Africa/Middle East: The IFC, a subsidiary of the World Bank, relies on venture capital

Africa/Middle East: The IFC, a subsidiary of the World Bank, relies on venture capital

Africa/Middle East: The IFC, a subsidiary of the World Bank, relies on venture capital

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The International Finance Corporation (IFC), a World Bank subsidiary specializing in private companies, is launching a $225 billion fund to strengthen the ecosystem of “venture capital,” the investors who back start-ups.

On average, Africa receives $4 per capita in venture capital, compared to $800 in the United States and $20 in India. Suffice it to say that those who are supposed to have a sense of risk are still very fearful of the continent. For this reason, the IFC has decided to release funds to promote African venture capital. The institution’s prestigious signature reassures markets, confirms Makhtar Diop, Director General of the IFC: ” The advantage we have is that the multiplier effect is huge. We were able to raise $44 in venture capital for every $1 invested. »

The new $225 million fund is a natural progression for an institution that has long embraced startups. This time it is about supporting start-ups as well as supporting investment funds.

In Africa, for example, we work with Partech, a fund based in France, says Makhtar Diop. This fund has previously invested in one of West Africa’s successful fintechs, Wave. Through these investment funds, we managed to reach other companies. And we work directly with other start-ups in the Middle East, for example with Yellow Door Energy in the field of renewable energy. We work with Twiga Food in Kenya. And all of these are direct investments. So we combine both. »

► Also to read or listen to: How can start-ups in Africa be supported?

The initiative is all the more interesting for African companies as rising interest rates around the world are making it more difficult for entrepreneurs to give up. ” When interest rates rise, company valuations tend to fall. It’s a mechanical effect explains Mathias Léopoldie, head of Julaya, a Franco-Ivorian fintech. As a result, you get diluted and the capital costs more. The market is currently a bit tight on its fundamentals. It can remain tense for another year or two, and then a new cycle begins again. »

However, not all countries are in the same boat. Venture capital invests in a handful of countries. Egypt and Nigeria at the top.

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