WASHINGTON: IFC, a member of the World Bank Group, today launched a new fund that will focus exclusively on investing in small and medium enterprises in central Africa, helping to improve access to finance, create employment, and reduce poverty in some of Africa's least developed countries.

IFC is investing $12.5 million in equity in the Central Africa Small and Medium Enterprise (SME) Fund, which will make equity and equity-related investments in smaller businesses across the central African region. It will initially focus on companies in the Central African Republic.

The fund will be managed by XSML, a social investment fund manager based in the Netherlands, and Cenainvest, an SME fund manager based in Cameroon.

With IFC's support, XSML and Cenainvest will aim to mobilize a total of $25 million for the fund from other development finance institutions and the private sector.

Jan Vos, Managing Partner at XSML, said, "By providing financing for small and medium enterprises, the Central Africa SME Fund will address a key constraint to the further development of Africa's private sector. The fund will aim to be an important source of socially responsible financing for companies across central Africa and contribute to reducing poverty across the region. We are very proud and pleased to help African entrepreneurs build sustainable businesses that create jobs and income."

Companies that the fund invests in will also receive advice on implementing better corporate governance, raising environmental and social performance, and other business support. The business support services facility will aim to improve the long-term and sustainable development of investee companies by advising them both before and after they receive financing.

The Central Africa SME Fund is the first of several private equity funds under the SME Ventures program that IFC aims to launch in the coming months to invest in smaller businesses in Africa's least developed regions and in countries emerging from conflict. All of the funds will leverage the expertise of locally based fund managers and combine financing with business support services and advisory to smaller business.

IFC Executive Vice President and CEO Lars Thunell, said, "Supporting the growth of small and medium enterprises in Africa's poorest economies and in countries emerging from conflict is a strategic priority for IFC in the region. The Central Africa SME Fund is an important part of IFC's efforts to improve access to finance for entrepreneurs and create opportunities for people in places that need it the most."

The fund's individual investments will be between $100,000 and $500,000, targeting companies in several sectors, including agribusiness, information technology, telecommunications, transportation, warehousing, and tourism.