As part of its support for digital transformation in Africa, Proparco has just acquired a US$5m shareholding in TLcom TIDE Africa Fund, which will provide financing for young innovative businesses in Sub-Saharan Africa. These start-ups will leverage new technology to improve access to basic services.
Harnessing technology for sustainable development
Although the penetration rate for SIM cards across Africa is similar to that of Western Europe (i.e. 70% vs. 83%), access rates for basic services in Africa still lag far behind. For example, rates of electrification or access to healthcare or banking facilities are below 31% in Africa, while they exceed 90% in Western Europe.
With over 600 million smartphone users forecast in Africa by 2020, mobile phones have become key vectors in development that can help in unlocking access to basic goods and services (i.e. energy, healthcare, education, transport, and everyday consumer goods).
The TIDE Africa Fund (i.e. Technology and Innovation for Developing Economies) was set up to partner the development of young Sub-Saharan African start-ups with tech- or digi-centric business models that cater to poorly-served or underserved local markets. These businesses will harness new technologies to improve access to essential goods and services in urban, peri-urban and rural areas.
Partnering with the fund from the beginning with its 1st closing
Proparco’s US$5m investment is part of a first round of funding totalling nearly US$40m that also involves the EIB and the African Development Bank (ADB). It will enable the TIDE Africa Fund to provide venture-capital for young African start-ups on a continent where venture capital is still in its infancy.
The TLcom team will draw on its solid experience of supporting innovative start-ups and a sophisticated understanding of the African start-up eco-system to invest in around 15 businesses, all of which are less than 5 years old and have moved beyond the prototype and marketing stages in order to help them grow and scale up.