IFC and TLG Capital launch $75M fund to bolster stressed African SMEs

New private credit initiative, backed by development finance institutions, aims to provide crucial financing and expert support to struggling small and medium-sized enterprises across vital sectors in Africa.

Manufacturing-Africa-and-TLG. Portal ERP South Africa. 

In a significant move to support Africa's resilient small and medium-sized enterprises (SMEs), the International Finance Corporation (IFC) and investment firm TLG Capital have announced the initial closing of their TLG Africa Growth Impact Fund II (AGIF II), securing US$75 million. This new private credit fund is strategically designed to offer a vital financial lifeline to approximately 20 SMEs across the continent grappling with existing loan pressures and macroeconomic headwinds.

The IFC, through its Distressed Asset Recovery Program (DARP), is a cornerstone investor in AGIF II, committing up to US$20 million. This commitment is amplified by the support of several prominent development finance institutions, including Swedfund, Norfund, Bpifrance, and the UK Foreign, Commonwealth & Development Office (FCDO) via its Manufacturing Africa program.

AGIF II will operate in partnership with local African banks, channeling much-needed financing to businesses operating in crucial sectors such as manufacturing, healthcare, agriculture, and telecommunications. This injection of capital aims to empower these enterprises to navigate current economic shocks and other challenges, ultimately fostering their recovery and strengthening their long-term viability.

Isha Doshi, co-Founder of TLG Capital, highlighted the pressing need for such an initiative, stating, "Today, one in four SME loans in Africa is under stress. And yet, the entrepreneurial spirit is unshaken. AGIF II is our answer to that call for partnership. It’s about capital that understands context – financing that’s flexible, strategic, and backed by advisory horsepower." Beyond financial support, TLG AGIF II will also provide access to expert guidance through collaborations with firms like McKinsey, BDO, ESS, and Ndarama Works, offering a holistic approach to SME empowerment.

Aliou Maiga, Director of IFC’s Financial Institutions Group for Africa, emphasized the fund's broader impact, noting its potential to attract further private investment and bolster SMEs that are critical for community development through job creation and the provision of essential services. He also pointed out the fund's alignment with the UN’s Sustainable Development Goals, promoting gender equity, local ownership, and sustainable growth.

Jonny Baxter, the UK Deputy High Commissioner to Lagos, underscored the importance of strengthening manufacturing for Africa’s economic advancement, stating that backing TLG Capital would catalyze increased investment, job creation, and overall prosperity in Nigeria and beyond.

The IFC’s DARP program, established in 2007, has a proven track record of facilitating the resolution of distressed assets globally. To date, it has committed $9.2 billion, contributing to the restructuring of over $46 billion in non-performing loans and positively impacting more than 21 million borrowers. The launch of AGIF II represents a continued commitment to this crucial work, specifically tailored to the unique challenges and opportunities within the African SME landscape.