The European Business Council for Africa

Germany’s KfW invests $13mln in Regmifa to expand SME finance in Africa

  • KfW makes a $13 million equity investment in Regmifa
  • Funds will support local lenders financing SMEs and low-income households
  • Regmifa reached nearly 219,000 borrowers across 25 countries in 2024

Germany’s development bank KfW said on January 20 it has made a new $13 million equity investment in the Regional MSME Investment Fund for Sub-Saharan Africa (Regmifa). The investment is intended to strengthen the fund’s financial capacity and expand the resources available to local financial institutions that provide financing to micro, small, and medium-sized enterprises (SMEs) and low-income households.

Operational since 2010, Regmifa operates as a private debt fund and intervenes exclusively through local financial intermediaries, notably microfinance institutions. According to Laure Wessemius-Chibrac, chair of the fund’s board, the additional capital will allow Regmifa to expand its network of partner institutions and reach a larger number of small economic actors across sub-Saharan Africa.

In 2024, Regmifa said it invested $36.7 million through 18 partner lending institutions operating in the region. These investments supported 218,798 end borrowers across 25 sub-Saharan African countries. Women accounted for 39% of beneficiaries, compared with 41% for men. The financed activities were mainly concentrated in trade, which represented 50% of the portfolio, followed by services at 23%, agriculture at 12%, and production activities at 4%.

The fund reported a 23% increase in its outreach compared with 2023, driven by new partnerships with microfinance-focused lending institutions. A key pillar of Regmifa’s strategy is lending in local currency. In 2024, 65% of loans were denominated in local currencies, compared with 10% in euros. This approach aims to reduce foreign exchange risk for both borrowers and partner institutions in a context of persistent currency volatility across African markets.

KfW’s new commitment comes as access to credit remains limited for SMEs in sub-Saharan Africa, despite their central role in the economy. SMEs account for about 90% of businesses in the region and contribute close to 60% of formal employment, while generating between 40% and 50% of GDP depending on the country.

 

Source: Ecofin Agency