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FSD Africa, a Nairobi-based, non-profit specialist development agency, has launched the Manager Finance Facility (MFF), a new initiative aimed at strengthening Africa’s emerging generation of alternative local capital providers.
The Manager Finance Facility (MFF) is being launched with support from FMO, the Dutch entrepreneurial development bank, and the UK Government’s Foreign, Commonwealth and Development Office (FCDO) Nigeria.
“We need to finance the financiers. 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,” said Juliet Munro, Early-Stage Director, FSD Africa.
The contribution of FMO is channelled through the Investing in Young Businesses in Africa (IYBA) programme, a Team Europe initiative funded by the European Commission to boost market creation and improve access to finance for young and early-stage businesses across key African markets. FSD Africa expects additional funding partners to join the initiative as MFF expands.
Andrew Shaw, Manager for Market Creation Financial Inclusion at FMO, 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.”
In a statement, FSD Africa says Africa’s small and growing businesses (SGBs) drive employment, innovation, and sustainable development, but they are often underserved by traditional lenders due to high transaction costs, rigid collateral requirements, and perceived risk. A new wave of Alternative Local Capital Providers (ALCPs), it argues, has come along to fill the gap but faces financing constraints of their own, a problem MFF aims to solve.
These ALCPs are bringing new capital approaches to the market, including revenue-based finance, flexible equity, venture debt, blended finance, and local-currency structures better suited to African businesses’ cash flow realities. With MFF, FSD Africa says they will offer catalytic, returnable grant capital to these providers, help them test and validate new financing models, build credible track records, strengthen their operations, and ultimately become investable at scale.
The Facility will offer two forms of flexible, returnable capital: Piloting Capital to help ALCPs test models and build track records, and Operational Capital to support core teams, systems and governance. The recipients of MFF will also get access to FSD Africa’s capacity-strengthening and peer-learning programmes.
“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,” added Munro.
