Published on :
The International Finance Corporation (IFC), a subsidiary of the World Bank dedicated to private companies, is launching a $225 billion fund to strengthen the “venture capital” ecosystems, those investors who bet on start-ups.
On average, Africa receives $4 a year per capita in venture capital, compared to $800 in the United States and $20 in India. Suffice to say that those supposed to have a taste for risk are still very timorous vis-à-vis the continent. This is what decided the IFC to release funds to promote African venture capital. The prestigious signature of the Institution reassures the markets, affirms Makhtar Diop Director General of the IFC: ” The advantage we have is that the multiplier effect is huge. In venture capital, for every dollar invested, we were able to raise $44. »
The new $225 million fund is a natural follow-on for an institution that has long been betting on start-ups. This time around, it’s as much about supporting start-ups as it is about supporting investment funds.
« In Africa, we work for example with Partech, a fund based in France, précise Makhtar Diop. This fund has already invested in one of the fintechs, which has had success in West Africa, Wave. We managed to reach other companies through these investment funds. And we work directly with other start-ups, for example Yellow Door Energy in renewable energy, in the Middle East. We work with Twiga Food in Kenya. And all of that is direct investment. So we combine the two. »
► To read or listen also: How to support start-ups in Africa?
The initiative is all the more interesting for African companies as the global rise in interest rates complicates the task of entrepreneurs. ” When interest rates rise, company valuations tend to fall. It is a mechanical effect, explains Mathias Léopoldie, boss of Julaya, a Franco-Ivorian fintech. As a result, you are diluted and the capital costs more. The market is a little tight on its fundamentals right now. It may stay tense for another year or two and then a new cycle will begin again. »
Still, not all countries are in the same boat. Venture capital invests in a handful of countries. Egypt and Nigeria in the lead.