural Africa as it provides vital electricity to households. The social benefits are significant: for instance, 24-hour lighting enables more effective infant care and in turn can lower the infant mortality rate,” Tillery said. 

“It’s also the catalyst for the development of small, growing businesses as the working day is longer and more productive. Clean energy can power enabling technology, such as irrigation for farmers, to mitigate many of the risks associated with primary production like adverse weather conditions.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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