Adedapo Adesanya
By Adedapo Adesanya
Nigerian tech startups will be among the many eligible parties that can get funding from the International Finance Corporation (IFC), a subsidiary of the World Bank, new $225 million platform.
In a release seen by Business Post, IFC has launched a new $225 million platform to strengthen venture capital ecosystems and invest in early-stage companies addressing development challenges through technological innovations in climate, health care, education, agriculture, e-commerce, and other sectors.
The platform will strengthen digital economies in Africa, the Middle East, Central Asia, and Pakistan.
According to the IFC, in 2021, these regions collectively received less than 2 per cent of $643 billion of global venture capital funding. Access to capital has been exacerbated by a slowdown in global venture capital investment, the COVID-19 pandemic, the rise in food and supply chain costs, higher interest rates, and currency depreciation.
The growth potential, however, is enormous across these regions. In Africa, for example, the digital economy has the potential to contribute $712 billion to the continent’s gross domestic product (GDP) by 2050.
Meanwhile, in the Middle East and North Africa (MENA), technology could boost GDP by 40 per cent, or $1.6 trillion, and create 1.5 million manufacturing jobs in the next 30 years. In Pakistan, the digital transformation can unlock up to $59.7 billion in annual economic value by 2030, equivalent to about 19% of the country’s GDP.
According to Mr Makhtar Diop, IFC’s Managing Director, the platform aims to strengthen these regions’ nascent venture capital markets, which have demonstrated early growth potential but face challenging global economic conditions.
“Support for entrepreneurship and digital transformation is essential to economic growth, job creation, and resilience. IFC’s Venture Capital Platform will help tech companies and entrepreneurs expand during a time of capital shortage, creating scalable investment opportunities and backing countries’ efforts to build transformative tech ecosystems.
“We want to help develop homegrown innovative solutions that are not only relevant to emerging countries but can also be exported to the rest of the world.”
IFC will make equity or equity-like investments in tech startups and help them grow into scalable ventures that can attract mainstream equity and debt financing.
The financer will also use the platform to collaborate with other teams in the World Bank Group to create and bolster venture capital ecosystems through regulatory reforms, sector analyses, and other tools. The platform will also focus on investments in low-income and fragile countries and help generate a pipeline of credible early-stage companies.
The platform will be backed by an additional $50 million from the Blended Finance Facility of the International Development Association’s Private Sector Window, which helps de-risk investments in low-income countries.
IFC will also mobilize capital from other development institutions and the private sector to support entrepreneurs and tech companies in those countries.
