African Export-Import Bank’s (Afreximbank) impact investment arm, the Fund for Export Development in Africa (FEDA), has announced a first close of $670 million across its four fund strategies to support intra-African trade growth, value-add export development, and industrialization.
It is expected that $270 million of the total $670 million will be used to establish FEDA Direct Equity Fund I, which will provide equity and quasi-equity financing to businesses that fall within FEDA’s mandate.
Strategic Initiatives Fund is a $250 million proprietary fund established by Afreximbank to implement landmark and high-impact greenfield investments in sectors crucial to the growth of intra-African trade and value-added export development across the African Continent.
Third, FEDA and Gateway Partners Group have committed US$125 million to a private credit fund called Africa Credit Opportunities Fund, L.P. (“ACOF”). To facilitate trade and stimulate economic development in Africa, ACOF will make investments in credit instruments.
A US$25 million Venture Fund is FEDA’s fourth strategy, and it will be used to finance high-impact, early-stage ventures across Africa through a combination of equity, quasi-equity, and venture debt.
By 2024, with the help of supportive Limited Partners, FEDA Investment Manager hopes to have raised a total of US$1.3 billion across the four fund strategies.
“We are very pleased with this first close which is a first step in the financing of the equity gap in the trade sector in Africa,” said Prof. Benedict Oramah, President and Chairman of Afreximbank. “Attracting leading institutions with a keen interest in Africa’s development, the FEDA fund strategies will also facilitate and increase FDI in the trade and export sectors” .
The Adjustment Fund for the African Continental Free Trade Area (AfCFTA) has also appointed FEDA as its Fund Manager. The AfCFTA Secretariat and Afreximbank are working together to establish this Fund, which is expected to begin operations in the first quarter of 2023. To help get the African Continental Free Trade Agreement off the ground, the government and private businesses will be able to tap into the AfCFTA fund.
FEDA has successfully exited four investments across industries since 2021. Among these transactions is an investment in a major player in the fiber optic networks sector; a trade-enabling infrastructure project to improve gas supply in the West African region; a logistics service provider that uses cutting-edge technology to streamline the transport of goods between East and West Africa; and a major player in the fast-moving consumer goods sector in Mauritania.