$98.7 million into new fund dedicated to growing African SMEs

March 12, 2024

Norfund, alongside IFC and other DFIs, has committed $15 million to the frontier investor XSML Capital and their new fund – African Rivers Fund IV (ARF IV), bringing total commitments so far to almost $100 million. The investment will address the scarcity of capital towards the SME segment in frontier markets in Africa.

One of XSML’s investments: The engineering company Geek that works with connecting Congo DRC (with a population the size of Western Europe) to the internet.

XSML Capital manages several private equity funds in Central and Eastern Africa and provides scarce risk capital to small and medium sized companies that operate in frontier markets such as DRC, Uganda and Angola. XSML is now raising its fourth fund, which allows them to double their investments and expand into new markets such as Zambia.

XSML specializes in helping talented African entrepreneurs in growing their business into sustainable medium and large companies. They have a track record of scaling up over 75 SMEs and initiating more than 150 business improvement projects, with investments ranging from US$ 300k to US$ 10m.

SMEs, making up 90% of African businesses that contributes significantly to GDP and job creation, often lack access to capital needed for developing their business.

“By investing in the fund, Norfund aims to empower local entrepreneurs to provide much needed goods and services in some of the least developed countries in Africa, while creating and sustaining viable jobs,”

Vegard Halvorsen, Investment Director in Norfund

The investment is aligned with Norfund’s strategy of bridging the financial gap that hampers the growth of these businesses.

Norfund invests together with Swedfund, British International Investment (BII), Dutch Entrepreneurial Development Bank (FMO), SIFEM and the International Finance Corporation (IFC).