FSD Africa and Dutch entrepreneurial development bank FMO have launched the Manager Finance Facility (MFF), a funding initiative designed to help emerging Alternative Local Capital Providers (ALCPs) build viable investment vehicles and attract capital at scale.

The facility provides flexible, returnable grant capital to fund managers developing financing models tailored to the realities of African small and growing businesses.

ALCPs are developing approaches including revenue-based finance, flexible equity, venture debt and blended structures. While many have established investment theses and achieved early results, they often lack the track record, systems and operating runway required to secure investment from commercial investors.

The financing challenge is particularly significant because African small and growing businesses play an important role in job creation and economic growth but frequently struggle to obtain suitable financing.

Traditional lenders often find it difficult to serve these businesses because of high transaction costs, rigid collateral requirements and perceptions of risk. ALCPs are seeking to address this gap, but emerging fund managers face a similar challenge in financing their own operations.

Innovative financing models do not automatically attract investors, while the economics of many ALCP funds only become viable once they achieve a certain scale. Reaching that point can take time, during which managers must meet costs for teams, systems and compliance without sufficient revenue or an established track record to unlock commercial capital.

The MFF is intended to address this financing gap, described as the “missing middle” between early-stage grant support and commercial investment.

Data provided by the facility shows that 38% of African ALCPs reach minimum viable fund size after beginning fundraising, while the figure falls to 27% among first-time fund managers. An African ALCP takes an average of 25 months to reach fund close.

The MFF offers two forms of flexible, returnable grant capital for ALCPs at different stages of their journey towards fund close.

The first, Piloting Capital, is aimed at ALCPs testing new financing models. Eligible managers can receive up to US$500,000 to finance early transactions and pilots, demonstrate the effectiveness of their approach and establish a track record for potential investors.

The support can be used to test and refine financing models, execute early transactions and build the track record investors require.

The second, Operational Capital, provides up to US$150,000 in working capital for ALCPs raising capital. It is intended to help fund managers maintain core teams and systems, strengthen governance and compliance, and manage cash flow while fundraising and moving towards sustainable operations.

In addition to funding, supported ALCPs can access FSD Africa’s capacity-strengthening support in areas including governance, ESG and impact, valuation, fundraising, legal enablement and peer learning with other fund managers.

The type and level of support provided to each ALCP will depend on its needs, stage of development and potential to establish viability and scale.

The facility is open to emerging ALCPs developing innovative, Africa-focused financing models, particularly fund managers pursuing climate-smart or gender-smart investment approaches.

Eligible applicants include managers developing new or unproven financing models such as revenue-based finance, flexible equity, venture debt and blended structures for African small and growing businesses.

Applicants should have limited track records but preliminary evidence of a viable investment thesis and early traction. The facility is also targeting ALCPs with significant upfront capital requirements, sub-scale fund-size risks and no access to commercial or quasi-commercial capital.

Funds must be able to demonstrate sustainable economics after close while facing a prolonged cash flow deficit beforehand. The facility is particularly interested in ALCPs addressing emerging investment sectors or markets, including those with climate-smart or gender-smart strategies.

Nigeria-based ALCPs are eligible to apply, alongside ALCPs operating in other eligible African markets, with the final list of markets still to be confirmed.

Applications opened for Nigeria-based ALCPs on 1 September 2026, while applications for ALCPs in other eligible markets opened on 21 September 2026. Applications will be accepted on a rolling basis until March 2028.

Interested applicants can apply through the MFF application portal: Apply Now

The application process begins with an initial screening through the MFF link. Applicants then proceed through pre-screening, where they provide further information about their fund model, financing requirements and proposed use of MFF support.

This is followed by an initial meeting with the MFF team to discuss the applicant’s model, needs and fit with the facility. Applications are subsequently scored and assessed against MFF criteria.

Applicants who progress undergo full assessment and approval, including data gathering, structuring, due diligence and Steering Committee approval. Successful applicants then proceed to contracting and disbursement, followed by ongoing monitoring under the grant agreement.

The MFF team will also be available for in-person engagement at the Moonshot & Africa Prosperity Summit in Lagos, Nigeria, from 26–30 October, and the African Early-Stage Investor Summit in Cape Town, South Africa, from 24–30 November.

For questions concerning eligibility, the application process or partnership opportunities, applicants can contact kevin.simmons@fsdafrica.org.

Source: fsdafrica.org