Verdant Capital doubles down on MSME growth with $13.5m bet on LOLC Africa

Onome Amuge

Verdant Capital, through its Verdant Capital Hybrid Fund, has injected an additional $4.5 million into LOLC Africa Singapore Limited, bringing its total investment in the pan-African microfinance operator to $13.5 million.

This follow-on investment builds upon an initial $9 million commitment made in June 2023. Both funding tranches, structured as holding company loans, are designated to support and expand the lending activities of LOLC Africa’s subsidiaries across ten African nations: Zambia, Rwanda, Egypt, Kenya, Tanzania, Nigeria, Malawi, Zimbabwe, Ghana, and the Democratic Republic of Congo.

LOLC, a Sri Lankan group established in 1980, entered the African market in 2018 and subsequently secured its first external investment from the Verdant Capital Hybrid Fund. 

This funding is instrumental in driving the expansion of LOLC Africa’s lending activities targeted at micro, small, and medium enterprises (MSMEs) continent-wide. Verdant Capital is also providing non-financial support through its Technical Assistance Facility (TAF), which has funded social performance and client protection assessments for LOLC’s Zambian and Egyptian operations, indicating potential for further technical collaboration.

Widely regarded as a top-tier global microfinance group, LOLC’s operational focus attracted the Verdant Capital Hybrid Fund, fitting the Fund’s criteria for backing sector leaders. LOLC targets the “bottom of the pyramid” segment, working to enhance financial inclusion through expanded access to MSME loans and deposit-taking services.

The investment proceeds are primarily allocated to strengtening and expanding the lending activities, particularly for MSMEs, within LOLC Africa’s existing network of subsidiaries across the continent. 

According to the company, the funds will also serve to strengthen the capital adequacy of current operations and potentially finance the establishment of new subsidiaries in Africa. 

LOLC frames its expansion within the MSME sector as pursuing both commercial objectives and a commitment to sustainable, socially responsible growth, aiming to deliver tangible benefits like enhanced financial inclusion, job creation, and income generation to underserved communities at the “bottom-of-the-pyramid,” thereby contributing to broader economic development.