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(Ecofin Agency) – Although considered too risky by banks and poorly financed by private equity, companies active in the fashion, film, and photography sectors have great potential. Proparco proposes to provide them with measured financing.
Proparco, the private sector financing arm of the French Development Agency (AFD), announced last February 15 its first financing initiative for the creative and cultural industries in sub-Saharan Africa.
Called Crea Fund, the project, which is scheduled to be launched in the second half of 2022, will provide guarantees for 5 to 6 companies in the fashion, visual arts, film, photography, audiovisual, and video game sectors. The beneficiary companies will be able to obtain up to €1.02 million ($1.16 million) to support their activities and finance their development.
“CREA Fund aims to improve access to finance for CCIs (cultural and creative industries) in part of the ACP region, specifically in Africa and the Caribbean (excluding South Africa, North Africa, and the Pacific),” said Natascha Korvinus, project manager at Proparco. She added that “it (the project, ed) is expected to generate between 380 and 456 direct jobs, and have a knock-on effect towards these CCIs estimated at €22 million.”
In sub-Saharan Africa, CCIs are still perceived as too risky for banks and investors, who are usually reluctant to invest in them. According to Ms. Korvinus, this is due to the size of these companies, which are mainly SMEs.
The initiative will include a guarantee component for an overall amount of €5 million and a technical support component of €1.47 million. It also aims to strengthen the capacities of cultural enterprises and to break some barriers to investment in the sector. In 2019, only 1.1% of the total investments made in African startups went to CCIs. This is about $22 million. In a 2015 study, UNESCO noted that CCIs in Africa and the Middle East account for about 3% of total revenues generated by all businesses, or about $58 billion.
Chamberline Moko
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