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Business collaboration between BII and Swedfund leads to creation of company for Small and Medium Enterprise funding in Zambia

Zambian organization GIP adopts a business model pioneered by BII and other collaborators in Ghana, to extend financial services to companies typically ignored by conventional banking institutions.

Venture formed by BII and Swedfund to fund small and medium-sized businesses in Zambia
Venture formed by BII and Swedfund to fund small and medium-sized businesses in Zambia

Business collaboration between BII and Swedfund leads to creation of company for Small and Medium Enterprise funding in Zambia

New Investment Company Launched to Boost SME Financing in Zambia

A new investment company named Growth Investment Partners Zambia (GIP Zambia) has been launched, aiming to provide much-needed financing to small and medium-sized enterprises (SMEs) in Zambia. The company, backed by British International Investment (BII), Zambia’s National Pension Scheme Authority (NAPSA), and Swedfund, will provide long-term, flexible, local currency financing to SMEs, with an initial funding of $70m (€60.3m).

Shipango Muteto, chair of NAPSA's board, described the launch of GIP Zambia as a significant milestone for the pension fund, channeling much-needed patient capital into SMEs that form the backbone of the economy. For NAPSA, the investment in GIP Zambia is not just an investment but an imperative that directly contributes to growing their membership base, thereby strengthening the long-term sustainability of the pension fund and securing the future of its members.

GIP Zambia targets SMEs with annual revenues and assets between $100,000 and $15m, and financing needs of $500,000 to $5m. The key economic sectors to be prioritized include manufacturing, agriculture, and financial services. There will be a strong focus on inclusive business ownership, notably support for women and locally owned and led firms.

The company aims to tackle a long-term acute shortage of financing in the Zambian economy, particularly for SMEs, which account for more than 70% of the country's GDP and provide 88% of employment. GIP Zambia plans to deploy more than $300m to 150 SMEs over the next 15 years, helping to create jobs and make SMEs more attractive for investors from traditional capital markets.

Leslie Maasdorp, CEO of BII, stated that GIP Zambia builds on the DFI’s experience of launching GIP Ghana and reflects its long-term commitment to building local financing ecosystems for SMEs and entrepreneurs. The investment in GIP Zambia is seen as a means to strengthen the long-term sustainability of NAPSA and as a direct contribution to growing NAPSA's membership base.

GIP Zambia will offer patient capital with features like longer tenors, reduced collateral requirements, more flexible repayment, risk-sharing, and tailored business support, enabling SMEs to expand sustainably. The objective of GIP Zambia is to close the critical financing gap that restricts SME growth, providing financing solutions that are not available through traditional bank lending or conventional private equity models.

The impact envisioned by GIP Zambia includes mobilizing over $300 million over 15 years to support around 150 SMEs across key sectors like manufacturing, agriculture, and financial services. This investment will support SMEs that collectively contribute over 70% of Zambia’s GDP and employ 88% of its workforce, thus bolstering the backbone of the Zambian economy.

The launch of GIP Zambia is considered a significant milestone for NAPSA, as it channels much-needed patient capital into SMEs. Musonda Chipalo, who has spent much of his career working in finance at the International Finance Corporation, heads GIP Zambia. GIP Ghana, a similar company launched in 2023, served as a template for GIP Zambia, demonstrating the potential for the GIP model to be a scalable and replicable method of SME financing across Africa.

Development finance through British International Investment (BII), pensions from Zambia’s National Pension Scheme Authority (NAPSA), and private equity from Swedfund are being used to launch Growth Investment Partners Zambia (GIP Zambia), aiming to provide long-term financing to small and medium-sized enterprises (SMEs) that form the backbone of Zambia’s economy. The company's investing strategy focuses on biodiversity, including support for women and locally owned and led firms, as it seeks to address the critical financing gap that restricts SME growth in Zambia. Businesses with annual revenues and assets between $100,000 and $15m, and financing needs of $500,000 to $5m in the manufacturing, agriculture, and financial services sectors will be prioritized.

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