ShEquity has received a co-investment of $1.2 million from USAID Trade Hub to invest in and support more than 100 of these high-potential women-owned or led businesses.

According to Pauline Koelbl, Founder and Managing Director of ShEquity, women entrepreneurs are integral to Africa’s success, as they operate more than 40 percent of small and medium-sized businesses on the continent. However, African women entrepreneurs face the hurdle of collectively growing these businesses due to $42 billion less in financing than their male counterparts.

“If Africa is to reach its full economic potential, smart investment for African women entrepreneurs needs to be dramatically increased,” Koelbl says. “The lack of financing, combined with insufficient business support, put potential women entrepreneurs and those seeking to expand their already successful businesses in a growth deficit or low-income trap, widening the gender gap and reinforcing negative biases.”

ShEquity’s USAID Trade Hub-backed project addresses these challenges by combining cash investment, structured technical support, and access to high-value networks. 

Specifically, ShEquity will leverage its $1.2 million co-investment grant to attract at least $15 million in private funding that will be cumulatively used to invest in, scale, and accelerate women-owned or led businesses operating in Benin, Burkina Faso, Côte d’Ivoire, Ghana, Mali, Niger, and Nigeria. The businesses targeted will operate in one of six key sectors: agribusiness, healthcare, tech-enabled solutions, renewable energy, mobility, and fast-moving consumer goods.

Also, as part of the USAID Trade Hub project, ShEquity will provide business development services and technical support to 120 women-owned or led businesses in the target markets and also select 12 high-growth, high-impact businesses that will each receive at least $50,000 in venture capital funding.

The combined investments in the 12 selected companies are expected to create at least 200 jobs and benefit around 20,000 people economically either directly or indirectly, along their respective value chains, through 2024.

To accomplish its project goals, ShEquity will leverage its proven experience in championing women-led businesses for success. ShEquity is intentionally building an integrated and holistic approach towards unlocking the potential of African female founders. ShEquity’s strategy involves combining its ShEquity Business Accelerator (SHEBA) and its Investment Vehicle to support women to grow their businesses.

SHEBA provides pre-investment venture building support to allow access to a trusted pipeline of potential deals and serves also as a post-investment technical assistance facility.

Started by Koelbl in May 2020 with her own seed capital of just $250,000, ShEquity has since invested in eight businesses in Sub-Saharan countries. Since the launch, ShEquity has been investing as a special vehicle purpose and is now in the process of formalizing into a venture capital fund structure. According to Koelbl, ShEquity’s current portfolio of companies has impacted more than 13.5 million people across Sub-Saharan.  

Commenting on what this partnership means to ShEquity, Koelbl stated, “We are excited about the future, as we hope to see more action towards democratizing access to capital and closing the gender funding gap in Africa. Backing female-led funds is the best strategy to address gender funding gap because of its trickle-down effect: more diversity in capital allocators translates into diversity of businesses getting funded.”

The USAID Trade Hub’s partnership with ShEquity represents its commitment to ensuring more women in West Africa have the access to finance, resources, and knowledge needed to grow their businesses and speed economic development in the region.

“African startups face many hurdles, but those launched by women even more so, despite their drive and determination,” said Robin Wheeler, Chief of Party for the USAID Trade Hub. “The USAID Trade Hub is proud to join with ShEquity to respond to this challenge with a coordinated approach, providing capital as well as operational and technical support to unlock the full potential of the many women-owned businesses in Africa.”

African Guarantee Fund, a leading non-bank financial institution, will leverage this grant, as well as $20,000,000 of private equity, to support its two-part COVID-19 Guarantee Facility.  

The combined $22,500,000 co-investment will allow African Guarantee Fund to absorb additional pandemic-related risk and provide guarantees to its partner financial institutions (PFIs) on more favourable terms and conditions while remaining financially sustainable.

The goal is to solve the limited access to capital which remains a high barrier to growth for many small- and medium-sized enterprises (SMEs) operating in West Africa, a challenge compounded by the COVID-19 pandemic. 

Through the COVID-19 Guarantee Facility, AGF expects to issue loan guarantees to 30 partner financial institutions (PFIs), allowing them to unlock up to $160,000,000 in financing for approximately 3,000 West Africa-based SMEs impacted by the pandemic. 

In addition, it will provide technical assistance to the PFIs and SMEs benefiting from the COVID-19 Guarantee Facility to accelerate their post-pandemic recovery.

During AGF’s three-year partnership with the Trade Hub, the COVID-19 Guarantee Facility is expected to help SMEs create 15,000 new jobs, maintain 20,000 existing jobs, and collectively generate $100,000,000 in sales and $8,000,000 in exports.

“Despite the internationally recognized importance of SMEs, African small businesses often have difficulties accessing financing for growth and innovation from the formal financial sector. Over the past two years, SME financing challenges have further escalated due to economic uncertainties brought about by the impact of the pandemic,” said Jules Ngankam, AGF’s Group chief executive officer.  

“Our COVID-19 Guarantee Facility is a response to this challenge, and we are excited to partner with the Trade Hub to increase our capacity in bridging the SME financing gap through this innovative initiative,” he added.

The Trade Hub’s partnerships with AGF represent its forward-thinking approach to helping high-potential West Africa-based businesses with the financing needed to rebound from the COVID-19 pandemic.

“Similar partnerships with Cordaid Investment Management and CrossBoundary, launched in 2021, are already showing success in bringing together the partners, capital, and resources that create a more stable environment for SMEs to grow and make a positive impact in the region,” says Robin Wheeler, the Trade Hub’s chief of party. “We are excited to add AGF as a co-investment partner,” he added.