SENEGAL – Fonds Souverain d’Investissements Stratégiques S.A. (FONSIS) the Senegalese Sovereign Wealth Fund has launched Oyass Capital in partnership with KfW, the German Development Bank.
Oyass capital is an investment fund which, through its own and risky financing, intends to provide technical assistance to local SMEs.
The Fund is initially capitalised with EUR30 million (US$35.18m) investment from FONSIS and is anticipated to be co-financed by the World Bank, subject to due diligence and further evolution of the Fund’s strategy and capital structure.
Oyass will be a single country closed-end fund with a final target size of EUR75-100 million (US$87.96- 117.28m) providing mezzanine and equity financing to SMEs in Senegal alongside technical assistance.
FONSIS and KfW are seeking a Fund Manager to finalise the design, fundraising and management of Oyass and its technical assistance facility. The Fund Manager will be selected through a tender procedure. On this part, they welcome all interested parties to apply to the prequalification selection.
The whole issue of the survival of SMEs in Senegal who donate in a degrading cosmos, linked to information asymmetry, the absence of technical supervision and a financial ecosystem capable of responding to their difficulties.
According to figures from the Private Sector Support Directorate (Dasp), SMEs represent 90% of private companies in Senegal but only contribute 20% to the Gross Domestic Product (GDP) and only represent 30% of jobs created.
It emerges from this study that the very short average life expectancy of Senegalese SMEs is largely due to the lack of solid structures that can support them in developing to become large, conquering companies.
According to GIZ, Small and medium-sized enterprises (SMEs) are a key driver of growth in the Senegalese economy. However, these enterprises do not yet play a key role in driving economic development.
Although 300,000 SMEs account for 90% of businesses in Senegal, they only account for 42% of total employment and just 33% of total value added. The private sector and SMEs must overcome a number of obstacles.
An investment-hostile business climate leads to low investment, especially in the informal economy. It is also difficult to access needs-oriented (micro) financial services and chambers of commerce and crafts lack the required capacities to play an active role in driving the economy.