AfriCap Microfinance Fund (AfriCap) is a $15 million equity investment fund dedicated to the microfinance industry in Africa. AfriCap is incorporated in Mauritius, with an operational base in Dakar, Senegal. AfriCap has a dual mission â€“ to generate both a commercial return to shareholders and a social return in the form of a viable micro finance industry. The Fund's activities are intended to stimulate the legitimization and growth of the commercial microfinance industry in Africa.
- AfriCap invests in a variety of institutional models, reflecting the diversity in Africa and
the desire to maximize the value of exchange and learning from different experiences. Eligible
Institutions can therefore range from-Non Governmental Organizations, Non- Bank Financial
Institutions, Financial Co-operatives and Commercial Banks in Africa.
- A typical capital
commitment to an eligible institution could consist of about $300,000 to $500,000 in equity for a
25% to 35% ownership interest; and/or quasi-equity, in the range of $0.75 to $1.0 million, for an
aggregate exposure of about $1.0 million per investee, in local currency equivalent.
following investment instruments are used in AfriCap-led investments, and may be combined to
provide an appropriate investment package, tailored to meet the needs of each particular investee
- Direct equity, in the form of common fully-voting shares;
- Quasi-equity, subordinated notes with various features - equity conversion, profit-linked return, or other equity premiums - to generate equity-based returns;
- Straight debt where appropriate and where this will stimulate additional lending by local banks to the investee institutions; and
- Guarantees to third party lenders, such as local banks.
Clients of the fund includes a range of organizations, non-governmental organizations, finance companies, banks and other local financial intermediaries each reaching clients in the range of 20,000 to 30,000 rural and urban poor in Africa. All together, the Fund is expected to reach on the order of 200,000 disadvantaged African households. Although initially the fund will target the Western and Southern/Eastern regions of Africa, eventually AFRICAP's investments may be distributed throughout the continent.
AfriCap has continued the development of its investment pipeline with investments in indigenous organizations, financial intermediaries that strategically reinvestment for development, and commercially focused organizations with profitable growth rates and providing economic opportunities. It also manages a grant facility, currently funded with $3 million of donor commitments over five years, to support certain institutional and industry development activities. It has made an investment of $1.6 million for 16% of the common shares of Equity Building Society (EBS), and most recently AfriCap has invested $1 million in Pride Uganda the primary Microfinance Institution in Uganda.
The AfriCap Microfinance Fund (AfriCap) completed an investment on December 19, 2003 of 2 billion Ugandan Shillings, about US$1 million, in PRIDE UGANDA. The investment was in the form of a convertible debenture, structured to support PRIDE’s transformation into a regulated financial intermediary under the recently launched microfinance regulatory regime in Uganda. This gives PRIDE the funds required to finance growth and ensure their long-term sustainability. Full Story