Selection Senegal
Teranga Capital
Teranga Capital is the first impact investment fund in Senegal and The Gambia and is entirely dedicated to financing and supporting start-ups and small and medium-sized enterprises (SMEs) in Sub-Saharan Africa. At a time when Senegal is facing acute challenges in financing SMEs and start-ups, and young people are tirelessly seeking employment opportunities, Teranga Capital delivers impactful funding to companies while creating employment opportunities.
The Problem
Senegal is one of the youngest countries in the world, with a growing number of young people entering the labour market each year. Despite this, the country is unable to supply enough jobs to match the increasing demand. Currently, Senegal can only match approximately 10% of the demand, making youth unemployment a major issue in the country.
Another issue in the Senegalese labour market is the quality of the jobs offered. Majority of the working population is employed in informal and precarious jobs, while only less than 5% work in formal private sector. To create more quality jobs, Senegal needs to invest in digitalisation, in both formal and informal sectors. Currently, large companies cannot access digital tools corresponding to local needs due to a lack of start-ups that are able to produce local software. At the same time, most coders locate elsewhere due to expensive living costs and low compensation for jobs offered. Senegal needs start-ups with qualified staff, but the low level of funding prevents them from flourishing.
If these start-ups receive sufficient funding they will start growing, generating revenues and profitability. Financial performance will induce more jobs, high-end services and these startups will be able to produce software used by large companies, which will also result in youth job creation. Despite having a strong impact potential, investors view digital and green sector as high-risk.
Finally, Senegalese youth are concerned on climate-change and are eager to do something about it. Senegal counts 17 000 associations run by people aged under 35 and mostly women. This stresses the interest for green and lucrative alternatives to create positive impact within their communities.
The Solution
The objective of this project by Teranga Capital is to deliver impactful funding to companies while simultaneously creating employment opportunities for youth that are in line with their aspirations. It will address investments in underserved industries such as digital and green. The project success will reassure Teranga Capital’s governance in the profitability of these industries and allow the fund to invest more on these underserved segments in the future.
The project will create new jobs through investment in start-ups in technology and sustainable development. More specifically this project will invest in three new companies in digital and green sector and create 360 direct and indirect jobs of which at least 40% will be for women.
Job quality will be improved through benefits such as offering all employees insurance policies. The project will also provide efficient training and a decent salary for all. Teranga Capital has many agricultural businesses in their portfolio, and by proving loans for their partners, such as small farmers and shop owners, this project can improve the jobs of 660 small producers and 60 small shop owners.
Finally, youth will be matched with digital and green companies that already exist in Teranga Capital portfolio, thus creating more youth employment in their areas of interest.
Additionality
The participation of CFYE is critical to this project. Without these funds Teranga Capital will never be able to make numerous investments in tech and green companies. The technical assistance from CFYE will also help Teranga Capital to monitor impacts on gender equality. There is a need for support to measure and track the progress of each activity. A consultant will help measure jobs created and improved in the informal sector and assess effective impacts on youth and women through indirect jobs.
