EIB, AfDB, European Commission partner to launch €150 million Initiative for African Startups

The European Investment Bank (EIB), the African Development Bank (AfDB) and the European Commission have partnered to launch the Boost Africa Initiative with an initial combined investment of up to €150 million. The Initiative is expected to leverage up to 1 Billion Euros in additional investments in a high growth sector, and support over 1,500 start-ups and SMEs across the continent.

The launch ceremony took place at the Headquarters of the AfDB in Abidjan in the presence of EIB President Werner Hoyer, AfDB President Akinwumi Adesina, EIB Vice-President Ambroise Fayolle and Stefano Manservisi, Director-General for International Cooperation and Development at the European Commission.

“Boost Africa will help Africa’s young population to gain hope and confidence that they can succeed in realising their dreams and aspirations,” said AfDB President Akinwumi Adesina.  “Africa’s future will be determined by the current youth and it is crucial that we create and support entrepreneurship opportunities for youth, generate success stories and show these as examples for other young people.”

Boost Africa will contribute to fostering the development of an efficient entrepreneurial ecosystem in Africa by supporting the earliest and riskier stages of the venture value chain, in an economically viable and sustainable way. Boost Africa aims to spur the entrepreneurial potential of the African youth to create innovative and compelling businesses with the capacity to compete regionally and globally, to attract domestic and foreign direct investment, to create new and quality jobs, and contribute to inclusive and sustainable economic growth.

EIB President Werner Hoyer said, “Boost Africa will hit the ground running, as the first start-ups and high-growth SMEs are expected to be supported already in 2017. These small businesses and the young men and women behind them are truly an inspiration. I believe they can teach us all something about dynamism and determination.”

Director-General for International Cooperation and Development at the European Commission Stefano Manservisi said, “Thanks to a smart use of blended finance, Boost aims at leveraging the full strength of two major financial institutions to venture into new areas of support for the new generation of African entrepreneurs and we want to give a particular focus on fragile and risky situations where financial services are not provided by the market. Boost is a concrete example of actions that reflect EU’s determination to create conditions for job creation for youth.”

Deploying a blended finance approach, the investment program expects to invest up to 25 – 30 smaller-sized equity investments into angel, venture capital and seed funds, which in turn fund start-ups and early stage businesses with high-growth and job creation potential in Africa. Boost Africa’s first investment is expected to be in Telecom Tide Africa Fund, an ICT fund investing in tech start-ups in West and East Africa. Africa Technology Ventures supporting innovative start-ups in East Africa and helping them to expand globally is also under appraisal.

The European Commission’s support is sought by partners and is being currently appraised by the Commission along with its conditions and amount, to enable senior tranche investments to be made by the EIB, AfDB and potential other investors and leverage private investment. The EIB contribution of €50 million will come from the Impact Finance Envelope of the ACP Investment Facility (a revolving fund established under the Cotonou Agreement, which is managed by EIB and is funded out of contributions by EU Member States through the European Development Fund). The AfDB will commit €50 million equity risk capital for investments. The Investment Program is expected to provide investors with adequate financial returns coupled with a superior developmental impact. The technical assistance envelope for Boost Africa will amount to €20 million while the Lab will receive approximately €10 million.