Sub-Saharan African Startups Get New $40m Impact Investment Fund
August 24, 2019
Huge hope for startups in sub-Saharan Africa. Global consultancy firm Palladium has launched a US$40 million impact investment fund aimed at bridging the financing gap for small businesses in Sub-Saharan Africa.
Here Is The Deal
The Palladium Impact Fund I will provide capital for SMEs and startups in emerging markets, such as sub-Saharan Africa 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.
Sub-saharan African countries
Working with many of the world’s largest aid agencies — including USAID, DFID, and DFAT — with staff in 90 countries, Palladium has contributed to a significant pipeline of investment opportunities, local networks, and a strong sense of what real impact takes.
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.”
What Is Expected of Potential Startups
For an investment to have an impact, it has to be sustainable, which means it needs to generate a financial return.
“We want to transform how development is financed, bridging the gap between aid and impact investing.”
Palladium CEO Christopher Hirst believes that after three years of direct investing, now is the time to channel others’ capital to deliver the same impact — and the same returns.
“We’re ideally placed to use our extensive international development work and global reach to source ideas for potential, credible investment opportunities,” he says. “Ultimately we want to transform how development is financed, bridging the gap between aid and investing.”
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.