KfW Development Bank has partnered Allianz Global Investors to set up a EUR170 million (US$188 million) “fund of funds” that will help African private equity and venture capital funds make investments in startups and SMEs on the continent.
Launched on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the KfW fund, which will be managed by Allianz, is called AfricaGrow and will finance 150 innovative businesses through local funds by 2030 in order to promote sustainable economic and social development.
“The design and structure of the new AfricaGrow Fund is a milestone in support for the African 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 Africa’s economy it is mainly the small, local companies that create the most jobs and thus contribute significantly to securing people’s incomes,” said Dr Joachim Nagel, member of KfW Group’s executive board.
The fund volume stems from cooperation between public and private partners and is initially EUR170 million. Half of that – EUR 85 million (US$94 million) – comes from the Federal Ministry for Economic Cooperation and Development (BMZ), plus another EUR 30 million (US$33 million) from KfW subsidiary DEG and EUR55 million (US$61 million) to EUR70 million (US$78 million) from Allianz companies. The German Federal Government is providing an additional budget in the tens of millions for accompanying support measures.