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FSD Africa has launched a new finance facility aimed at strengthening locally rooted capital providers and improving access to funding for small and growing businesses across Africa.
The Manager Finance Facility (MFF), launched in Nairobi and Lagos, will provide catalytic, returnable capital to Alternative Local Capital Providers (ALCPs) developing new financing models for underserved businesses.
According to a statement issued on Saturday, the initiative is supported by FMO, the Dutch entrepreneurial development bank, and the UK Government’s Foreign, Commonwealth and Development Office (FCDO) Nigeria.
FMO’s contribution is supported through the Investing in Young Businesses in Africa (IYBA) programme, a Team Europe Initiative funded by the European Commission to improve access to finance and strengthen market opportunities for young and early-stage businesses across Africa.
FSD Africa said additional funding partners would be brought into the facility as it expands.
The organisation said small and growing businesses remain important drivers of employment, innovation and sustainable economic development, but continue to encounter significant barriers to accessing finance from conventional financial institutions.
It identified high transaction costs, stringent collateral requirements and perceived risks associated with smaller businesses as some of the factors contributing to the financing gap.
FSD Africa said the problem was compounded by funding constraints facing emerging ALCPs, which are developing alternative ways of financing businesses that traditional lenders often struggle to serve.
The MFF is therefore designed to provide flexible capital that would enable these providers to test innovative financing models, strengthen their operations and build investment track records needed to attract larger investors.
The models being developed by supported providers include revenue-based finance, flexible equity, venture debt, blended finance and local-currency financing structures.
FSD Africa’s Early-Stage Director, Juliet Munro, said the facility was intended to help emerging local capital providers transition from experimentation to scale.
“We need to finance the financiers. Across Africa, we are seeing a new generation of locally rooted capital providers developing innovative ways of financing businesses that traditional financial institutions are not reaching,” Munro said.
She said the providers required capital to demonstrate the viability of their models, strengthen their institutions and establish track records that could attract larger pools of investment.
“The MFF is designed to bridge this gap – helping promising providers move from experimentation towards scale, channelling more – and more appropriate – capital to African businesses in the longer-term,” she added.
The facility will operate through two principal forms of catalytic capital — Piloting Capital and Operational Capital.
Piloting Capital will enable ALCPs to test new financing models, execute early transactions, demonstrate commercial viability and build investment records.
Operational Capital, on the other hand, will support core teams, systems, governance and compliance as providers seek to raise investment capital and move towards sustainable operations.
Beneficiaries will also receive capacity-building and peer-learning support from FSD Africa covering governance, environmental, social and governance (ESG), impact measurement, valuation and fundraising.
The organisation said data and lessons generated through the facility would contribute to market intelligence and evidence on Africa’s alternative local capital sector.
FSD Africa said the MFF was not only focused on individual capital providers but also sought to demonstrate that African-led providers could develop into a credible and investable asset class capable of attracting catalytic, private and institutional capital.
FMO’s Manager, Market Creation Financial Inclusion, Andrew Shaw, said the initiative would support the development of financing solutions tailored to the realities of African businesses.
“Africa’s small and growing businesses need financing solutions that reflect how they operate and grow. By backing locally rooted capital providers with catalytic capital, the Manager Finance Facility will help promising models establish a track record, strengthen their institutions and become ready for larger pools of investment,” Shaw said.
He added that the approach would help create a stronger pipeline of investable businesses and mobilise additional private and institutional capital into underserved markets.
The FCDO Nigeria Investment and Capital Markets Lead, Temilola Akinrinade, said UK support for the Nigeria window was aimed at strengthening local capital providers and attracting additional private investment.
“Unlocking Nigeria’s economic potential requires financing solutions that work for its entrepreneurs and growing businesses. The UK is proud to support the Nigeria window of the Manager Finance Facility which will strengthen locally rooted capital providers, mobilise further private investment and support Nigeria’s sustainable economic transformation,” Akinrinade said.
She added that the initiative was part of the UK’s broader partnership with Nigeria to boost investment, create jobs and promote mutual economic growth.
FSD Africa said the facility would also provide a platform for additional catalytic investors to participate in building Africa’s alternative capital ecosystem for small and growing businesses.
Applications for Nigeria-based ALCPs opened on September 1, 2026, while applications from other eligible African markets opened on September 17.
The facility is particularly targeting emerging capital providers developing innovative investment approaches, including models incorporating climate resilience and gender-smart strategies.
Successful applicants will be assessed on their financing models, proposed use of MFF support, institutional requirements, risk profile and due diligence before approval, contracting and disbursement.
FSD Africa said the ultimate objective was to create a multiplier effect across African financial markets by strengthening local capital providers, widening access to finance, supporting employment and contributing to more resilient and inclusive economies.