Global impact firm Palladium has launched a $40 million investment fund aimed at small businesses in Sub-Saharan Africa. With these funds, it aims to bridge the continent’s financing gap present.
The fund will be providing debt and quasi-equity investments with a focus on agribusiness value chains and off-grid clean energy startups in Nigeria, Ghana and Kenya.
The fund is focused on clean energy technology and agribusinesses because of the importance of electricity to off-grid rural households in Africa and the massive agricultural industry in Africa. And with the right funding, businesses can scale their solutions to ensure that there is development in the various areas.
Solar and clean energy technology is hugely important, particularly in rural Africa as it provides vital electricity to households. Clean energy can power enabling technology, such as irrigation for farmers, to mitigate many of the risks associated with primary production like adverse weather conditions.
Palladium.
Of the $40m fund, Palladium will input a $5 million investment of its own, while the other $35 million will be raised by investors including foundations, family offices, pension funds, and institutional investors. And from this fund, Palladium will be making investments of between US$250,000 and US$2 million in potential startups. The funds will be used by these startups for expansion, to scale their business and as a working capital associated with growth. It will have a six-year term.
According to Palladium, this funding will help in alleviating poverty and empower over 500,000 rural households, which in turn will create about 3,500 jobs.
Palladium says it is giving priority to women-led businesses as it aims to empower African women. Up to 60% of the businesses invested in will be women-led. This is because African women are known to perform the majority of agricultural activities, own a third of all firms and are key to the welfare of their families. So increasing their productivity means giving them the platform to reach their potentials and in turn “boost the continent’s development.”
Nevertheless, Palladium is not a fresher on the African continent, thus it clearly recognises what is needed to make an impact with investments. Already, Palladium has made two direct impact investments in Naasakle, a family-owned shea nut processing business in Ghana, and PEG Africa, an off-grid solar energy project. The company also has a further 10 investments currently undergoing due diligence.
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