Proparco is a key player in the development sector, which has been dedicated to financing the private sector for over 45 years. Proparco has been operating in an extraordinarily complex international environment, especially since 2022. Faced with the climate crisis and growing inequalities, the African private sector holds the key to helping to resolve some of these long-term challenges. Based on this conviction, Proparco intends to step up its support for African entrepreneurs by further adapting its approach to the real needs of the economy and to invest in new markets.
PROPARCO WILL FOCUS 50% OF ITS ACTIVITY ON THE AFRICAN CONTINENT BY 2025
The African private sector, in particular SMEs and micro-businesses, are now more than ever the main engine of growth and innovation on the Continent. SMEs account for 90% of formal businesses and account for about 60% of formal jobs1. Yet the African private sector has a real need for financing, as only 20% of SMEs on the continent have access to bank loans.
Proparco, a subsidiary of the French Development Agency (AFD), will capitalise on its historical expertise on the continent to support African businesses in the coming years. Investments will be allocated both to the financing of infrastructure, whose proper functioning is essential for the deployment of African businesses, and for supporting
SMEs, micro-businesses and high-impact startups. The idea is to ensure continuity by providing entrepreneurs with the means to develop their activities.
CLIMATE, INEQUALITY, FOOD INSECURITY…SUPPORT FOR THE REAL ECONOMY THAT WILL ADDRESS THE CONTINENT’S LONG-TERM CHALLENGES
We live in a time of major challenges, and on the African continent the private sector is a breeding ground for initiatives, innovation and sustainable wealth. Supporting the real needs of the economy will provide the African private sector with the means to solve the continent’s most important challenges, while creating local, non-relocatable employment and adding value.
Proparco’s approach is focused on some of the major challenges facing Africa: building a sustainable and resilient economy, protecting the planet and fighting inequalities. This will be reflected in Proparco’s strong support for the most responsible projects that mitigate the consequences of climate change, enabling populations to adapt to it more effectively, or projects that reduce territorial, gender or socio-economic inequalities. Proparco will mobilise all its sectoral expertise – from financing SMEs to strengthening physical infrastructure and local financial systems – to boost its impact across these sectors.
The fight against food insecurity, particularly in relation to the crisis in Ukraine, will be a priority for Proparco, particularly by strengthening local production and processing capacity for vulnerable African companies affected by the crisis.
To maximise the impact of these strategic initiatives, Proparco is refining its analysis and monitoring process. Impacts will be identified and analysed at all stages of the relationship with Proparco’s partners; from the beginning of project appraisal through a sustainable development rating, through project implementation thanks to more extensive and longer-term technical support, and up to the final evaluation through the analysis and monitoring of results (both estimated and actual). Thus, the impact from projects carried out by our partners will not be limited to the final and quantitative results of the project but will also include projects’ capacity to evolve in terms of ESG criteria, which will enhance sustainability over the long term.
POSITIONING PROPARCO TO MEET THE NEEDS OF ENTREPRENEURS MORE EFFECTIVELY AND TO SUPPORT THEM OVER THE LONG TERM
Through this new strategy, Proparco has chosen to explore new markets. More specifically, Proparco will encourage investors to bet on innovation, especially in enterprises and projects operating in fragile environments or emerging sectors, based on the conviction that the emergence of new ecosystems and financing instruments will be one of the keys to successfully supporting the private sector.
Françoise Lombard, Proparco’s Chief Executive Officer, declared during the launch of this new strategy:
“Proparco’s new strategy is underpinned by a strong conviction: good entrepreneurial projects which are helping to solve the continent’s most pressing problems deserve to be supported, regardless of the economic environment and in line with the Paris Agreement. We are determined to go where other investors have not yet gone, by moving closer to the field to be as close as possible to our partners’ and their needs, to deploy our resources effectively. We are therefore making a big call towards
enabling growth in new markets and taking more risk to help more innovative projects to bear fruit.”
To support this ambition, Proparco will benefit from additional resources from the French Government and the European Union, which will increase its funding and non financial support.
Two flagship initiatives that illustrate the new strategy
Choose Africa, an initiative by the French Agency for Development (AFD) and its subsidiary Proparco, has committed EUR 3.5 billion between 2018 and 2022 and supported more than 40,000 businesses and hundreds of thousands of micro businesses across the continent. Thanks to this initiative, nearly 8, 700 businesses have benefited from dedicated technical support. Proparco will contribute to strengthening the initiative as part of a second Choose Africa programme.
Digital Africa, Proparco subsidiary, provides support and financial backing for African start-ups requiring seed funding. Its programs (Talent 4 Startups Bridge, Fuzé, etc.) complement Proparco and the AFD Group’s support to African businesses at every stage of their development, namely the seed investment stage (Digital Africa), venture capital stage (Digital Africa and Proparco), financing and support for public (AFD) and private (Proparco) financial institutions, a range of guarantees for financial institutions (Proparco), and private equity for SMEs in the growth and maturity phase.
Two examples of projects
Since 2017, Proparco has been supporting GoMyCode, a Tunisian startup whose mission is to bridge the gap between the existing educational infrastructure in Africa and the digital skills required in the job market. The company is now present in 7 countries in North Africa and West Africa and welcomes 1,000 new students every month.
Since 2022, Proparco has also been supporting Anka, a company specialising in software solutions that enable African SMEs to market their products on the internet and internationally. The company now employs 40 people.
1 Source AFP https://www.afd.fr/fr/actualites/choose-africa-linitiative-francaise-pour-accelerer-la-croissance des-petites-et-moyennes-entreprises-en-afrique