FSD Africa has introduced the Manager Finance Facility (MFF), an initiative aimed at strengthening locally rooted capital providers and improving access to suitable financing for small and growing businesses across Africa.

The facility was launched in Nairobi and Lagos and will provide catalytic, returnable capital to Alternative Local Capital Providers (ALCPs) working on new financing models for businesses. The initiative is supported by FMO and the UK Government’s Foreign, Commonwealth and Development Office (FCDO) Nigeria.

FSD Africa said many small and growing businesses still face difficulties securing funding from traditional financial institutions. It attributed the challenge to factors including high transaction costs, strict collateral requirements and perceived risks linked to smaller businesses.

Through the MFF, local capital providers will receive flexible, returnable capital to enable them to test alternative financing models, strengthen their operations and develop investment track records that can help attract larger investors.

The supported providers are working on several financing approaches, including revenue-based finance, flexible equity, venture debt, blended finance and local-currency structures. These models are intended to better align financing with the cash flow patterns and growth realities of African businesses.

The facility will offer two forms of catalytic capital. Piloting Capital will support the testing of new financing models, execution of early transactions and development of investment track records.

Operational Capital, meanwhile, will support teams, systems, governance and compliance as participating providers work towards building sustainable operations.

In addition to funding, beneficiaries will receive capacity-building and peer-learning support in areas including governance, ESG, impact measurement, valuation and fundraising.

FSD Africa said the initiative is also expected to generate market intelligence on Africa’s alternative local capital sector. It is further intended to support the development of a stronger pipeline of investable businesses capable of attracting private and institutional capital.

Source: msmeafricaonline