Venture capital gets sh827m boost
Dec 23, 2006
THE East Africa Development Bank (EADB) has received a $473,050 (sh827m) grant from the US trade development agency to support establishment of a venture capital fund in the region.
By Sylvia Juuko
THE East Africa Development Bank (EADB) has received a $473,050 (sh827m) grant from the US trade development agency to support establishment of a venture capital fund in the region.
Venture capital are funds provided by outside investors for financing of new, growing or struggling businesses.
Godfrey Tumusiime, the director general of EADB, signed the grant agreement with US ambassador Steven A. Browning, a statement issued by the US embassy on Thursday stated.
The grant will partially fund a study on the viability of establishing an East African capital venture fund to support small businesses.
The ambassador noted that while there is equity finance available for East Africa, it is not designated for small and medium enterprises (SMEs).
“Current equity financing often seeks investments greater than $2m (sh3.5b), which is higher than those of SMEs and is usually only available from banks that do not provide permanent equity financing,†he noted.
EADB has selected a New York-based financial advisory firm, Selected Credit International Corporation, to provide technical assistance.
EADB will also contribute additional resources for the technical assistance programme.
The creation of the venture capital fund is one of the short-term measures aimed at transforming EADB that were mooted early this month to position the institution as a leading bank in the region.
The 10-year fund is expected to nurture entrepreneurship and development of SMEs. It will also fund the setting up or expansion of SMEs.
The fund is expected to make investments ranging from $100,000(sh178m) to $2m(sh3.5b) in form of equity and in some cases supplement technical assistance to individual enterprises.
THE East Africa Development Bank (EADB) has received a $473,050 (sh827m) grant from the US trade development agency to support establishment of a venture capital fund in the region.
Venture capital are funds provided by outside investors for financing of new, growing or struggling businesses.
Godfrey Tumusiime, the director general of EADB, signed the grant agreement with US ambassador Steven A. Browning, a statement issued by the US embassy on Thursday stated.
The grant will partially fund a study on the viability of establishing an East African capital venture fund to support small businesses.
The ambassador noted that while there is equity finance available for East Africa, it is not designated for small and medium enterprises (SMEs).
“Current equity financing often seeks investments greater than $2m (sh3.5b), which is higher than those of SMEs and is usually only available from banks that do not provide permanent equity financing,†he noted.
EADB has selected a New York-based financial advisory firm, Selected Credit International Corporation, to provide technical assistance.
EADB will also contribute additional resources for the technical assistance programme.
The creation of the venture capital fund is one of the short-term measures aimed at transforming EADB that were mooted early this month to position the institution as a leading bank in the region.
The 10-year fund is expected to nurture entrepreneurship and development of SMEs. It will also fund the setting up or expansion of SMEs.
The fund is expected to make investments ranging from $100,000(sh178m) to $2m(sh3.5b) in form of equity and in some cases supplement technical assistance to individual enterprises.