Investment group BII and Swedfund establish company to fund small and medium enterprises in Zambia
Growth Investment Partners Zambia Launches to Boost Small Business Financing
Growth Investment Partners Zambia (GIP Zambia) has officially launched, marking a significant step towards addressing the financing gap for Small and Medium Enterprises (SMEs) in Zambia. With an initial funding of $70 million from British International Investment (BII), Zambia’s National Pension Scheme Authority (NAPSA), and Swedfund, GIP Zambia aims to deploy over $300 million to around 150 SMEs over 15 years.
Addressing the Financing Gap
GIP Zambia targets the substantial SME financing gap in Zambia by complementing existing banking finance through longer loan tenors, lower collateral requirements, and capital provided in local currency. This approach will help SMEs access the capital they need to grow and create jobs, driving inclusive economic development.
Strong Local and International Backing
The involvement of major local and international partners, including NAPSA as the largest Zambian pension fund, signals strong local ownership and international confidence in the funding model. This backing provides a solid foundation for GIP Zambia to make a significant impact in the SME sector.
Support for SME Readiness
Besides capital provision, GIP Zambia enhances the operational readiness and growth capabilities of SMEs, thus preparing them for sustainable expansion. This support will empower SMEs to reach their full potential and contribute more effectively to Zambia’s economy.
Contribution to Job Creation and Economic Growth
SMEs account for 88% of employment in Zambia, and by financing 150 SMEs, GIP Zambia is expected to catalyse the creation of numerous new jobs. SMEs also contribute over 70% to Zambia’s GDP, and by unlocking finance and capacity for these enterprises, GIP Zambia supports Zambia’s Vision 2030 for private sector-driven growth, inclusive prosperity, and structural economic transformation.
Local Economic Impact
The focus on long-term, flexible, and local currency capital reduces foreign exchange risk for SMEs and encourages domestic economic resilience. This approach will help protect SMEs from external shocks and promote the growth of a strong, self-sustaining economy.
Priority Sectors
Key economic sectors to be prioritised by GIP Zambia include manufacturing, agriculture, and financial services. By focusing on these sectors, GIP Zambia aims to drive growth and development in areas that are crucial to Zambia’s economy.
Government Support
Zambian President Hakainde Hichilema personally officiated the launch, emphasizing government commitment to strengthening the SME sector and attracting long-term private capital. This initiative aligns with the UK's development finance goals and Sweden’s Swedfund objectives to reduce poverty, create decent jobs, and enhance sustainable private sector growth.
In summary, GIP Zambia is a pioneering platform with strong institutional backing that addresses critical SME financing gaps in Zambia. It has a clear mandate to foster job creation and economic growth through locally grounded and scalable investment, representing a promising model for SME-driven development in the country.
This article is based on the following sources:
- Growth Investment Partners Zambia
- British International Investment
- Swedfund
- NAPSA
- The launch of Growth Investment Partners Zambia (GIP Zambia) signifies a significant move towards development finance, with a focus on financial inclusion of Small and Medium Enterprises (SMEs) in Zambia.
- GIP Zambia asserts its mission by blending public and private equity, leveraging initial funding of $70 million from British International Investment, Zambia’s National Pension Scheme Authority (NAPSA), and Swedfund, looking to deploy over $300 million to around 150 SMEs over 15 years.
- By providing longer loan tenors, lower collateral requirements, and capital in local currency, GIP Zambia aims to augment business opportunities for SMEs, leading to personal-finance enhancement and job creation.
- Additionally, GIP Zambia offers education-and-self-development resources and support, preparing SMEs for sustainable expansion and fostering increased effectiveness in contributing to Zambia’s economy.
- Understanding the importance of technology in today’s economic landscape, GIP Zambia will prioritize sectors such as manufacturing, agriculture, and financial services, which are key drivers of both local and national economic growth.
