Micro, small, and medium-sized enterprises are essential for job creation and economic growth throughout Africa, yet they face significant challenges in accessing credit. This limits the growth potential of individual entrepreneurs.
To help address this gap, Impact Fund Denmark is now lending USD 15 million (approximately DKK 96 million) in Verdant Capital Hybrid Fund (VCHF). The fund invests hybrid and mezzanine capital in financial institutions in Africa that focus on financial inclusion by lending and providing other financial services to micro, small, and medium-sized enterprises and entrepreneurs.
Through this investment, VCHF can provide more capital to financial institutions, which in turn can issue more loans to small businesses and entrepreneurs. This will increase income opportunities for individual companies and create more jobs.
VCHF has a mandate to invest on a pan-African basis. Current markets of investment include: Egypt, Ghana, Kenya, Nigeria, Uganda, Rwanda, South Africa, Tanzania, Zambia and Zimbabwe.
The investment demonstrates how Impact Fund Denmark funding, deployed through financial intermediaries, can effectively reach MSMEs.
"An investment like this addresses a specific and significant issue in many developing countries, namely the lack of financing for small businesses. By strengthening Verdant Capital Hybrid Fund, we can help thousands of entrepreneurs grow, hire more staff, and contribute more in taxes. This is crucial for creating economically sustainable societies." - Nitish Chawla, Investment Director in Financial Services at Impact Fund Denmark.
In addition to capital, Impact Fund Denmark provides an action plan to strengthen the VCHF’s work with environmental and social risks.