Investment firm founded by BII and Swedfund to fund Small and Medium Enterprises in Zambia
Growth Investment Partners Zambia (GIP Zambia) Launched to Boost SME Financing
Growth Investment Partners Zambia (GIP Zambia), an investment company, has been launched with the aim of providing long-term, flexible capital to small and medium-sized enterprises (SMEs) in Zambia. The company was founded with $70 million of initial funding from three main investors: British International Investment (BII), Zambia’s National Pension Scheme Authority (NAPSA), and Swedish development finance institution Swedfund.
The investment in GIP Zambia is seen as an imperative by Shipango Muteto, chair of NAPSA's board. Muteto emphasized that for NAPSA, the investment is not just an investment, but an imperative that contributes to growing the membership base of the pension fund. The investment strengthens the long-term sustainability of the pension fund and secures the future of its members, according to Muteto.
GIP Zambia will provide financing with longer tenors, lower collateral requirements, more flexible repayment arrangements, risk sharing, and more customized business support. The company aims to deploy more than $300m to 150 SMEs over the next 15 years.
Leslie Maasdorp, CEO of BII, stated that GIP Zambia is built upon the DFI's experience of launching GIP Ghana. Maasdorp emphasized BII's long-term commitment to building local financing ecosystems for SMEs and entrepreneurs. GIP Zambia will primarily offer financing in local currency to address a long-term acute shortage of financing in Zambia.
GIP Zambia aims to provide accessible, long-term finance to SMEs primarily in local currency, mitigating currency and financing risks for businesses. The company also aims to support SME formalisation, inclusion in value chains, and job creation across sectors. Additionally, GIP Zambia seeks to mobilize local institutional investors (beyond NAPSA) to bolster domestic confidence in SME financing.
SMEs in Zambia contribute over 70% of GDP and provide 88% of employment, making this sector crucial to the economy. Key economic sectors to be prioritized by GIP Zambia include manufacturing, agriculture, and financial services. The company also has a strong focus on inclusive business ownership, notably support for women and locally owned and led firms.
In summary, GIP Zambia’s purpose is to transform SME financing in Zambia through a large-scale investment vehicle backed by both international and local institutional investors, aiming to unlock the growth potential of the SME sector, which is vital for the country’s economic development. The company will finance SMEs with annual revenues and assets between $100,000 and $15m, and financing needs of $500,000 to $5m. The launch of GIP Zambia was described as a significant milestone by Shipango Muteto, chair of NAPSA's board.
- The investment by British International Investment (BII), Zambia’s National Pension Scheme Authority (NAPSA), and Swedish development finance institution Swedfund in Growth Investment Partners Zambia (GIP Zambia) is a blend of development finance and private equity, aimed at supporting the energy transition and business growth of small and medium-sized enterprises (SMEs) in Zambia.
- As part of its efforts to boost SME financing, GIP Zambia plans to mobilize local institutional investors, beyond NAPSA, to invest in the SME sector, thereby promoting business growth and job creation across sectors, particularly in manufacturing, agriculture, and financial services.
- GIP Zambia’s strategy of offering accessible, long-term finance in local currency to SMEs, while also providing business support, risk sharing, and fostering inclusive business ownership, represents innovative blended finance solutions, contributing significantly to the country's economic development and energy transition.
