According to information from Jeune Afrique, the Burkinabe executive approved the creation of an annual fund of two billion CFA francs over five years to finance start-ups in the country. He hopes to boost innovation and ultimately create around 500 small and medium-sized businesses.
It is a trial balloon that the government of Prime Minister Paul Kaba Thiéba is launching that could revolutionize the access of start-ups to financial resources. From now on, the executive will devote two billion CFA francs per year to financing start-ups.
In total, Burkina Start Up, as this fund which will be launched in May is nicknamed, will provide over the next five years a contribution of 10 billion CFA francs (15.2 million euros) to facilitate the outbreak of at least 500 small and medium enterprises. The program targets all sectors of activity, with particular attention paid to innovation and growth potential.
The government initiative will attempt to respond to one of the major challenges facing African entrepreneurs: access to finance at an early stage of development, and venture capital inflows still very infrequent on the continent. If the initiative of the government of Ouagadougou proves successful, it could reduce the failure rate, very important, of Burkinabè entrepreneurs.
“The funding will concern businesses in the process of being created or those already in activity for less than five years with the aim of consolidating their growth,” explains Blaise Parfait Kemdé, director of the Burkinabè Fund for Economic and Social Development (FBDES), to Jeune Afrique. public agency to which the management of Burkina Start Up will be entrusted.
Application via an internet platform
According to our information, an internet platform will be opened to choose the first 100 beneficiaries. “Recruitment will take the form of a competition on the platform where each candidate can submit their project. A committee of experts will select the best candidates, who will have to defend their project in front of it, ”explains Blaise Parfait Kemdé.
The FBDES targets two funding methods to support start-ups: either it will do so via an equity investment that allows it to enter the capital with a minority share not exceeding 10% of the total shares – in this case, the Fund will invest an amount between 2 and 40 million CFA F per company – or it will intervene through loans. “For example, we are targeting equipment expenses, and our funding ceiling is 10 million FCFA [per company, note]”, explains the economist by training, also a tax inspector.
Public equity investment mechanism
Endowed with 5 billion FCFA this year, the FBDES has been acting as a public mechanism for financing small businesses for the past thirty years. It is present at the round table of several companies – public and private – such as the Textile Fiber Company (Sofitex), the Commercial Bank of Burkina or the Banque de l’Habitat. The Fund estimates the total volume of its equity investments at more than 16 billion CFA francs. And claims 4.5 billion injected for the development of 150 SMEs.