IFC, TLG Capital Launch $75M Fund to Support African SMEs
TLDR
- The IFC and TLG Capital reached the first close of a new $75 million private credit fund to support distressed African SMEs
- The fund, TLG Africa Growth Impact Fund II (AGIF II), will offer tailored financing to up to 20 SMEs struggling with existing debt
- AGIF II will work with local banks to deploy flexible capital to businesses in key sectors including manufacturing, healthcare, agriculture, and telecoms
The International Finance Corporation (IFC) and TLG Capital have reached the first close of a new $75 million private credit fund to support distressed small and medium-sized enterprises (SMEs) across Africa.
The fund, TLG Africa Growth Impact Fund II (AGIF II), will offer tailored financing to up to 20 SMEs struggling with existing debt. IFC is committing up to $20 million through its Distressed Asset Recovery Program (DARP), alongside capital from Swedfund, Norfund, Bpifrance, and the UK’s FCDO via its Manufacturing Africa initiative.
AGIF II will work with local banks to deploy flexible capital to businesses in key sectors including manufacturing, healthcare, agriculture, and telecoms. TLG Capital says the fund will not only offer financial relief but also provide strategic guidance through partnerships with McKinsey, BDO, ESS, and Ndarama Works.
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Key Takeaways
The AGIF II fund signals growing recognition that traditional financing tools are not enough to support Africa’s SMEs, especially in the wake of macroeconomic shocks. Roughly 25% of SME loans in Africa are under stress, reflecting a broader liquidity gap for businesses that are often underserved by banks or constrained by foreign exchange challenges. Private credit has emerged as a vital alternative. Funds like AGIF II fill a financing gap between bank loans and venture capital, offering structured debt solutions for businesses in recovery or transition. The inclusion of advisory partners like McKinsey and BDO in the fund’s design reflects a shift toward blended support: capital and capacity-building. With SME resilience tied to job creation and community stability, funds like AGIF II may play a larger role in Africa’s next economic chapter.
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