Small and medium-sized enterprises (SMEs) form the backbone of Africa’s economy, providing roughly 80% of jobs and accounting for up to 90% of all businesses, according to the World Bank. With the African workforce projected to grow by 910 million people between 2010 and 2050—830 million of them in Sub-Saharan Africa, the potential for SMEs to thrive has never been greater.
Yet, despite this opportunity, access to capital remains a critical barrier. Many promising businesses struggle to scale, limiting economic growth and job creation. This is where blended finance plays a transformative role. By strategically combining public, private, and philanthropic funds, blended finance mitigates risk and unlocks investment opportunities that traditional financing models often overlook.
Blended finance is a structuring approach that pairs concessional or philanthropic capital with commercial investment to reduce risk and attract private investors to projects that might otherwise be deemed too risky, especially in emerging markets like Africa. While often confused with impact investing, the two are distinct: impact investing intentionally seeks both financial returns and measurable social or environmental impact, whereas blended finance focuses on structuring deals, using tools like first-loss capital, guarantees, or technical assistance—to make investments viable.
The synergy between the two is powerful: blended finance de-risks opportunities, allowing impact investors to fund comfortably. In this way, blended finance acts as a catalyst, channeling resources toward sustainable growth.
Africa faces a persistent funding gap in key sectors such as infrastructure, healthcare, and education. For example, the African Development Bank estimates that the continent requires $170 billion annually just for infrastructure. Traditional financing alone cannot meet this demand, making blended finance essential for driving development.
Unlocking Investment in Priority Sectors
Renewable energy, agriculture, and healthcare are critical for sustainable growth but often remain underfunded due to perceived risks. Blended finance reduces these risks, attracting private investors, boosting job creation, raising productivity, and improving livelihoods.
Reducing Risk for Investors
High perceived risk is a major barrier to investment in Africa. Blended finance addresses this by leveraging concessional funding from development partners or philanthropic groups to absorb potential early losses, giving private investors the confidence to participate.
Mobilizing Local Capital
Africa’s long-term progress depends on mobilizing domestic resources. Blended finance allows local banks, pension funds, and financial institutions to participate in development projects, building trust and strengthening local financial systems.
Supporting Innovation and Growth
Africa is home to groundbreaking solutions in fintech, agri-tech, and other sectors. Blended finance bridges the gap between pilot projects and large-scale operations, helping innovative ideas scale and positioning Africa as a global hub of creativity.
Maximizing Social Impact
Blended finance goes beyond financial returns—it supports measurable social outcomes. Investments are often aligned with the Sustainable Development Goals (SDGs), promoting poverty reduction, gender equality, and environmental sustainability. By combining financial and social impact, blended finance creates greater value for African communities.
As Africa’s economies expand and its young population reshapes the global workforce, the time to act is now. At Oxano Capital, we are committed to leveraging blended finance to empower entrepreneurs, accelerate sustainable growth, and deliver lasting impact across the continent.