IFC has launched a new $225 million platform to strengthen venture capital ecosystems and invest in early-stage startups tackling development challenges through technological innovations in the climate, health care, education, agriculture, e-commerce, and other sectors. This platform will help build the digital economy in Africa, the Middle East, Central Asia, and Pakistan.
These regions received less than 2% of the $643 billion in global venture capital funding in 2021 as a whole. The COVID-19 pandemic, rising food and supply chain costs, increasing interest rates, and currency devaluation have all made it harder for businesses to access money. In addition, outside of more developed economies like Egypt, Kenya, Nigeria, Pakistan, Senegal, and South Africa, tech ecosystems are in their infancy or possibly nonexistent.
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Nevertheless, there is tremendous room for expansion in each of these areas. The digital economy, for instance, has the potential to increase Africa’s gross domestic product (GDP) by $712 billion by the year 2050. Technology has the potential to increase the Middle East and North Africa’s GDP by 40%, or $1.6 trillion, and generate 1.5 million manufacturing jobs over the next 30 years. By 2030, Pakistan’s digital transformation could generate up to $59.7 billion in economic value annually, or about 19% of the nation’s GDP.
“Support for entrepreneurship and digital transformation is essential to economic growth, job creation, and resilience,” said Makhtar Diop, IFC’s Managing Director. “IFC’s Venture Capital Platform will help tech companies and entrepreneurs expand during a time of capital shortage, creating scalable investment opportunities and backing countries’ efforts to build transformative tech ecosystems. We want to help develop homegrown innovative solutions that are not only relevant to emerging countries but can also be exported to the rest of the world.”
The platform aims to support the region’s emerging venture capital markets, which have shown early growth promise but are currently confronted by difficult global economic conditions. IFC will invest in tech startups with equity or investments that resemble equity in order to assist them develop into scalable businesses that can draw conventional equity and debt finance. Additionally, IFC will work with other teams in the World Bank Group on the platform to develop and strengthen venture capital ecosystems through regulatory changes, sector analyses, and other tools. The platform will also concentrate on making investments in low-income and unstable nations while assisting in the creation of a pipeline of reliable early-stage businesses.
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The platform will expand on IFC’s investments and programmes, such as the IFC Startup Catalyst Program, to create tech ecosystems in Africa, the Middle East, Central Asia, and Pakistan. IFC has invested in businesses like TradeDepot, an e-commerce venture that connects international brands with African retailers, Twiga Foods, a technology-based food distribution platform based in Kenya, and Toters, a major on-demand delivery platform in Lebanon and Iraq.
The platform will also receive an additional $50 million from the Private Sector Window of the Blended Finance Facility of the International Development Association, which lowers the risk of investments in low-income nations. IFC will also raise money from private investors and other development organisations to help those nations’ businesspeople and tech firms.
IFC African startups IFC African startups
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard. You can book a session and speak with him using the link: https://insightsbyexperts.com/view_expert/charles-rapulu-udoh