FMO, the Dutch development bank dedicated to fostering entrepreneurial growth, has launched a groundbreaking $4 million fund aimed at supporting early-stage businesses in Ghana, Nigeria, and Tanzania. This initiative marks a significant shift in impact investment strategies within sub-Saharan Africa, focusing on addressing the critical funding gaps that hinder the growth of emerging enterprises in the region.
The fund, known as the Africa Ecosystem Catalysts Facility (AECF), is a collaborative effort between FMO, Village Capital—a U.S.-based impact investment firm—and the Netherlands Enterprise Agency (RVO). The AECF aims to tackle the persistent challenges faced by nascent businesses by channeling capital through locally-led Entrepreneur Support Organizations (ESOs). This innovative approach integrates investment decisions with the expertise of regional stakeholders, thereby enhancing the effectiveness of funding in local contexts.
Kars Gerrits, Coordinator of the Orange Corners Innovation Fund at RVO, emphasized the strategic importance of this collaboration: “By pooling our resources, we are addressing a critical bottleneck in these African ecosystems—limited access to early-stage capital. Our commitment is firmly rooted in promoting enterprise growth, particularly among youth and women entrepreneurs.”
Early-stage companies in Ghana, Nigeria, and Tanzania are increasingly recognized as essential drivers of job creation and innovation, tackling pressing issues such as financial inclusion and climate resilience. However, these ventures often face significant barriers in attracting investment due to perceived risks, limited visibility for international investors, and structural challenges within the market.
Locally-led ESOs play a vital role in providing mentorship, networking opportunities, and capacity-building support to startups. These organizations possess a deep understanding of the local entrepreneurial landscape and the challenges faced by emerging businesses. Despite their valuable insights and established networks, ESOs are frequently underutilized in formal investment processes. The AECF aims to rectify this by positioning ESOs at the forefront of deal sourcing, due diligence, and investment recommendations.
Susan Nakami, Africa Region Lead at Village Capital, remarked, “For nearly a decade, we have seen how often investors overlook the invaluable expertise of locally-led ESOs. This facility is not just about deploying capital; it’s about empowering local ecosystems and creating a sustainable pathway for high-potential companies to drive genuine economic progress.”
Under the AECF, Village Capital will collaborate with up to two ESOs in each target country, leveraging their insights to identify promising ventures in sectors critical to regional development. The facility will implement a staged capital pathway, supporting companies as they transition from initial revenue generation to achieving product-market fit and ultimately scaling their operations. This phased approach is designed to mitigate risks and provide tailored support throughout the entrepreneurial journey.
FMO, which has traditionally focused on larger-scale investments, views this partnership as a key component of its broader 2030 strategy aimed at market creation. Claire Nyambori, Technical Assistance Officer at FMO, stated, “Our goal is to transform early-stage companies into robust, investment-ready entities. By collaborating directly with ESOs and businesses, we aim to foster meaningful market growth and strengthen businesses that are vital to the long-term economic trajectory of the region.”
The AECF represents a departure from conventional development finance models that often rely on top-down investment strategies. By empowering local actors with critical investment functions, the initiative seeks to build stronger, more resilient entrepreneurial ecosystems and ensure that capital is deployed effectively to ventures with the highest potential for impactful and sustainable growth.
Additionally, the facility will serve as a pilot project, closely monitoring the impact of this capital pathway approach on investee companies and the catalytic role of ESOs. The ultimate goal is to demonstrate a model that can attract larger funding rounds and solidify the position of ESOs as indispensable players in the African investment landscape.
While the $4 million commitment may seem modest in the context of overall development finance flows to Africa, FMO’s African fund, in partnership with the AECF, introduces an innovative methodology centered on local empowerment. This approach could herald a significant shift in how international capital is deployed to support the continent’s burgeoning startup ecosystem. The success of this initiative will be closely observed by development finance institutions and impact investors seeking more effective, locally-rooted strategies for fostering entrepreneurial growth in emerging markets.
