$50m Cash For Private Sector

The West Africa office of the Africa Enterprise Challenge Fund (AECF), which is expected to reduce poverty and increase incomes of the inhabitants of the region, was yesterday opened in Accra.

AECF is a $50million private sector fund set up to encourage private sector companies in Africa to compete for investment support for new projects.

The launch of the Southern and Eastern African AECF offices took place in South Africa and Kenya respectively two weeks ago.

AECF is being hosted by the Alliance for Green Revolution in Africa (AGRA) and the business ideas AECF is expected to consider include agri-business, rural financial services and rural media information and other services.

The fund is being supported by African Development Bank, UK's Department for International Development, Netherlands Ministry of Foreign Affairs and the International Fund for Agricultural Development.

To qualify for the fund, Chief Executive Officer of AECF, Hugh Scott, said a project should have a positive impact on the rural poor in Africa, delivering increased employment, reduced costs, and improved productivity.

He said even though the fund is opened to proposals from all countries in Africa, it would focus initially on 13 countries namely Kenya, Uganda, Tanzania, Rwanda, Burundi, Ghana, Nigeria, Mali, Burkina Faso, South Africa, Mozambique, Malawi and Zambia operating from three regional hubs namely Nairobi, Accra and Johannesburg.

According to Mr Scott, the fund would run a number of competitions every year for six years with effect from June 1, 2008.

“AECF would provide grants and non-recourse loans up to a maximum of $1.5 million for each project and a minimum of $250,000,” he noted.

Proposals that are considered to have the greatest impact in rural areas will be invited to present a detailed business plan. The final selection of business ideas will then be made.

“The AECF operates like a 'social' venture capital fund, seeking and engaging with many potential projects and company partners to find those with the greatest rate of return against our objectives.”

A successful applicant, Mr Scott noted, is expected to contribute a minimum of 50 percent of the total cost of the project.

“Businesses that are willing to contribute greater than the 50 percent minimum are more likely to receive AECF support as we wish to leverage our funds,” the Chief Executive Officer of AECF added.

The deadline for application is June 30, this year, while funding approval for successful applications will be granted within a maximum of 90 days from the closing date for applications.

The fund would be increased from $50 million to $100 million in future, Mr Scott assured.

By Felix Dela Klutse