Proparco, the subsidiary of the French Development Agency (AFD) focused on private sector financing, has provided a €1.5 million ($1.7 million) investment guarantee to Teranga Capital. This critical mechanism is designed to cover part of the risks associated with a €3 million investment portfolio dedicated to the growth of Small and Medium-sized Enterprises (SMEs) in Senegal. The guarantee acts as a risk-sharing tool, enabling Teranga Capital to deploy equity investments in high-impact sectors, including agribusiness, energy access, and information and communications technology, by lowering the cost of risk for the investor and allowing the firm to target SMEs that previously struggled to access financing. According to Sadio Dicko, Proparco’s regional director for West Africa, the mechanism is specifically intended to mitigate financial risk and help the fund scale its investments while maintaining prudential safeguards, supporting the broader goal of private sector development across West Africa.
Teranga Capital, which has operated since 2016 as part of the Investisseurs & Partenaires (I&P) network, addresses the structural financing challenge often dubbed the “missing middle.” The fund provides both equity investments and tailored technical support to companies with funding needs up to CFA300 million, a segment severely underserved by commercial banks. This new funding support follows a previous CFA2 billion ($3.55 million) fundraising round in May 2025, which expanded Teranga’s capacity to deploy potential investment tickets up to CFA1 billion per company. The economic imperative is clear: SMEs represent 99.8 percent of enterprises in Senegal, generate 80 percent of jobs, and contribute 36 percent of the national GDP. Despite this, only 9 percent of bank credit is allocated to SMEs, and roughly 60 percent of new enterprises fail in their first year, according to Senegal’s Secretary of State Ibrahima Thiam. Teranga Capital’s enhanced capacity is thus vital for bridging this gap, offering capital and expertise to companies with genuine growth potential. Beyond Senegal, the guarantee also supports Teranga Capital’s regional expansion efforts into Mauritania, Guinea-Bissau, and Cape Verde, complementing its existing operations in Gambia. By backing private investment in high-impact SMEs, Proparco aims to foster a more sustainable and resilient business environment in the region.
