News Column

Kikwete Launches Sh480 Billion Equity Fund

April 29, 2014

Orton Kiishweko

PRESIDENT Jakaya Kikwete launched a 300 million-dollar (about 480bn/-) private Equity Fund, the first ever to be based in the country, with a call on Tanzanians to make the most out of it.

The fund, named Mkoba Private Equity Fund, whose headquarters are in Dar es Salaam, seeks to support small and medium enterprises targeting equity investments ranging from $1.0 to $15 million (about 1.6 bn/- to 24 bn/-) .

"Its coming is of special economic significance as it will provide growth capital for high-growth small and medium sized companies," the president said while launching the fund in Dar es Salaam.

Mr Kikwete noted that state agencies have already done a survey with findings indicating that the majority of companies were retaining their earnings and re-investing them.

He further noted that investor confidence has also grown, with foreign direct investments having gone up by 38 per cent. According to the president, FDI flows had reduced globally at a point in time while it had increased in Tanzania.

"The demand for credit among businesses had gone up by 15.3 per cent between 2012 and 2013," he pointed out, while praising the entrance into Tanzania's market of the country's first equity fund.

The 300 million dollars would change the country's financial landscape," he observed.

The president hailed the launching as a good move towards small and medium enterprises that are hungry for capital and finance, adding that this would encourage more funds to come into the market.

"A bulk of our businesses are SMEs and are usually hungry for capital, " he said.

Mr Kikwete told his audience that the environment had improved with the enactment of the Public Private Partnership Policy and Act in 2010, adding that the government was currently working on the existing encumberances recently touched by the Presidential Delivery Bureau lab.

He noted that young people will continue to be the engine of growth, noting that given support, including finances, they would deliver the promise of Tanzania going beyond the objectives of Vision 2025.

"Natural resources alone cannot change the national dream into reality but it is business that would transform the economy," President Kikwete remarked.

Dr Frannie LÉautier, a partner and chief executive officer of the Fund, said that Mkoba will fill the financing gap to the SMEs in the region.

She explained that the Fund responds to the emerging market opportunity in Sub-Saharan Africa, adding that it is designed to fill the gap in the current array of financing options available to thriving African SMEs operating in a number of consumer-demand driven sectors.

The Fund's CEO noted it would offer opportunity for investors to participate in private equity investments in Sub Saharan Africa.

The fund is managed by a credible and disciplined fund manager with unique networks, experience and skills geared to unlocking the potential of African SMEs -- creating sustainable value, stellar returns and real development impact, she added.

During the panel discussion, the Director of Resource Mobilisation and Economic Sectors at the Presidential Delivery Bureau, Mr Lawrence Mafuru, said the fund was a move in the right direction to fund innovation and big visionary ideas.

Mr Mugisha Kamugisha from the Tanzania Revenue Authority (TRA) said the existing policies were pro- business, including an open consultative tax system since 1998 where the private sector and the government sit together to plan tax regime, a situation that increases incentive to investors.

He expressed his belief that the coming of the fund would bring expertise, capital and business growth.

Mkoba was founded in 2013 by partners with deep local roots, diverse experience and profound knowledge of target countries' political and social context, with 70 per cent of companies that manage Mkoba being Tanzanian.

The conference, jointly organised by Mkoba Private Equity Fund and UONGOZI Institute, aims to highlight the challenges and opportunities of investing in Africa and the role that business and entrepreneurs can play to deliver on Africa's promise.

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Source: AllAfrica

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