FSD Africa has launched the Manager Finance Facility (MFF), a new initiative aimed at strengthening Africa’s emerging generation of alternative local capital providers (ALCPs) and unlocking more appropriate financing for small and growing businesses (SGBs) across the continent.

The facility is being launched with support from FMO, the Dutch entrepreneurial development bank, and the UK Government’s Foreign, Commonwealth and Development Office (FCDO) Nigeria, with additional funding partners expected to join as the initiative expands.

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 strengthen market creation efforts and improve access to finance for young and early-stage businesses across key African markets.

FSD Africa said Africa’s SGBs remain critical drivers of employment, innovation and sustainable economic development but many continue to face limited access to finance because of high transaction costs, rigid collateral requirements and perceptions of risk among traditional financial institutions.

At the same time, emerging ALCPs are developing alternative ways of financing underserved businesses but often face financing constraints of their own.

The MFF is designed to address this gap by providing catalytic, returnable grant capital to ALCPs, enabling them to test and validate innovative financing models, build credible investment track records, strengthen their operations and ultimately become investable at scale.

The providers are developing financing approaches including revenue-based finance, flexible equity, venture debt, blended finance and local-currency structures, which can better reflect the cash-flow and growth realities of African businesses than conventional financing products.

Early-Stage Director, FSD Africa, Juliet Munro, said the initiative was based on the need to “finance the financiers” by supporting locally rooted capital providers that are developing new ways of reaching businesses underserved by traditional financial institutions.

“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.

“But these providers need capital themselves to prove their models, build their institutions and develop the track records that investors require.

“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.”

The facility will provide support through two principal forms of catalytic capital, structured as flexible, returnable capital rather than conventional grants.

The first, Piloting Capital, will enable ALCPs to test innovative financing models, execute early transactions, demonstrate commercial viability and build investment track records needed to attract larger pools of capital.

The second, Operational Capital, will provide working capital to support core teams, systems, governance and compliance as ALCPs raise investment capital and move towards financially sustainable operations.

Beyond capital provision, supported providers will have access to FSD Africa’s wider capacity-strengthening and peer-learning initiatives covering governance, environmental, social and governance (ESG) issues, impact measurement, valuation and fundraising.

Data and knowledge generated through the facility will also contribute to wider market intelligence and evidence on the alternative capital-provider sector.

FSD Africa said the ambition of the MFF extends beyond financing individual ALCPs, as the facility seeks to demonstrate that a diverse generation of African-led providers can develop into a credible and investable asset class capable of attracting catalytic, private and eventually institutional capital.

The launch brings FSD Africa, FMO and FCDO Nigeria together around the objective of strengthening institutions capable of deploying capital to underserved African businesses.

Manager, Market Creation Financial Inclusion, FMO, Andrew Shaw, said SGBs needed financing solutions that reflected how they operated and grew.

“Africa’s small and growing businesses need financing solutions that reflect how they operate and grow,” Shaw said.

“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.

“This is how we can build a stronger pipeline of investable businesses and mobilise more private and institutional capital into underserved African markets.”

Investment & Capital Markets Lead, FCDO Nigeria, Temilola Akinrinade, said the UK was supporting the Nigeria window of the facility as part of its wider partnership with the country.

“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.

“It forms part of UK’s wider partnership with Nigeria to increase investment, create jobs and deliver mutual growth.”

FSD Africa said the MFF would operate as a platform through which additional catalytic investors could participate in building Africa’s alternative SGB capital ecosystem, with further funding partners to be onboarded and announced as the facility develops.

The approach builds on FSD Africa’s experience of using catalytic capital, technical assistance and ecosystem development to test financing models, strengthen local investment capability and crowd additional public, private and development capital into underserved markets.

Applications to the MFF opened for Nigeria-based ALCPs on September 1, 2026, while applications from other eligible African markets opened on September 17.

The facility is particularly interested in emerging ALCPs developing innovative investment models, including approaches incorporating climate resilience and gender-smart strategies.

Successful applicants will undergo an assessment process covering their financing models, proposed use of MFF support, institutional needs, risk assessment and due diligence before approval, contracting and disbursement.

Ultimately, FSD Africa said the MFF aims to create a multiplier effect across Africa’s financial markets through stronger locally based capital providers, more investable businesses, increased employment and more resilient and inclusive economies.

FSD Africa is a specialist development agency working to make finance work for Africa’s future. It works with governments, regulators, investors and financial institutions across more than 30 countries to strengthen markets, shape policy and mobilise capital into opportunities supporting growth, climate resilience, the clean-energy transition and nature-positive development.

FMO is the Dutch entrepreneurial development bank and an impact investor supporting sustainable private-sector growth in developing countries and emerging markets. With a more than 55-year track record, FMO invests in projects and entrepreneurs across Agribusiness, Food & Forestry, Energy and Financial Institutions. It has a total committed portfolio of about €16 billion spanning more than 85 countries.

The FCDO is the UK government department responsible for diplomacy, international development and consular services worldwide. In Nigeria, its programmes are delivered through the British High Commission and support the UK-Nigeria partnership in areas including economic growth, trade and investment, development, security and other shared priorities.