Investor Updates: June 16 2022 - Microsoft, BofA back Kenya’s Crossboundary in $25m fundraising

Microsoft, BofA back Kenya’s Crossboundary in $25m fundraising

Highlights

• CrossBoundary Energy Access (CBEA), a financing facility for mini-grids, has raised $25 million in new funding commitments from ARCH Emerging Markets Partners Limited, Bank of America, and Microsoft Climate Innovation Fund. 
• This investment will leverage an additional $25 million in senior debt to deploy $50 million of capital into CBEA’s near-term pipeline of solar-powered mini-grids.
• CBEA plans to deploy a total of $150 million over the next two years to bring clean energy to one million people in Africa.

Source: TechCrunch

Our Takeaway

As African economies grow, the demand for energy by companies, homeowners, and industries increases by the day. This comes with challenges of climate change and energy depletion, however, many innovators and investors believe renewable energy can help Africa counter these challenges. Financiers mostly are skeptical about funding ventures in the renewable energy space, which has hindered growth in the sector, but recent successful fundraising rounds by Kenyan duo Crossboundary and Sun King suggest the perception toward the renewable energy opportunity in Africa could be changing.

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Egypt’s Boyot raises funding to digitize real estate payments

Highlights

• Egypt-based Boyot has raised a pre-seed round from a Kuwait-based real estate firm.
• Founded in 2020 by Mahmoud El Sabongy (CEO) and Khaled El Refaay (CTO) and Mohamed Sayed, Boyot offers an end-to-end SaaS solution for payments tailored to real estate businesses.
• The startup intends to use the acquired funds to expand operations and grow its team.

Source: Wamda

Our Takeaway

Heavy cash reliance and poor cash flow management are some key challenges hurdling the growth of small and medium-sized businesses (SMBs) operating in the local real estate market in Egypt. That’s what Boyot has set out to address with its software, as digitization continues to gain ground among traditional sectors in Africa, driving growth in the SaaS market. Of $3 billion raised by startups in the Middle East and North Africa region (Mena) last year, SaaS startups scooped a total of $176.35 million across 31 deals.

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Ghana launches $700m development bank to support SMEs

Highlights

• After having been first conceived in 2017, the Development Bank Ghana (DBG) was finally launched this week to help catalyze growth in the country’s small and medium enterprise sector.
• The DBG has an initial $700m to loan to private financial institutions – including CalBank, CBG, GCB, and Fidelity Bank – who in turn will on-lend to SMEs. 
• The bank is financed through a consortium of loans from international lenders including the World Bank ($250 million), the European Investment Bank ($170 million), the German state-owned development bank KfW ($46.5 million), the African Development Bank ($40 million) and the government of Ghana ($253 million).

Source: African Business

Our Takeaway
Around one to two million SMEs, comprising about 80% of businesses in Ghana, are estimated to generate some 70% of GDP but struggle to secure loans, especially long-term lending. Ghana wants the new bank to ease the access to credit and finance for its small businesses by providing loans with tenors greater than three years. The importance of making credit facilities available for small businesses can’t be overstated due to their contribution to the economy, both in terms of output and provision of employment. While laudable, it remains to be seen the impact of Ghana’s latest move on its economic fortunes.