Funding Options For SMEs In Africa
SME grants are vital to the success of SMEs in Africa regardless of the size, location, and sector. Although essential, funding can be very challenging to secure for business owners. This is one of the many reasons funding options for SMEs exist – to help SMEs in Africa achieve their business goals and objectives.
Are you a startup in need of seed capital to kickstart your business? Do you need to upgrade your business? Whichever category you belong, below is a list of funding options for SMEs in Africa to take advantage of.
1. TONY ELUMELU FOUNDATION ENTREPRENEURSHIP PROGRAMME
The Tony Elumelu Foundation (TEF) Entrepreneurship Programme is the largest philanthropic initiative in Africa. The initiative was established to empower African entrepreneurs across the continent.
This programme was founded by Mr Tony Elumelu in 2015, an entrepreneur and philanthropist from Nigeria. Ever since its inception, the initiative has provided grants annually for SMEs in Africa and empowered them with $100 million yearly. To qualify for this funding, applicants must be legal residents of either one of the 54 African countries. Also, applicants must have a good business plan to qualify for the TEF Entrepreneurship funding.
Selection Criteria
- You must have a feasible business idea.
- Have an understanding of the financial requirements of running a business.
- Business idea must be scalable.
More information about this initiative can be found on the official website.
2. SEEDSTARS AFRICA
Seedstars is a Switzerland based competition for startups organised for emerging markets across the continent. With Seedstars, a search for the most promising startups is conducted each year. These startups will participate in competitions across local, regional, and global stages. In the end, one startup will be crowned the winner and receive a grand prize of up to $500,000 in investment.
SMEs in Africa can apply from wherever they are as the program is solely online. One winner will be selected per country after which each of these winners will represent their countries in the regional stage.
Selection Criteria
- You should have a Minimum Viable Product (MVP) and initial traction.
3. ACUMEN FUND
Acumen is a charity organisation that invests as debt or equity in enterprises that are either non-profit or for-profit organizations. It was incorporated in 2001 and focuses on businesses within the agricultural, housing, water, healthcare, and energy sectors.
With Acumen, investment is not restricted to financial capital alone but also human capital. In addition, it provides assistance in areas such as planning, strategy, and performance management. Since its inception, Acumen has sourced and executed several opportunities in the agriculture, energy, and health care sectors.
Selection Criteria
- The company must have significant impact within West Africa, East Africa, Pakistan, India, Latin America, or the United States.
- Business must fall within the Agriculture, Health, Workforce Development, Energy, and Education sectors.
- Business must be in seed or early stage.
- It must have a potential for social impact, financial sustainability and scaled impact.
4. THE INTERNATIONAL FINANCE CORPORATION
The International Finance Corporation (IFC) is a member of the World Bank Group and is also a development finance institution. It is the largest global development institution with its focus on the private sector. This corporation has invested over $25 billion on financial institutions and businesses in Africa.
SMEs in Africa seeking funding to establish a new business or invest in an existing one can apply for funding directly. This can be done by submitting a proposal to the nearest field office to the proposed project’s location.
Selection Criteria
- Business must be located in a developing country that is a member of IFC
- It must have prospects of being profitable.
- It must benefit the local economy and satisfy environmental and social standards.
More information about this initiative can be found on the official website.
5. SHARED INTEREST
Shared Interest is an investment organization that helps to alleviate poverty by investing in businesses in remote and disadvantaged communities. It has over 11,500 investors who come together to achieve a common goal by investing their money.
These funds put together are used to provide loans and credit facilities mainly for fair trade businesses. It also operates to ensure farmers are paid at the right time for their crops.
Selection Criteria
According to the official website, the selection criteria includes:
- Producers must be registered with either 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.
- Businesses must have at least three years trading history and a positive balance sheet.
6. SAVANNAH FUND
Another initiative on the list of funding options for SMEs in Africa is the Savannah Fund. It provides grants to African entrepreneurs in the startup stage of their businesses. However, a startup has to be within the technology sector to be eligible for the Savannah fund. Savannah Fund combines capital with local technical assistance and mentor networks in both the region and Silicon Valley.
Selection Criteria
- Startups must be a high growth technology sector in sub-Saharan Africa.
With the availability of funding options for SMEs in Africa, business owners can now seize the numerous opportunities to scale their businesses. What’s more? These funding options are available to all businesses in Africa. All you have to do is find a funding option that works for you to take your business to the next level.
