Swedfund, the Swedish development finance institution, has announced a $15 million investment into the TLG Africa Growth Impact Fund II (TLG II), aimed at supporting small and medium-sized enterprises (SMEs) across the continent. The fund focuses on preserving and generating jobs by providing structured debt capital tailored to SMEs’ specific needs. These businesses often face financing barriers, especially when they are temporarily distressed but still viable.
Supporting Africa’s Economic Backbone
SMEs are the cornerstone of Africa’s economy, accounting for 80% of the continent’s workforce and generating nine out of ten new jobs. However, their growth is often hampered by limited access to appropriate financial products that address local market conditions and unique business challenges. Swedfund’s investment seeks to address this by fostering an inclusive credit market that supports both the preservation of existing jobs and the sustainable creation of new ones.
Innovative Financial Model Tailored for Local Impact
TLG II offers an innovative approach by combining flexible long-term debt with equity participation and local bank guarantees, creating a hybrid model not commonly available in African markets. This structure allows TLG to extend loans with more favorable tenors and interest rates, helping viable yet struggling businesses regain stability and chart a path for long-term growth. By enabling access to this type of capital, TLG empowers SMEs to overcome financial hurdles and scale their operations sustainably.
Joint Effort With Global Development Partners
Swedfund’s commitment is part of a larger $75 million funding round that includes other key development finance partners such as Norfund, the International Finance Corporation (IFC), and BPI France. This collaborative approach amplifies the reach and impact of the fund, aligning with global efforts to bolster private sector development in Africa. Swedfund’s continued partnership with TLG—first established through a 2018 investment in the TLG Credit Opportunities Fund—demonstrates a long-term commitment to strengthening Africa’s entrepreneurial ecosystem.
Driving Poverty Reduction Through Job Creation
According to Jakob Larsson, Senior Investment Manager at Swedfund, enabling African SMEs to thrive is essential for reducing poverty on the continent. He emphasized that a robust and functional financial services market tailored to local needs is critical for the survival and expansion of SMEs. Swedfund’s involvement in TLG II aims to generate a meaningful and lasting impact by supporting businesses that are vital to local economies and community livelihoods.
A Scalable Solution to Strengthen Resilience
The investment positions TLG II as a scalable solution capable of bridging systemic credit gaps that constrain SME growth in Africa. By leveraging local bank partnerships and integrating credit guarantees, the fund creates a lower-risk, higher-impact financing model. This not only benefits SMEs but also builds confidence among financial institutions to continue lending in underserved markets.
Swedfund’s $15 million investment in TLG II reflects a broader commitment to sustainable development and private sector resilience in Africa. As SMEs continue to play a crucial role in job creation and economic progress, targeted financial interventions such as this are essential. Through this strategic collaboration, Swedfund and its partners aim to drive inclusive growth while fostering long-term stability and prosperity across the continent.