FSD Africa has launched the Manager Finance Facility, a new initiative designed to channel catalytic capital to Africa’s emerging generation of Alternative Local Capital Providers, expanding access to more suitable financing for small and growing businesses across the continent.
The facility launches with support from FMO, the Dutch entrepreneurial development bank, and the UK Government’s Foreign, Commonwealth and Development Office Nigeria.
FMO’s contribution is channeled through the Investing in Young Businesses in Africa programme, a Team Europe Initiative funded by the European Commission to strengthen market creation and improve access to finance for young and early-stage businesses across key African markets.
Additional funding partners are expected to join as the facility expands.
The initiative targets a persistent structural gap in African business financing. Small and growing businesses are crucial for employment and economic development but struggle with limited access to finance due to high transaction costs, rigid collateral requirements, and risk perceptions that make traditional financing unsuitable for their diverse needs.
Alternative Local Capital Providers have been developing new approaches to financing these businesses, but frequently face financing constraints of their own.
The facility provides catalytic, returnable grant capital to these providers, allowing them to test and validate innovative financing models, build investment track records, strengthen operations and progress toward becoming investable at scale.
Providers at the facility are creating models like revenue-based finance, flexible equity, venture debt, blended finance and local-currency structures to better align financing with the cash-flow and growth needs of African businesses compared to traditional bank lending.
Juliet Munro, Early-Stage Director at FSD Africa, framed the facility as addressing a financing gap one level removed from the businesses themselves.
“We need to finance the financiers,” Munro said. “Across Africa, we are seeing a new generation of locally rooted capital providers developing innovative ways of financing businesses that traditional financial institutions are not reaching. But these providers need capital themselves to prove their models, build their institutions and develop the track records that investors require. The MFF is designed to bridge this gap – helping promising providers move from experimentation towards scale, channelling more – and more appropriate – capital to African businesses in the longer term.”
The facility structures its support through two principal forms of flexible, returnable capital rather than conventional grants.
Piloting Capital enables providers to test innovative financing models, execute early transactions, demonstrate commercial viability and establish the investment track records needed to attract larger pools of capital.
Operational Capital provides working capital for core teams, systems, governance and compliance as providers raise investment capital and move toward financially sustainable operations.
Beyond direct financing, participating providers gain access to FSD Africa’s broader capacity-strengthening and peer-learning initiatives, covering governance, environmental, social and governance practices, impact measurement, valuation and fundraising.
Data and knowledge generated through the facility will also feed into market intelligence and evidence on the development of Africa’s alternative financing sector more broadly.
The Manager Finance Facility’s ambition extends beyond supporting individual providers.
The initiative aims to show that diverse African-led capital providers can become a credible asset class for attracting private and institutional capital, serving both as a proof-of-concept and a financing vehicle.
Andrew Shaw, Manager Market Creation Financial Inclusion at FMO, tied the facility to a broader pipeline-building strategy.
“Africa’s small and growing businesses need financing solutions that reflect how they operate and grow,” Shaw said. “By backing locally rooted capital providers with catalytic capital, the Manager Finance Facility will help promising models establish a track record, strengthen their institutions and become ready for larger pools of investment. This is how we can build a stronger pipeline of investable businesses and mobilise more private and institutional capital into underserved African markets.”
The facility’s Nigeria window will focus specifically on strengthening locally rooted capital providers and supporting investment into Nigerian entrepreneurs and growing businesses.
Temilola Akinrinade, Investment and Capital Markets Lead at FCDO Nigeria, said the window reflects a broader UK-Nigeria economic partnership.
“Unlocking Nigeria’s economic potential requires financing solutions that work for its entrepreneurs and growing businesses,” Akinrinade said. “The UK is proud to support the Nigeria window of the Manager Finance Facility which will strengthen locally rooted capital providers, mobilise further private investment and support Nigeria’s sustainable economic transformation. It forms part of UK’s wider partnership with Nigeria to increase investment, create jobs and deliver mutual growth.”
FSD Africa aims to create the Manager Finance Facility to attract catalytic investors and enhance Africa’s alternative capital ecosystem for small and growing businesses, with more funding partners to be added as it develops.
The initiative leverages FSD Africa’s experience in deploying capital, providing technical assistance and developing ecosystems to test financing models, enhance local investment skills, and attract more capital to underserved African markets.
