The United Nations Capital Development Fund (UNCDF) in collaboration with Bamboo Capital Partners company is set to launch investment fund for African SMEs in agribusiness, technology, finance, infrastructure, solar energy, and telecoms companies by the end of 2019.
In an interview with the Green Carpet’s Cabrel Nana during the AFSIC Africa Investment event that took place in London, the Deputy Executive Secretary of the United Nations Capital Development Fund (UNCDF), Mr. Xavier Michon, spoke about the activities of UNCDF and its impact on Africa’s Small and Medium-size Enterprises (SME’s) and the Poor.
Xavier said that the over 52year organization is driven to “making finance work for the poor” and they have a mandate to operate in the least developed countries of the world of which two-thirds are in Africa.
He noted that 90% of SME’s in Africa are private and owned by the young middle-class entrepreneurs that make up about 30% of the GDP and two-thirds of the work force. This places Africa in the hotspot for most of their major interactions and efforts.
The top notch explained that they do not only provide grants and technical assistance but they go an extra mile to incubate companies (SMEs) providing guarantees and loans that set a platform so that other actors (investors), banks for instance, can comfortably put in their finances with more assurances. He added, when asked, that grants and technical assistance are provided for SMEs that are still scaling up but once operational they can only provide loans and in local currencies to absorb the currency risks.
The UNCDF provides financial tickets below the $5 million mark this is special because most investors would prefer to invest far above that mark. This reiterates the mandate of the UNCDF to work for the less privileged, bridging the inequality gap. SME’s that demonstrate viability in terms of impact and the corresponding SDG-development-goal derived from it are eligible. Challenge Calls for proposals are made on the UNCDF website and selected SME’s are supported comprehensively.
When asked about the development challenges in Africa, Mr. Michon staked the claim to a development practitioner who sees the glass half full. On the other hand, he said perception is a turn-off for investors who do not make the extra effort to investigate realities. In this case private financial market realities. So, he urges investors to move from “perception to a reality, based on a proper screening of the market, of the actors of that investment’’. He believes this is a big step between those two parameters and he noted that “because we have staff on the ground, we can bring those readings and realities to investors”.
So, investment risk can be minimized by closing the chasm between perception and reality.