Impact Fund Denmark Lends $15 Million to Boost African SME Financing
The investment targets a persistent credit gap by channeling hybrid capital through financial institutions to expand lending to underserved small businesses across Africa.
Key points
- Impact Fund Denmark commits $15 million to Verdant Capital Hybrid Fund
- Fund provides hybrid and mezzanine capital to financial institutions across 10 African markets
- Investment aims to expand credit access for micro, small, and medium enterprises
Micro, small, and medium-sized enterprises drive job creation and economic growth across Africa, but limited access to credit continues to constrain their expansion and productivity.
To help address the gap, Impact Fund Denmark is lending $15 million to Verdant Capital Hybrid Fund (VCHF). The fund deploys hybrid and mezzanine capital to African financial institutions focused on financial inclusion, enabling them to extend more financing to MSMEs and entrepreneurs.
Reaching Underserved Businesses Through Financial Intermediaries
The investment will allow VCHF to scale capital allocations to partner financial institutions, which can in turn increase lending to small businesses. The approach is expected to expand income-generating opportunities and support job creation across local economies.
VCHF operates across 10 African markets, including Egypt, Ghana, Kenya, Nigeria, Uganda, Rwanda, South Africa, Tanzania, Zambia, and Zimbabwe.
Targeting Structural Gaps in SME Financing
Nitish Chawla, investment director in financial services at Impact Fund Denmark, said the initiative addresses one of the most persistent constraints in developing economies: access to financing for small businesses.
« By strengthening Verdant Capital Hybrid Fund, we can help thousands of entrepreneurs grow, hire more staff, and contribute more in taxes. This is crucial for creating economically sustainable societies, » he said.
The investment illustrates how catalytic capital—channeled through financial intermediaries—can improve access to finance for MSMEs at scale.
Beyond funding, Impact Fund Denmark is also supporting VCHF with an action plan to strengthen its management of environmental and social risks.
