• Feature
• Finance

10 Business Funding Options for SMEs

by Shannon Okubor

November 5, 2020 1

Finding funding options when starting up your business can be a rocky but rewarding process. With the rapid emergence of SMEs in Africa, one of the major challenges these small businesses are faced with is generating capital for starting, sustaining and scaling their business. 

The African continent is plagued with lack of infrastructure, poor funding and other unfavourable business conditions. Amidst this, however, there are many funding options to help support SMEs in Africa. 

Tony Elumelu Fund(TEF)

The Tony Elumelu Foundation Entrepreneurship Program is an African non-profit organisation founded in 2010 by Mr Tony Elumelu, an entrepreneur and philanthropist based in Nigeria. He believed that with the right support, African entrepreneurs can contribute to Africa’s development. This program empowers SMEs in Africa that have business ideas, providing mentorship, training and seed capital to these entrepreneurs. Since 2015, TEF has empowered 4,470 African entrepreneurs, with a seed capital of $5,000 each. 

Criteria  

• All applicants must be legal residents of one of the 54 African Countries.
• Businesses must be in existence for a minimum of three years.

How to Apply
http://www.tefconnect.com/ 

GroFin Fund

GroFin Fund launched in 2015, and it operates in 9 African countries. It has committed $500 million to fund small and medium businesses (MSMEs) across Nigeria. Grofin operates through these five platforms: Aspire Small Business Fund, Growth Africa Fund, Aspire Growth Fund, Small Growing Business Fund, and Aspire Nigeria Fund. Aspire Small Business Fund provides a minimum of $100,000 and a maximum of $1.5 million to support various businesses in Nigeria. GroFin delivers funds mostly for a maximum of six years.

BOI Loans 

Bank of Industry has a number of loans that SMEs can leverage on. These include: 

• Graduate Entrepreneurship Fund (GEF) for NYSC corpers 
• Cottage Agro Processing (CAP) Fund 
• Nolly Fund for players in the Nollywood industry
• Fashion Fund for designers
• Funds for the automotive industry 
• Government Enterprise and Empowerment Program funds (MarketMoni, TraderMoni) and other funds. 

Africa’s Young Entrepreneurs (A.Y.E)

Africa’s Young Entrepreneurs (A.Y.E) is designed to empower young African entrepreneurs. It is a non-profit organization that helps facilitate intra trade among African entrepreneurs in 19 countries. There are no winners in A.Y.E but different businesses walk away with varying degrees of funds and empowerments. 

International Finance Corporation

The International Finance Corporation (IFC) is a development financial institution and a member of the World Bank Group. The IFC has invested over $25 billion on financial institutions and businesses in Africa. SMEs can apply directly by submitting a proposal to the nearest office close to the business project’s location. You can visit the official website for more information.

Savannah Funds 

Savannah Funds provides funds to start-up businesses but focuses on high growth technology startups in Africa. It has recorded 15 investments in Nigeria, Ghana, Kenya and South Africa which has generated revenue in millions while creating jobs in these countries. 

To apply, visit: http://savannah.vc/accelerator/ 

Shared Interest

Shared interest is a lending society which was founded in 1990 in England. The growth of Shared Interest has led to the establishment of satellites in some African countries like Ghana and Kenya. With over 11,500 investors, it also has investments in some countries in East Africa. Its goal is to make funds available to artisans, farmers and producers in developing countries. 

Criteria 

• Producers must be registered with Fairtrade International (FLO), World Fair Trade Organization (WFTO), The British Association for Fair Trade Shops and Suppliers (BAFTS), Small Producer Seal (SPP) or the Fairtrade Federation.
• All businesses must have at least three years of trading history and a positive balance sheet

Applications can be sent to info@shared-interest.com or visit their official website.

Seedstars Africa

Seedstars is based in Switzerland and is investing in over 53 countries in continents of Africa, the Middle East, Asia and South America. Every year a competition is held for SME grants in emerging markets. This competition is set to help companies with potential in need of technical help and capital. Their goal is to build and support online businesses in Africa. SMEs in Africa can register online from wherever they are. One winner is then selected per country and then they all compete in the regional stage. 

VC4 Africa

This community started off as a LinkedIn group in the year 2008. Interestingly, it is now one of the largest communities with members in 159 countries. It tries to provide startup funds for African entrepreneurs. They also provide free online tools and mentorship opportunities. This community provides exposure and business opportunities for SMEs. 

Acumen Funds 

Acumen funds is a charity organization that invests in social enterprises that serve low-income communities. It focuses on businesses in the housing, agricultural, water, healthcare and energy sectors. Investments are not only restricted to financial capital but also involve human capital.

Selection criteria include:  

• Businesses must be in the early stage
• Business must fall within the Agriculture, Health, Energy, Workforce Development, and Education sectors.
• Business must have a potential for social impact 

If you are searching for funding options to sustain and scale your business, simply select any of these 10 business funding options for SMEs in Africa. You can also check out our article on Funding Options For SMEs In Africa.

Do you have questions or suggestions? We’d love to know them in the comments!