/ 27 September 2024

How British International Investment is supporting African businesses

Afsic Advert Register A4 2024

SMEs are the life source of employment in Africa, and BII is helping to finance them 

We recognise that SMEs in Africa are critical to driving economic growth, creating jobs, fuelling innovation, and supporting delivery of the SDGs. And as a long-standing investment partner to  businesses in Africa, we have been supporting SMEs for decades and in several ways.  

One of the greatest challenges that SMEs face is accessing the finance they need to grow. This is  where we come in. Our investments in private equity funds such as the Africa Rivers Fund and Takura,  is providing smaller investments than we can to SMEs and entrepreneurs of early-stage businesses with strong growth and impact potential. We provide directed funding to banks across the continent,  including our recent investments with Zanaco in Zambia and COFINA in Cote d’Ivoire to on-lend to  SMEs.  

We also provide trade finance lines through a number of the pan-African banks which are utilised by SMEs across the continent such as our $100 million risk-sharing facility with Citi Bank to support local  businesses in frontier and developing economies.  

However, given the critical nature of the SME segment to Africa’s growth, we wanted to do more and bridge the financing gap between banks and private equity funds. This led to BII setting up a new  platform company – Growth Investment Partners (GIP) – which invests in SMEs at scale in key markets  across the continent. The first of these platform companies was launched last year with GIP Ghana  and we are currently replicating the model in the next country. GIP is a local evergreen investment  company, set up at a country level, with the ability to provide flexible local currency growth capital to  SMEs. 

Our partnerships provide more than capital. We offer innovative technical assistance, training, and  access to experts, through initiatives such as the Ghana Investment Support Programme, to support SMEs in becoming investment-ready and upskilling local business leaders to transform their ideas into  sustainable and productive businesses.  

What challenges and risks do you foresee in the African market, and how does BII navigate and  mitigate them? 

For over 75 years, we have been strategically investing in African businesses. BII’s expansive footprint  across Africa enhances our ability to closely monitor policy shifts, regulatory changes, and  macroeconomic trends across our portfolio companies’ operating landscape.  

Our approach is geared towards aligning investment protection, ethics, and growth strategies that  build resilience for businesses navigating complex risks, such as the climate crisis or the threat of  future pandemics. 

Overall, the cost of capital has escalated around the world, particularly in the last 18-24 months. In  Africa particularly, the cost of doing business remains prohibitive in parts of the continent and this is mainly because of the lack of basic infrastructure such as paved roads, electricity, transparent  framework etc. Currency devaluation and therefore related risk have also constrained opportunities  for exits in investments.  

On the macroeconomic front, Africa, like much of the rest of the world, faces various external  challenges. The good news is that sub-Saharan Africa’s economy is returning to stability after a few  challenging years. The International Monetary Fund projects growth in 2024 to increase to 3.8 per  cent, up from 3.4 per cent last year. Inflation has halved in the early months of this year thanks to fast  action by central banks to slow the rise in food prices in a region where the cost-of-living crisis has  become either divisive or unbearable. 

Global and local partnerships and coordination remain vital to navigating and addressing some of  these issues – which is why we are working even more closely with multilateral development banks  and other development finance institutions and participating at key international gatherings such as  the World Bank Meetings and annual COP meetings.  

Political risk remains in sharp focus, but by leveraging the deep local partnerships I just referred to,  we can better manage risks that present themselves. This helps us respond to and design innovative  platforms to boost investment, for example in clean energy such as Globeleq, and Gridworks. Our  investment tool kit includes equity, debt, guarantees, syndication models, and capital market  instruments such as bonds. Our flexible funding and broad financial toolkit means we can be agile in  developing bespoke solutions for our partners. 

How does your company approach partnerships with local businesses and governments to foster  economic development in the regions where you operate? 

We have a strong and growing on-ground presence covering the four corners of the continent, from  Cairo to Johannesburg and Nairobi to Lagos, and teams in Ghana and Zimbabwe. We are impact-led and commercially rigorous and we invest patient capital to stimulate productive, sustainable, inclusive  economies. 

Our local networks enable us to address the specific needs of our diverse partners, whether they are  businesses, entrepreneurs, pension funds, philanthropic foundations, or family offices in Africa. Our  track record of success and on-ground presence empowers us to innovate in collaboration with central  banks and national governments, bolstered by our partnership with the Foreign Commonwealth and  Development Office (FCDO), our shareholder.  

What are you hoping to achieve at AFSIC 2024? 

We have been partnering with AFSIC for many years, and as Africa’s longest established impact  investing institution, our objective remains constant: to demonstrate our commitment to growing  African businesses and supporting economies through our investments, expertise, and support as a  patient capital investor. AFSIC is also a gathering of key partners where we are able to share  knowledge, experience and discuss how to continue to impact the lives of people in Africa through  investments. We currently partner with over 1,500 companies in Africa, Asia and the Caribbean, and  our total assets now exceed £8.5 billion.  

Chris Chijiutomi is MD & Head of Africa, British International Investment

About AFSIC – Investing in Africa: 

AFSIC – Investing in Africa has become perhaps Africa’s most important annual investment event.  AFSIC is wholly focused on accelerating Africa’s economic emergence by matching investment  opportunities in Africa transforming Africa’s business, trade and investment environment  sustainably growing Africa’s economy and increasing African incomes in all business sectors at a  continental scale. 

African Investments Limited (www.africaninvestments.ai), operates two multi award-winning digital  platforms, the African Investments Dashboard which matches investment opportunities to our  global network of institutional investors and the Africa Business Opportunities Dashboard, which  matches business, trade and investment opportunities across Africa covering all business products,  sectors, countries in Africa and multiple business objectives. The digital platforms won the global  2022 Salesforce Partner Innovation Award for Financial Services. 

Visit: 

www.afsic.net 

www.africaninvestments.co 

www.africaninvestments.ai 

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