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Mkoba Private Equity Fund will support African SMEs

Last month saw the launch of the Mkoba Private Equity Fund in Dar es Salaam, Tanzania. The fund, with its target size of $300 million, seeks to support SMEs in various African nations, believing this to be an under-resourced sector that is crucial to the continued growth of African economies. Tanzanian President Jakaya Kikwete delivered the inaugural speech for the private equity fund during the April proceedings of the ‘Investing in Africa’s Future and the Role of the Private Sector’ conference.

Mandate of the Mkoba private equity Fund

The fund will target what its founders believe to be the “missing middle”, namely SMEs requiring financing in the region of USD 1 to 15 million. It will focus on several African nations – Cote d’Ivoire, the DRC, Ethiopia, Liberia, Mozambique, Rwanda, Tanzania, Sierra Leone, and South Africa – specifically those with fast-emerging economies undergoing liberalisation and those emerging from conflict and working to rebuild their economies.

In his speech Kikwete stressed the importance of the fund, saying that it will “provide growth capital for high-growth small and medium sized companies” across various sectors. Dr Frannie Léautier, CEO and Founding Partner of Mkoba, says the raison d’être for the fund is to service portfolio companies that are overlooked by most other funds.

Mkoba Fund partners have also stated their commitment to socially responsible investing and to promoting pioneering green-field companies as well as gender equality and female empowerment.

Tanzania chosen for its latent potential

The Mkoba fund is to be headquartered in Dar es Salaam – a first for the city and the country in terms of hosting a fund of this scale. The fund will also have offices in Johannesburg and Abidjan.

The choice of Tanzania ties in with economists and industry leaders’ assertion that the country has what it takes to become the continent’s next economic heavyweight. In support of this claim they point to Tanzania’s abundant natural resources, improved and steady tax administration, investment and business policy reforms, and strong political leadership, among other things.

Tanzania Private Sector Foundation Chairman Dr Reginald Mengi, for instance, has spoken favourably about both Kikwete’s leadership and the Government’s policy changes, and says SMEs should have confidence in their country and invest where they are. “In business we take risks,” he says, “but not of investing in other countries … I will only continue to invest in my country.”

David Okwara

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