Swedfund Invests $15M in TLG II to Boost African SME Growth

Swedfund  is investing USD 15 million in TLG Africa Growth Impact Fund II (TLG II). Through the investment, Swedfund aims to support the preservation and creation of decent jobs in small and medium-sized companies that otherwise struggle to find financing.

Small and medium-sized companies (SMEs) in Africa often struggle to access debt capital structured to fit their needs. This is particularly dire for the viable but temporarily distressed SMEs inhabiting commercial bank portfolios. Through the investment in TLG II, Swedfund bridges this gap by supporting a scalable credit solution that enables the growth of local companies, enhancing protection of at-risk jobs, and sustainable creation of new ones.

SMEs employ 80 percent of the African workforce, and nine out of ten new jobs on the continent are created by growing companies. To protect existing jobs and to create new ones is crucial for poverty reduction. For African SMEs to survive and grow, it is important that there is a functioning market with the right, fit for purpose financial services addressing diverse local challenges. Through this investment we help achieving that, generating long-term impact.

– Jakob Larsson, Senior Investment Manager, Swedfund

TLG II has a for the African market innovative structure and combines flexible, long-term debt to SMEs with equity participation and guarantees issued by local banks. This allows TLG to offer loans with tenors and interest rates that allow viable but struggling SMEs to unlock sustainable recovery and grow their businesses sustainably.

The investment is done alongside Norfund, the IFC and BPI France and sums up to a total of USD 75 million. Swedfund has an existing relationship with TLG through its investment in TLG Credit Opportunities Fund in 2018.