Boost Africa (“BA”) is a joint initiative between the African Development Bank and the European Investment Bank, with financial support of the European Commission (“EC”) and the Organisation of African, Caribbean and Pacific States Secretariat (“OACPS”). The EIB side of the programme provides funding to sub-Saharan Venture Capital (“VC”) funds as well as Technical Assistance (“TA”) to fund managers and their portfolio companies.
BA’s overarching goal is to enable and enhance entrepreneurship and innovation across Africa. To do so BA’s investment program permit investments by EIB and AfDB in venture capital (“VC”) and private equity (“PE”) funds to support the development and growth of innovative start-ups and SMEs. This investment program is also complemented by a TA program.
The EIB leg of the BA investment programme does comprise both (i) the Senior Tranche (“ST”) investments (the regular type of instruments used to invest in VC and PE funds,) (ii) the Junior Tranche (“JT”) investments (subordinated instruments). The EIB JT program allows to absorb portions of potential losses incurred by VC and PE funds and thus benefit all Senior Tranches (“ST”) investors.
The BA JT is capped at 30% of a given fund’s total commitment. And together the JT and ST cannot represent more than 49% of a fund’s total commitment. The JT percentage of total fund’s commitment is determined according to certain criteria (focus on fragile economies, on seed and early stage, first time teams).
The BA program is expected to have a strong catalytic effect by attracting resources from public and private investors to the underserved venture capital market in Sub-Saharan Africa. EIB and AfDB are expected to mobilize an additional EUR 300m from third parties co-investing alongside the EIB and AfDB in the VC and PE funds.
BA is expected to support the growth of the African VC market through investments into African start-ups and SMEs. Therefore, the programme is not only expected to deliver a financial return but also high impact through job creation (1,700 direct jobs and 5,100 indirect jobs expected to be created) for women (more than 30% of female professional staff expected in start-ups and SMEs) and youth (75% expected youth professional staff in start-ups and SMEs).
EIB invested in five funds through senior tranches and in two funds through junior tranches (Janngo Capital Startup Fund and Atlantica Ventures). A last investment is contemplated before year end. Other Alliance members are invited to co-invest in the funds supported by BA, in particular in the Janngo Capital Startup Fund and Atlantica Ventures, which are still fundraising.
A successor to BA, Boost Ventures in Africa, in partnership with European DFIs is expected to be set in place in 2023/24 and other Alliance members are invited to propose pipeline fund candidates for this new program.
