Presentation on theme: "Small Enterprise Assistance Funds Alexander Dixon Vice President – Africa Tel: 202-737-8463 Empowering African Women Entrepreneurs."— Presentation transcript:
Small Enterprise Assistance Funds Alexander Dixon Vice President – Africa Tel: 202-737-8463 Empowering African Women Entrepreneurs
The Makeda Fund: The Big Picture Investment Capital for Women-Run SMEs SMEs are the backbone of modern economies. The Fund will invest in African SMEs as the region tries to join the global community. The Fund’s focus on women-owned and managed SMEs will allow it to address the gap in investment caused by business size and insufficient credit. Investment in SMEs has proven to deliver developmental, as well as financial, returns The fight to alleviate poverty in Africa is dependent on the regions ability to facilitate sustainable private sector growth and improved economic opportunities. Investing in women-owned and managed SMEs addresses the root causes of poverty by helping people feed their families, buy homes, get health insurance, save for retirement, send their children to school, and plan for their futures.
The Current Problem The Missing Middle: Small and medium enterprises (SMEs) are underserved and often overlooked by mainstream investors: –Too big for microloans and grants –Too small for traditional venture firms and investment banks Impact of Underinvestment: Large middle sector of the economy is left with limited short-term funding sources The 2nd Step: SMEs are a necessary second step for the micro-entrepreneur to enter the global economy IdeaMicro-EntrepreneurSMECompany/Corp. Micro loans & GrantsVenture Firms & Inv. BanksMissing Middle (Makeda’s Opportunity) Growth of a Business
The Solution: The Makeda Fund SEAF and NCEP Group jointly formed a management company, Makeda Fund Managers [MFM], to manage the Makeda Fund. The Target: The Fund will invest in SMEs in West Africa (with a particular focus on Nigeria) that: –are women-owned, led or exemplify significant impact on women stakeholder communities; –have a proven business concept; and –are in need of expansion capital Sectors of Interest: Distribution, Professional Services, Retail, Tourism, and Agribusiness; fund open to invest in full range of sectors Products Offered: The Makeda Fund will empower women entrepreneurs by: –Providing them access to long-term, patient capital; –Introducing them to globally proven best practices--product development, sales and marketing, quality control, financial systems and management; –Connecting them to new customers—locally, regionally, and internationally –Plugging them into our world-wide network of sector experts and successful businesses.
The Opportunity Investment: Investing in women-owned and managed SMEs in Africa to improve the daily lives of Africans, and to produce scalable and sustainable business growth with profitable returns. Development: Creating stable and secure jobs for unskilled and semiskilled individuals who then receive training, see significant growth in their wages and overall benefits, and are then able to begin to plan for their families’ futures that can end the cycle of poverty. –investing in improved housing –preventive health care –education for their children Returns: The near absence of investment in Africa’s SMEs to date offers an untapped market of opportunity for growth and investment with returns on a social as well as financial level for the investor and the community.
Fund Terms The Fund: The Makeda Fund, a Delaware limited liability company. Investment Objective : long-term capital appreciation through private equity in combination with quasi-equity financial instruments and subordinated debt in Nigeria and West Africa. Fund Size: $50 million first close; up to $75 million. Investment Size: $0.5 - $5 million Fund Manager: Makeda Fund Managers LLC, co-founded by Ngozi Okonjo- Iweala and Small Enterprise Assistance Funds (SEAF) Term: 12-year fund Investment Period: 5 years, with the possibility of two one-year extensions. Targeted Investments: –women-owned or led SMEs which are ripe for expansion and have high growth potential; –early stage investments in markets where there is demonstrated demand; –businesses that have developed a product in a niche market with a sustainable competitive edge. Management Fee: 3% of the Fund’s committed capital.
Why Choose Makeda: The Experience Asia Afghanistan China India Kazakhstan Kyrgyz Republic Tadjikistan Turkmenistan Uzbekistan Vietnam Central and Eastern Europe Bulgaria Croatia Czech Republic Estonia Georgia Hungary Kosovo Latvia Lithuania Macedonia Montenegro Where We Work Poland Romania Russia Serbia Slovakia Slovenia Ukraine Latin America Bolivia Colombia Peru
Why Choose Makeda: The Reach Francophone l Benin l Burkina Faso l Côte d’Ivoire l Guinea l Guinea-Bissau l Mali l Niger l Senegal l Cameroon l Togo Anglophone l Ghana l Nigeria Where We Are Going
Makeda Investment Process 1.Verify compliance with funds guideline 2.Business screening and on-site visits 3.Background checks and verification of documents 4.Assessment of markets and company prospects 5.Structure and valuation - development of financial projections and appropriate investment structure and terms including preliminary valuation Stages of investment selection and due diligence process Makeda Fund will build on SEAF’s extensive investment experience in conducting due diligence on SME investments. Procedures include: POTENTIALPROSPECT APPROVE CANDIDATE 1002036102
Exit Strategies SME investments can be liquid, often with a higher likelihood for exit than larger investments. MFM will make investments ONLY if the exit route can be planned from the start. Exit strategy is based on three pillars: 1.Targeting investments with proven business operations seeking expansion 2.Pre-investment capital planning of exit rights and structure 3.Active post-investment support and involvement
Development Impact Study Every $1 dollar invested in SMEs, generates $12 in the local community In most OECD countries, SMEs generate two-thirds of private sector employment and are the principal creator of new jobs (OECD). In the SMEs in which SEAF has invested, 84% of new jobs go to unskilled and semi-skilled workers. SMEs train employees and increase wages and benefits. SMEs benefit a host of stakeholders--from its employees, suppliers, customers, and competitors, and, through tax payments, social security contributions and frequent philanthropic donations, local government and community. We believe that if we can combine the natural inclination of SMEs to rely on local and known suppliers with the Fund’s strategic focus on gender, we will be able to demonstrate substantial developmental benefits beyond the commercial success of each investment.
The Makeda Fund: A Chance to Make a Difference The Makeda Fund represents an opportunity to: Make a visible and important impact both developmentally and commercially Demonstrate that gender need not be a barrier to commercial success in Africa Provide a model that is capable of expansion elsewhere in Africa and throughout the developing world Thank you for your attention and interest Small Enterprise Assistance Funds Alexander Dixon Vice President – Africa Tel: 202-737-8463 Small Enterprise Assistance Funds Alexander Dixon Vice President – Africa Tel: 202-737-8463