AECF (Africa Enterprise Challenge Fund) is a leading non-profit development organisation supporting innovative agribusiness and renewable energy enterprises to reduce rural poverty, promote resilient communities and create jobs. 

The organization catalyzes the private sector by surfacing and commercialising new ideas, business models, and technologies designed to increase agricultural productivity, improve farmer incomes, expand clean energy access, reduce greenhouse gas emissions and enhance resilience to the effects of climate change. AECF also provides catalytic funding to high-risk businesses that struggle to access commercial funding and are are committed to working in frontier markets, fragile contexts, and high-risk economies where few mainstream financing institutions dare to go. 

Capital caught up with Victoria Sabula who is the CEO of AECF to talk about how AECF is scaling up its financing, advisory services, investment support, and knowledge services to catalyze greater work of 500 African SMEs and improve the lives of 10 million rural Africans by 2026. Excerpts;

Capital: What is the primary mission and vision of The Africa Enterprise Challenge Fund, and how does it contribute to promoting entrepreneurship and sustainable development in Africa?

Victoria Sabula: In a continent full of untapped potential, AECF (Africa Enterprise Challenge Fund) fosters entrepreneurship and sustainable development with a clear vision to “build a prosperous, enterprising, and resilient Africa” and a mission “to catalyse, grow, and improve the resilience of private sector enterprises for the benefit of rural and marginalised communities in Africa.”

AECF’s commitment to building resilience in the agriculture and renewable energy sectors is underpinned by a focus on empowering and uplifting the most vulnerable and marginalized segments of Africa’s rural and underserved communities, particularly women, youth, and those residing in fragile states and contexts.

With a dedication to addressing gender-based inequalities that obstruct progress in these sectors, AECF strives to combat the scourge of youth unemployment that threatens to undermine communities in Africa. The overarching goal is to challenge the prevailing structural bias in society by fostering empowerment and creating job opportunities.

Operating in fragile contexts, AECF exhibits courage and conviction in advocating for the rights and potential of individuals in these communities, recognizing their worth as equal to those in flourishing economies. AECF’s prowess in entering nascent markets enables the organization to de-risk and attract investments, thus fostering progress and stability in conflict-affected environments.

AECF has positively influenced over 4 million lives, generated more than 795 new jobs, and facilitated approximately US$ 5.8 million in wages in fragile, frontier markets since 2012, ultimately contributing to a total benefit of around US$ 25.6 million.

At its core, the AECF envisions a future where sustainable businesses take centre stage in championing systems that work, especially in rural Africa and to fight against poverty. To realize this ambitious goal, the organization employs a multifaceted approach that combines financial support, innovation, and community empowerment.

One of the primary ways the AECF contributes to promoting entrepreneurship and sustainable development in Africa is by providing grant and debt financing to innovative business ideas. These funds are not just distributed haphazardly; they are strategically directed towards initiatives that hold the potential to make a significant impact on local communities and economies. By investing in these enterprises, the AECF jumpstarts economic growth, creates employment opportunities, and empowers marginalized populations who might otherwise be left behind. AECF seeks out and supports groundbreaking ideas that have the power to transform sectors ranging from agriculture and renewable energy to technology.

Importantly, the AECF’s commitment to sustainable development goes beyond the financial aspect. It involves capacity building, mentorship, and market linkages, providing budding entrepreneurs with the tools and knowledge they need to thrive. This holistic approach not only helps businesses succeed but also contributes to the resilience of these enterprises, which are essential for long-term prosperity in Africa.

Capital: Could you highlight some successful projects or initiatives supported by AECF that have had a significant impact on local communities or economies in Africa?

Victoria Sabula: In the face of global challenges, AECF remains steadfast in its commitment to catalysing private sector investments that benefit rural and marginalised communities in Africa. Despite recent formidable hurdles, including the Russia-Ukraine conflict, the lingering effects of COVID-19, and the escalating climate crisis, AECF has demonstrated remarkable resilience and adaptability in its pursuit of sustainable development.

AECF has successfully implemented a range of programmes that align with the United Nations Sustainable Development Goals (SDGs), with a significant positive impact on the lives of millions in Africa. Below are some of the successful programmes of AECF.

Agribusiness

AECF’s dedication to agriculture has yielded significant progress, resulting in increased crop yields and improved food security for numerous farming communities. These efforts have played a pivotal role in addressing the pressing challenge of food security across the African continent.

Through its investments and support in agribusiness across sub-Saharan Africa, AECF has prioritized diverse agriculture value chains, fostering sustainable growth and innovation in numerous countries, including South Sudan, Kenya, Tanzania, Somalia, and Ethiopia, among others. These programs have empowered smallholder farmers, enhancing their production and productivity, thereby contributing to regional economic growth.

Renewable energy

AECF’s investments in the renewable energy sector have been nothing short of transformative. The Renewable Energy Access for All in Sub-Saharan Africa (REACT SSA) portfolio reached over 80% of its target, positively impacting households with renewable energy. This expansion contributed to a doubling of jobs, a tripling of SMEs, and a significant development impact increase, totalling nearly US$40 million. These investments have reduced dependence on fossil fuels, ensuring improved access to clean and affordable energy across the continent.

Investing in women

AECF has fostered an enabling environment for women entrepreneurs to thrive, addressing the unique challenges faced by these groups in accessing financial inclusion and economic empowerment through the programmes such as Investing In Women in the Blue Economy in Kenya (IIW-BEK), Investing In Women in Nigeria (IIW-Nigeria), Investing In Women in South Sudan (IIW-South Sudan) and Financial Inclusion for Growth in Somalia (FIG-Somalia) programmes, just to mention a few.

By the end of 2022, AECF’s impact was profound and far-reaching, with over 31 million lives positively impacted and significant growth in its Active Investor Portfolio. The organization’s strategic focus on agriculture, renewable energy, financial inclusion, gender equality, and climate resilience has contributed to improved livelihoods, economic growth, and sustainable development in Africa.

Capital: In your opinion, what are the key challenges and opportunities for African entrepreneurs and businesses in accessing finance and scaling their operations? How does AECF address these challenges?

Victoria Sabula: The key challenges for African entrepreneurs and businesses in accessing finance and scaling their operations:

• Limited access to capital: African entrepreneurs often face challenges in accessing adequate capital, especially in the early stages of their ventures. Traditional financing options may be limited or come with high interest rates, making it difficult to secure the necessary funds for business expansion.
• High Interest Rates: Can make it difficult for businesses to secure affordable capital for expansion and can significantly impact their ability to compete in the market. These rates are often driven by factors such as perceived risk, inflation, and the scarcity of creditworthy borrowers.
• High risk: Many African countries are perceived as high-risk environments for investment due to political instability, regulatory uncertainties, and economic volatility. This perception can deter potential investors and lenders from supporting local businesses.

The opportunities we see for African entrepreneurs and businesses:

• Growing consumer market: Africa’s population is rapidly growing, providing a substantial consumer market for businesses across various sectors.
• Natural resources: The continent is rich in natural resources, offering opportunities for businesses in agriculture, mining, and renewable energy.
• Technology and innovation: There is a growing tech-savvy population in Africa, and innovations like mobile banking and e-commerce are creating new avenues for businesses to reach customers and operate more efficiently.
• Youthful workforce: Africa has a young and increasingly educated workforce, which can be a source of innovation and productivity for businesses.
• Regional integration: Initiatives like the African Continental Free Trade Area (AfCFTA) aim to promote intra-Africa trade, potentially opening up larger markets for businesses.

How AECF Addresses these challenges:

• Patient capital: AECF provides patient capital to businesses, including grants and zero-interest loans, reducing the financial burden on entrepreneurs and allowing them to focus on growth.
• Risk mitigation: AECF works to mitigate investment risks through careful due diligence, providing technical assistance to businesses, and fostering an enabling environment for investment.
• Technical assistance: AECF offers advisory services to help businesses develop sustainable models and improve their financial literacy. This support equips entrepreneurs with the skills needed to manage their finances effectively.
• Innovation and technology: AECF supports innovative business models and technology-driven solutions, enabling entrepreneurs to leverage advancements in digital technology and reach broader markets.
• Regional programs: AECF’s regional programs and initiatives promote cross-border collaboration and help businesses navigate regulatory differences, making it easier for them to expand regionally.
• Sectoral focus: AECF targets specific sectors critical to Africa’s development, such as agriculture and renewable energy, aligning investments with the continent’s pressing needs.

Capital: How does AECF collaborate with other stakeholders, such as governments, development agencies, and private sector partners, to create an enabling environment for entrepreneurship and investment in Africa?

Victoria Sabula: AECF’s core mission revolves around four pivotal pillars; advisory services, investment support and knowledge and insights sharing. These pillars form the bedrock of AECF’s work focus, highlighting a collaborative approach and dedication to making a meaningful impact across the continent.

An example of AECF’s financing pillar is the “Renewable Energy and Adaptation to Climate Technologies (REACT)” window. This initiative extends funding to businesses engaged in developing renewable energy and climate adaptation solutions, fostering collaboration to address energy access and climate challenges in Africa.

The “Investing in Women in South Sudan (IIW-SS)” program stands as a testament to AECF’s dedication to advisory services. Collaboratively, this initiative offers advisory support to women in South Sudan, amplifying their participation in diverse agricultural value chains and enhancing their economic resilience.

The “Agribusiness in Africa Window (AAW),” comprising multiple investment rounds, exemplifies AECF’s commitment to investment support. It vigorously invests in diverse agribusinesses across Africa, engaging in a collaborative effort to provide capital and support, thereby generating employment opportunities and enhancing livelihoods in the agricultural sector.

AECF’s commitment to knowledge and insights sharing is evident in the work with research organizations to put together disseminate knowledge about initiatives, impact, financial, support to policymakers and businesses in making informed decisions regarding vulnerable populations.

By working closely with governments to advocate for policy reforms that promote a business-friendly regulatory environment, collaborating with development agencies to leverage resources and expertise and engages private sector partners to foster innovation and investment in development initiatives, AECF recognizes the importance of using research and sector specific knowledge, and collaboration to create an enabling environment for entrepreneurship and investment in Africa.

Capital: Could you share some insights into the specific sectors or industries that AECF focuses on? How does it identify priority sectors and align its support with the needs of African economies?

Victoria Sabula: AECF focuses on Agribusiness, Renewable Energy and cross-cutting sectors with the potential for high impact and alignment with African development needs. By conducting rigorous market assessments and engage with local and regional stakeholders to identify priority sectors, AECF can align support and resources. Common areas of focus include agriculture, renewable energy, and financial services. By positioning their support with these sectors, AECF aims to drive sustainable growth and address pressing development challenges for local communities.

Capital: What are the future plans and strategic priorities for AECF? Are there any new initiatives or partnerships on the horizon that will further enhance its impact and reach?

Victoria Sabula: AECF’s future plans involve expanding reach to support more early-stage businesses, particularly those in underserved regions. AECF is continuously seeking partnerships with funders, governments, development partners and private sector enterprises to enhance their impact. AECF is committed to adapting its strategies to meet evolving development needs and maximize its contribution to Africa’s growth.

Capital: How can African entrepreneurs and businesses get involved with AECF? What advice would you give to aspiring entrepreneurs seeking funding and support for their ventures?

Victoria Sabula: African entrepreneurs and businesses can engage with AECF by regularly visiting their website and monitoring calls for proposals, active programmes and opportunities for partnerships and even reaching out with ideas for synergies. AECF offers various funding opportunities and competitions, which typically require applicants to meet specific eligibility criteria. Aspiring entrepreneurs should prepare well-structured business plans, demonstrate a clear understanding of their target markets, and focus on creating sustainable impact. Building a strong professional network and seeking mentorship can also improve their chances of securing support from organizations like AECF.