In a significant step towards fostering entrepreneurship in Africa, the European Investment Bank (EIB) has announced a €15 million investment in the new I&P Afrique Entrepreneurs 3 (IPAE 3) fund. This initiative aims to provide critical support to small and medium-sized enterprises (SMEs) in West Africa and Madagascar, ultimately creating more than 4,000 direct jobs, with at least 40% reserved for women.

The investment aligns with the European Union’s Global Gateway strategy, a framework designed to strengthen economic and developmental ties between Europe and Africa. The EIB’s funding, sourced from the African, Caribbean, and Pacific (ACP) Trust Fund, underscores the bank’s commitment to advancing sustainable growth and financial inclusion across the African continent.

Strengthening the African Entrepreneurial Ecosystem

The IPAE 3 fund, managed by Investisseurs & Partenaires (I&P), is designed to bridge critical financing gaps that have traditionally hampered the growth of African businesses. Many SMEs in the region struggle to access capital due to high lending rates, stringent collateral requirements, and an underdeveloped financial sector. The new fund aims to alleviate these challenges by providing targeted financial assistance to businesses with strong growth potential in sectors such as agriculture, nutrition, health, energy, water, industry, and services.

EIB Vice-President Ambroise Fayolle emphasized the transformative nature of this investment:

“Our aim is to provide finance for start-ups and assist them in their development, especially in countries where accessing finance is difficult. By taking action, we are helping to create a more responsible form of entrepreneurship and supporting women entrepreneurs. In this way, we are helping to create jobs and develop the business leaders of the future.”

Driving Gender Inclusion and Economic Empowerment

One of the defining aspects of the IPAE 3 fund is its commitment to gender inclusion. At least 40% of the jobs created through the investment will be designated for women, supporting the broader objectives of the 2X Challenge, an initiative aimed at empowering women through investment in female-led businesses.

Women entrepreneurs in Africa face unique challenges, including limited access to funding, cultural biases, and a lack of mentorship opportunities. By prioritizing investment in women-led businesses, the IPAE 3 fund seeks to address these disparities and unlock the economic potential of female entrepreneurs.

“IPAE 3 has a unique ambition: to grant finance to capable, responsible, and innovative businesses that offer solutions to the biggest challenges facing Africa while supporting economic inclusion, especially that of women,” said I&P co-CEO Sébastien Boyé.

Attracting Additional Investment for Greater Impact

The EIB is among the first institutional investors in the IPAE 3 fund, alongside the West African Development Bank (BOAD) and Proparco. However, the objective is to leverage this initial investment to attract additional funding from both public and private investors.

By providing a catalytic capital injection, the EIB expects to mobilize up to 4.5 times its original investment amount, leading to a total of over €67 million in funding. This approach is particularly vital in regions where private equity firms have traditionally been reluctant to invest due to perceived risks and market volatility.

The IPAE 3 fund will target businesses in Côte d’Ivoire, Ghana, Senegal, Madagascar, Benin, and Togo, ensuring that capital reaches underserved entrepreneurs in multiple key economies.

Overcoming Structural Barriers in African Finance

Despite Africa’s vast economic potential, SMEs on the continent face multiple barriers that hinder their ability to grow. Some of these challenges include:

1. Limited Access to Credit – Traditional financial institutions in Africa often require high collateral for business loans, making it difficult for SMEs to secure funding.
2. High Interest Rates – Many African countries have double-digit lending rates, discouraging entrepreneurship.
3. Regulatory Challenges – Bureaucratic red tape and inconsistent policies make it difficult for businesses to expand across borders.
4. Infrastructure Deficits – Poor transportation, energy, and digital infrastructure impact productivity and operational efficiency.

By investing in equity rather than debt financing, the IPAE 3 fund helps address some of these barriers, giving entrepreneurs the flexibility they need to scale their businesses sustainably.

The Role of Impact Investing in Africa’s Growth

Impact investing—where financial returns are balanced with measurable social and environmental benefits—has been gaining traction in Africa. Investors are increasingly looking beyond traditional profit-driven models and focusing on businesses that generate positive change.

The EIB’s investment in the IPAE 3 fund exemplifies this approach. By channeling funds into high-impact sectors such as renewable energy, sustainable agriculture, and healthcare, the investment will not only generate financial returns but also improve the quality of life for millions of people across Africa.

Building on a Strong Partnership

The EIB’s collaboration with I&P is not new. This latest investment marks the fourth joint initiative between the two entities, bringing the total funding provided by the EIB to I&P-managed funds to €35.25 million.

Over the past 20 years, I&P has supported over 300 SMEs across 11 African countries, providing capital and strategic guidance to help businesses grow sustainably. The organization operates with a hands-on approach, offering mentorship and operational support to the companies it funds.

“We are especially proud to continue our long-term partnership with the European Investment Bank, which began almost 20 years ago. The commitment that has been made to IPAE 3 demonstrates that there is confidence in our approach and expertise,” said Boyé.

The Bigger Picture: EU-Africa Relations

The EIB’s investment in the IPAE 3 fund is part of the broader EU-Africa Global Gateway program, which aims to mobilize up to €150 billion in investment across Africa by 2027. The initiative focuses on five key areas:

• Digitalization – Expanding internet access and connectivity.
• Green Energy – Investing in renewable energy projects.
• Transport Infrastructure – Developing roads, railways, and ports.
• Health & Education – Strengthening healthcare systems and educational institutions.
• Financial Inclusion – Enhancing access to credit and investment opportunities.

The Global Gateway program is seen as the EU’s strategic response to China’s Belt and Road Initiative, ensuring that African nations have diverse investment options that promote sustainable development and local ownership.

The Future of Entrepreneurship in Africa

With Africa’s population expected to reach 2.5 billion by 2050, the need for job creation has never been more pressing. The continent’s youthful demographic presents a massive opportunity for economic growth, but without adequate investment in entrepreneurship, many young people may be left without viable employment prospects.

Initiatives like the IPAE 3 fund are crucial in unlocking Africa’s economic potential, equipping small businesses with the resources they need to innovate and expand. By fostering a thriving SME ecosystem, Africa can transition from being a raw materials exporter to a hub for high-value industries and services.

The success of this investment will be measured not only in financial returns but also in the tangible impact on African businesses and communities. If the IPAE 3 fund delivers on its objectives, it could serve as a blueprint for future SME-focused investment strategies across the continent.

Conclusion

The European Investment Bank’s €15 million investment in the IPAE 3 fund marks a critical step in supporting African entrepreneurship. By focusing on key sectors such as agriculture, health, and renewable energy, the initiative aims to create thousands of jobs and empower women-led businesses.

With a strong emphasis on impact investing, financial inclusion, and sustainable development, the IPAE 3 fund is poised to drive long-term economic transformation in West Africa and Madagascar.

As Africa continues to emerge as a global economic powerhouse, strategic investments like this will be instrumental in unlocking the continent’s full potential, fostering innovation, and building a more inclusive and resilient future for African entrepreneurs.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

19th February, 2025