Vital Capital launches emergency debt facility targeting African companies
Vital Capital, a pioneering impact investor focused on companies in sub-Saharan Africa, has announced a new debt facility providing loans to promising businesses to help them get through the coronavirus pandemic while continuing to offer essential services.
Vital Capital, which typically takes equity stakes, has launched the Vital Impact Relief Facility, to offer businesses immediate access to capital in anticipation of a severe economic crisis that could result from the rapid spread of coronavirus in the region. These loans, which seek risk-adjusted returns, will help fundamentally sound African businesses providing impactful services to weather the economic consequences of the virus and put them in a position to thrive when the pandemic has ended.
The Vital Impact Relief Facility will start with an initial $10 million in capital and will issue roughly 10 loans on favorable terms of approximately $1 million each with a duration of up to four years. Vital also plans to open the facility to other investors to extend the available pool of capital.
The vehicle will primarily target companies involved in agro-industry & processing, healthcare, sustainable infrastructure and education, and is initially launching in Kenya and Uganda. It will then expand into Vital's target geographies including Ghana, Democratic Republic of Congo, Côte d’Ivoire, Angola and Senegal.
To co-lead these efforts and oversee this new vehicle, Vital Capital has hired Guido Boysen. Guido, who recently stepped down as CEO of Grofin, a leading Africa SME lender, has vast experience in creating and managing targeted debt facilities in Africa.
Despite Africa being home to six of the world’s 10 fastest growing economies, according to the World Economic Forum, the coronavirus-related economic crisis could reduce foreign direct investment globally between 30% and 40%, according to the United Nations, a tough result for Africa.
“Because the coronavirus has already begun to impact a range of businesses in sub-Saharan Africa, there is an urgent need for the loans that many of these African companies will require to ride out this tumultuous period,” said Nimrod Gerber, Managing Partner, Vital Capital. “It’s a fast-developing situation that demands immediate action, so we are pleased to move forward with this debt facility and we encourage others to join us. The Vital Impact Relief Facility aims to give impactful enterprises the ability to continue offering their vital services through this crisis while building a bridge to realizing their visions of becoming prosperous companies that can benefit millions of Africans.”
Vital Capital has been making targeted investments in sub-Saharan Africa since 2011, with the aim of improving the economic, personal and social well-being for people in low and middle-income communities throughout sub-Saharan Africa. Every year, Vital’s investments touch the lives of more than five million people who receive essential products or services through Vital’s portfolio companies.
