By NKOLE CHITALA
THE first ever private sector venture capital fund has been set up in Zambia, with an initial investment of US$10 million (K54 million) which is expected to create hundreds of jobs and help to reduce poverty in Zambia, the Daily Mail has learnt.
The ambitious project, intended especially for small-scale businesses, is the brainchild of Meanwood Properties Limited and will be called Meanwood Venture Capital after being incorporated on May 30, 2013.
It will provide private equity, which is often hard to access from commercial banks because of high interest rates.
Company managing director Sungani Mwale said in Lusaka yesterday that while the initial capital is US$10 million, the target is to grow the fund to US$30 million (more than K150 million), seek boosting local shareholding among Zambians and also benefit Zambians in the Diaspora in the next two years.
“The investment is important and we are hoping to grow the fund to over US$30 million as the US$10 million is just 30 percent of the total capital,” Mr Mwale said.
“Within the next two years, the fund will grow and be opened up to other Zambians locally and abroad to take up shareholding in the firm,’’ Mr Mwale said.
He said between 30 and 40 people are expected to be employed initially and more later as the company expands.
The firm will help SMEs which lack access to finance from banks or those which have already accessed financing through the banks and are looking for more capital.
It will also be dealing with start-up SMEs and existing companies that will be assessed on a case-by- case basis or through risk assessment.
Mr Mwale said the criterion is difficult to determine as the firm will be dealing with different sectors, hence the need to conduct risk assessment.
“We will assess on a case-by-case basis and if it is a business that has a lot of opportunities for growth, we may get into that business, take equity into that business or help to restructure their debt,’’ he said.
The firm is targeting as many entrepreneurs as the fund will allow countrywide, particularly those which will add value to the economy in processing, manufacturing, information and communication technology, tourism, agro business and energy.
Mr Mwale said a venture capital fund is not like a typical financial institution where firms borrow money, but deals mainly with equity or partnerships.
“So if you are an SME and you want finance in your institution, you don’t need to borrow from the bank….all you can do is approach us and get some partnership or equity instead of a loan,’’ he said.
The company will participate as a shareholder for a particular period, and thereafter, it will place its investment in another firm.
Mr Mwale said he is optimistic that the fund will succeed as it is “very attractive” for the local market.
He also urged SMEs that are short of money to allow the firm to participate as a shareholder to grow their businesses.
Mr Mwale advised firms to use corporate advisory services as the firm will provide restructuring support to firms with a perfect business model and products but need help in managing the business.
The firm will also guarantee loans with the bank by underwriting the risk for the firm which wants to access a loan from a bank but has no collateral.
“This will benefit SMEs, Government through economic growth and other players such as banks. So, we are providing a whole package,”
By NKOLE CHITALA