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CDC Group makes investment focused on Sierra Leone

CDC Group has become the first development finance institution to make a private equity investment focused solely on Sierra Leone since the end of the country’s civil war in 2002.

CDC will commit USD5m to Sierra Investment Fund, which will invest in small and medium sized enterprises and start ups in the West African nation.

The fund is managed by locally based manager ManoCap.
 
Over the next few years, the fund hopes to invest between USD20m and USD30m in six to eight investments, with a deal size of between USD1m and USD5m. It will focus on firms that have high growth potential and a proven business model in sectors including agribusiness, tourism, transportation and training.
 
Rod Evison, CDC’s managing director for Africa, says: “Sierra Leone has made significant economic and political progress since the end of the civil war and its democratic government is keen to attract foreign investment. The country has until recently largely been ignored by investors because of its history of violent conflict, its poor infrastructure and a shortage of managerial skills.
 
“Economic growth in Sierra Leone has been strong, averaging about seven per cent annually over the past five years, despite a chronic lack of access to credit. While Sierra Leone has been reliant on donor funding, CDC’s commitment to private sector investment will encourage entrepreneurial talent to establish and grow businesses, which in turn will increase employment and reduce poverty.”
 
A key role for CDC lies in offering the fund ongoing support on environmental, social and governance practices to help the invested businesses introduce better systems and processes to bring them up to international business standards.
 
Richard Laing, CDC’s chief executive, adds: “Our investment in this fund will offer a rare opportunity for SMEs. There is significant untapped potential in many sectors in Sierra Leone where underinvestment and low levels of competition have resulted in limited choice and poor services for its people.”
 
CDC’s investment comes the week before a major Sierra Leone investment and donor conference which takes place in London on 18-19 November. The conference, which will hear from speakers including President Koroma of Sierra Leone, UK Development Minister Gareth Thomas and former UK Prime Minister Tony Blair, aims to attract private sector investment into one of the world’s poorest countries.
 
The UK government’s Department for International Development has a long history of supporting Sierra Leone and is its largest donor, contributing around GBP48m in aid last year.

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