How missing middle financiers help Africa’s small and growing businesses to create quality jobs for youth

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Between 10-12 million young Africans enter the labour market each year, while that same year only three million formal jobs are created. These youth need decent, productive work to build the financial and psychological resilience to escape poverty. While small and growing businesses (SGB) are the main engine for job creation in African economies, they struggle to achieve continued growth in often contracting economies.

Financing plays a critical role here; SGB are facing a $930 billion financing gap. Their financing needs typically range between $20,000 to $2 million, and this is seen as the “missing middle”: too large for microfinance and too small for commercial investors and lenders. Fortunately, a growing group of financiers is looking specifically into providing these investment sizes. These financiers also realize that it is not just financing that will fuel SGBs growth, and also provide technical assistance (TA) that provides SGBs with much-needed advise on how to optimize their growth, in a sustainable and impactful way.

The Challenge Fund for Youth Employment (CFYE) acknowledges the critical role that these missing middle financiers are playing, and has selected several of these financiers in its portfolio, such as Balloon Ventures in East-Africa, WIC Capital in West-Africa, and Acumen operating across the continent. CFYE is providing these fund managers with first loss capital in the form of grants, grant funding for their TA facilities and expert advice around critical areas.

To better understand how these financiers work, how the SGBs in their portfolio grow, and how this growth helps to create new and decent employment for young people, CFYE has conducted a deep-dive into the operations of Balloon Ventures in Kenya and WIC Capital in Senegal. This Impact for Breakfast Session will be held during the Global Impact Investor Network (GIIN)’s annual forum, in collaboration with Collaborative for Frontier Finance, CFYE, and Acumen.