In a significant move to support the growth of small and medium-sized enterprises (SMEs) in South Africa, Proparco has announced a €2 million ARIZ PRIME portfolio guarantee for the ASISA Enterprise and Supplier Development (ESD) Fund. Managed by Edge Growth Ventures, a subsidiary of the Edge Growth Group, the ASISA ESD Fund aims to empower historically disadvantaged entrepreneurs and foster sustainable economic development across the region.

Background of the ASISA ESD Fund

The ASISA ESD Fund was established by the Association for Savings and Investment South Africa (ASISA) in collaboration with Edge Growth. Founded in 2008, ASISA serves as a representative body for the savings, investment, and insurance sectors in South Africa, sectors that significantly contribute to the nation's economy. The ESD Fund specifically targets SMEs owned by individuals from historically marginalized backgrounds, focusing on those with the potential to deliver positive social and environmental impacts.

The fund operates with the objective of creating jobs and driving transformation in the economy. It seeks to align its goals with the United Nations Sustainable Development Goals (SDGs), underscoring a commitment to fostering a more equitable economic landscape. The investment from Proparco serves as a risk-sharing mechanism that will facilitate the ASISA ESD Fund's capability to invest in SMEs during their growth phases, providing essential business development support and long-term financial backing, whether through equity or quasi-equity investments.

Expertise and Support from Edge Growth Ventures

Edge Growth Ventures brings extensive experience in managing enterprise and supplier development funds, with over €115 million in capital under its management. Since its inception in 2007, Edge Growth has been pivotal in addressing the primary constraints that SMEs face: access to finance, market access, and skill development. The firm’s expertise will be crucial in ensuring that the funds are allocated effectively, maximizing the impact on South Africa’s entrepreneurial ecosystem.

Fay Mukaddam, Chairperson of the ASISA ESD Funds, emphasized the global importance of social responsibility, stating, "The world has increasingly moved closer together, and tangible commitment to social responsibility remains a global indicator of effective and ethical corporate leadership." She highlighted the fund's mission to actively support high-impact black-owned SMEs, thereby contributing to job creation and overall economic transformation.

Proparco's Strategic Involvement

Proparco, a subsidiary of the French Development Agency (AFD), aims to facilitate investments that reduce socio-economic inequalities. Steven Gardon, Proparco's Regional Director for Southern Africa and the Indian Ocean, expressed enthusiasm about the renewed partnership with the ASISA ESD Fund, which follows an initial collaboration in 2019. Gardon noted, "Through the deployment of the ARIZ PRIME guarantee, Proparco facilitates investments in high-impact SMEs, and thus contributes to one of its strategic objectives of reducing socio-economic inequalities."

The deployment of the ARIZ PRIME guarantee will not only bolster the ASISA ESD Fund's capabilities but will also ensure that investments are directed towards businesses that exhibit the potential for significant social impact. This strategic partnership aligns with Proparco's mission of promoting inclusive economic development and fostering an environment conducive to sustainable business practices.

Addressing Historical Disparities

By focusing on historically disadvantaged entrepreneurs, the ASISA ESD Fund plays a crucial role in addressing the economic disparities that persist in South Africa. The fund seeks to create a supportive ecosystem that empowers these entrepreneurs to succeed and thrive. The collaboration with Proparco further enhances this mission, providing the necessary financial backing and expertise to foster growth and innovation in the SME sector.

The partnership between Proparco and the ASISA ESD Fund represents a proactive approach to fostering economic growth and social development in South Africa. With a focus on supporting high-impact SMEs, this collaboration not only enhances financial accessibility for marginalized entrepreneurs but also contributes to a more inclusive and equitable economic future. By facilitating investments in businesses that prioritize social value and sustainability, Proparco and the ASISA ESD Fund are paving the way for a brighter, more prosperous South Africa.