AFIG Funds sees opportunities in Africa

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Dakar - Small and medium-sized enterprises in Africa are crying out not just for financing but also management and operational expertise to enable them to grow a regional footprint, says private equity firm AFIG Funds.

Papa Madiaw Ndiaye, Senegal-based chief executive of Advanced Finance and Investment Group (AFIG) Funds, said his firm targets businesses in 29 African countries in which it invests between $3 million and $14 million to help them expand.

“African entrepreneurs tend to be some of the loneliest people out there because they don't have a tremendous amount of quality support services like in the US or Europe where you can call the likes of McKinsey or BCG (Boston Consulting Group),” Ndiaye told the Reuters Africa Investment Summit.

“That model of business support needs to be transferred to the smaller guys and we think that it is critical to the growth of African economies,” he said.

Mauritius-registered AFIG Funds recently completed a fund-raising to increase its Atlantic Coast Regional Fund (ACRF) to $122 million from $72 million when it was launched in 2008.

The fund has invested about $45 million so far in seven companies including a petroleum products distributor, a bus assembly firm, a mine drilling services company and three subsidiaries of pan-African bank Ecobank.

As well as providing money, AFIG Funds says it brings people and expertise in finance, accounting and auditing to help grow companies from small, country-focused players to firms with regional ambitions.

“We saw a gap in the market and decided to put together a fund that can address that, a private equity fund with a strong developmental angle,” Ndiaye said.

Harvard and Wharton-educated Ndiaye returned to Senegal to launch AFIG Funds in 2005 after working on Wall Street and in Washington at the World Bank's investment arm IFC and as investment director at private equity firm Emerging Markets Partnership.

Small and medium-sized enterprises (SMEs) are the backbone of most economies in Africa, he said, but banks and larger equity funds tend to chose bigger projects and businesses to lend to or form partnerships.

The African Development Bank (AfDB), which launched a $50 million African fund in 2012 to help African SMEs, said the sector, which contributes more than 45 percent of employment and 33 percent of gross domestic product on the continent, has a funding gap of more than $140 billion.

Ndiaye said AFIG Funds plans to set up another fund of about $200 million within the next two years, targeting the same niche of small and medium-sized companies.

Though the firm does not have any sector preference, food production and agribusiness are increasingly attractive as well as financial services, he said.

AFIG Funds invested $14 million in RMG Concept, a firm making and distributing crop protection products in several West and Central African countries including Ghana and Ivory Coast, the world's top two cocoa producers.

“Africans today want to be better fed and more reliably fed and we think that there is a market there,” Ndiaye said. - Reuters



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