British fund of funds CDC Group has become the first development finance institution to invest in Sierra Leone since the end of the country’s civil war in 2002.
CDC, which is a private equity fund of funds vehicle owned by the British government, has committed $5 million to the Sierra Investment Fund (SIF).
SIF is managed by Manocap, a manager based in the nation’s capital, Freetown, and invests in small- and medium-sized businesses and start-ups.
Speaking to delegates at the PEI Africa Forum in June, founder and director of Tom Cairnes stressed the importance of the “first-mover advantage” that can be seized when operating in a frontier market such as Sierra Leone.
“First-mover advantage – in reasonably large markets especially – gets you to the position where you can take 70 or 80 percent of the market,” he said.
Over the next few years, SIF hopes to invest between $20 million and $30 million in six to eight investments in sectors including agribusiness, tourism, transportation and training.
“The country has until recently largely been ignored by investors because of its history of violent conflict, its poor infrastructure and a shortage of managerial skills,” said CDC’s head of Africa, Rod Evison, in a statement.
Evison added that over the last five years economic growth in the country had averaged about 7 percent annually, despite “a chronic lack of credit”.