Boost Africa Initiative, a unique partnership in support of innovation and entrepreneurship across Africa has been launched on Monday, November 21 in Abidjan by the European Investment Bank (EIB) and the African Development Bank (AfDB) in partnership with the European Commission. The launch ceremony took place at the Headquarters of the AfDB in Abidjan in the presence of EIB President Werner Hoyer, AfDB President Akinwumi Adesina, EIB Vice-President Ambroise Fayolle and Stefano Manservisi, Director-General for International Cooperation and Development at the European Commission.
Boost Africa will contribute to fostering the development of an efficient entrepreneurial ecosystem in Africa by supporting the earliest and riskier stages of the venture value chain, in an economically viable and sustainable way. Boost Africa aims to spur the entrepreneurial potential of the African youth to create innovative and compelling businesses with the capacity to compete regionally and globally, to attract domestic and foreign direct investment, to create new and quality jobs, and contribute to inclusive and sustainable economic growth.
As a result of an initial combined investment of up to €150 million, the Initiative is expected to leverage up to €1 billion in additional investments in a high growth sector, and support over 1,500 start-ups and SMEs across the continent.
Pan-African in scope, the Boost Africa Initiative has three integrated pillars:
- Firstly, Investment Program: equity investments in seed funds, business angels co-investment funds, accelerators’ follow-on funds, venture capital funds, etc. that invest in innovative start-ups and high-growth small and medium enterprises (SMEs);
- Secondly, Technical Assistance Facility: a pool of grant resources to provide capacity building and disseminate best practices for the investment readiness of intermediaries, the business and technical assistance, training of investee companies and entrepreneurs, and the creation of local investors’ networks;
- Thirdly, Innovation and Information Lab: a platform for supporting the entrepreneurship ecosystem by fostering innovation, knowledge development and partnerships, and incubating and piloting promising new ideas, as well as assessing and disseminating best practices.
“Boost Africa will help Africa’s young population to gain hope and confidence that they can succeed in realising their dreams and aspirations,” said AfDB President Akinwumi Adesina. “Africa’s future will be determined by the current youth and it is crucial that we create and support entrepreneurship opportunities for youth, generate success stories and show these as examples for other young people.”
EIB President Werner Hoyer said, “Boost Africa is a truly great initiative which will support African entrepreneurship and innovation, and nurture the continent’s new talent. It is thus a concrete way of tackling the long-term factors fuelling poverty, instability and brain drain – many of which are at the origin of the migration crisis we all currently face – and therefore make the Sustainable Development Goals a reality.I am proud that the EU and its Bank, the EIB, are operating in such effective partnership with the African Development Bank and other DFIs to tackle the world’s pressing challenges.” President Hoyer added, “What’s more, Boost Africa will hit the ground running, as the first start-ups and high-growth SMEs are expected to be supported very soon. These small businesses and the young men and women behind them are truly an inspiration, as are their dynamism and determination.”
Director-General for International Cooperation and Development at the European Commission Stefano Manservisi said, “Boost Africa will give a concrete push to innovation and spur the creation of new instruments which support financial inclusion, such as venture capital and impact investing which is in line with the European External Investment Plan approach. Thanks to a smart use of blended finance, Boost Africa aims at leveraging the full strength of two major financial institutions to venture into new areas of support for the new generation of African entrepreneurs and we want to give a particular focus on fragile and risky situations where financial services are not provided by the market. Boost Africa is a concrete example of actions that reflect EU’s determination to create conditions for job creation for youth.”
Through Boost Africa, the EIB and AfDB are widening their investment scope to projects that are usually deemed too small, too risky and too time consuming, but which are key to foster entrepreneurship and high impact innovation. Boost Africa is also unique in the emphasis it is putting on a sizeable technical assistance envelope, alongside financing, as well as on its Innovation and Information Lab to strengthen the investment program’s investments.
Boost Africa leverages business and financial expertise from AfDB and EIB, as well as from a broad network of partners and stakeholders, to accelerate the growth and development of start-ups in Africa, and will attract, make strategic use of and nurture a network of venture intermediaries for both financing and business development to boost African entrepreneurship. The comprehensive intervention approach is expected to contribute to the success and growth of start-ups in order to become significant businesses within their local environments.
“Africa is currently home to a boom in small businesses experimenting with innovative products, services or business models, often leveraging technology,” said Adesina. “This is the right time to support these enterprises with financial and technical resources to enable them to commercialise their innovations. Boost Africa will demonstrate to all Africans that they can and should take charge of their future. Boost Africa is a key initiative within the AfDB’s Jobs for Youth in Africa initiative, one of the Bank’s High 5 priorities.”
Deploying a blended finance approach, the investment program expects to invest up to 25-30 smaller-sized equity investments into angel, venture capital and seed funds, which in turn fund start-ups and early stage businesses with high-growth and job creation potential in Africa. Boost Africa’s first investment is expected to be in Telecom Tide Africa Fund, an ICT fund investing in tech start-ups in West and East Africa. Africa Technology Ventures supporting innovative start-ups in East Africa and helping them to expand globally is also under appraisal.
The European Commission’s support is sought by partners and is being currently appraised by the Commission along with its conditions and amount, to enable senior tranche investments to be made by the EIB, AfDB and potential other investors and leverage private investment. The EIB contribution of €50 million will come from the Impact Finance Envelope of the ACP Investment Facility (a revolving fund established under the Cotonou Agreement, which is managed by EIB and is funded out of contributions by EU Member States through the European Development Fund). The AfDB will commit €50 million equity risk capital for investments. The Investment Program is expected to provide investors with adequate financial returns coupled with a superior developmental impact. The technical assistance envelope for Boost Africa will amount to €20 million while the Lab will receive approximately €10 million.