A new resource, published today (13/06/2023) by Invest Salone, aims to accelerate investment into the Sierra Leonean market by providing impact investors with practical guidance on how to support small and medium-sized enterprises (SMEs) to become more investment ready.
The Sierra Leonean Investment-Readiness Insights Report was prepared for Invest Salone, the UK Government-funded private sector development initiative, by Acumen, as part of their partnership through Invest Salone’s PROSPER Salone scheme. It indicates that helping up-and-coming businesses address key legal, financial and operational gaps in their business models could make them more attractive to impact and traditional investors.
The report is based on Acumen’s experience as a non-profit venture capital fund operating in Sierra Leone, and presents key findings and recommendations from its 2022 investment-readiness bootcamp for six promising Sierra Leonean SMEs.
The bootcamp process, which was also supported by PROSPER Salone, commenced with a due diligence assessment of the six participating firms, after which Acumen worked with each company’s management team to develop a workplan to address the challenges and barriers identified.
One of the participating firms – the Water and Sanitation Promotion Company (WaSAP) – has since diversified its customer base and increased its annual revenue from US$129,000 to over US$500,000. WaSAP has also raised an initial US$14,000 in investment and is now speaking to several other investors.
Yahya Kargo, General Manager of WaSAP, says the bootcamp helped the company improve its internal processes and gain crucial insights on key performance metrics and how they affect operations, profitability and sustainability. “It was beneficial across the board, however, one of the main highlights was going through the process of due diligence, which highlighted lapses in our filings with the Corporate Affairs Commission that would have deterred investors. These are now fully up-to-date and we have organisational processes and systems to ensure we remain compliant.”
To complement the report, Acumen has also compiled an investment toolkit to guide SMEs, accelerators, incubators, impact investors and early-stage companies keen to maximise investments into Sierra Leone. The toolkit identifies common gaps among Sierra Leonean SMEs seeking investment and offers recommendations and a list of available resources to help companies address these gaps.
Adekemi Ajayi, Director, Acumen West Africa, says that without a pipeline of investment-ready projects, attracting and channelling investment into Sierra Leone will continue to be a serious challenge. “We hope that impact investors and grant providers with a commitment to identifying and supporting promising businesses in Sierra Leone can learn from our experience in developing a pipeline of investment-ready companies in Sierra Leone, ultimately catalysing more investment into this emerging market to fully unlock its potential.”
Pooja Melwani works with Invest Salone to link investors and firms to encourage and facilitate investment in Sierra Leone. She says that tools like PROSPER Salone which help de-risk investment into Sierra Leone are an essential part of the process. “Capital flows to frontier markets like Sierra Leone, are often constrained by investors’ unfavourable perceptions of risk. The PROSPER Salone partnership grant helped Acumen provide pre-investment support catalytic to transforming these companies to become investment-ready. The lessons from this experience, which also serve as a recommended best-fit due-diligence framework, are now available to other investors through the new Investment Readiness Insights Report.”
The Sierra Leonean Investment-Readiness Insights Report is available to download here.
Acumen is a global leader in social and economic transformation, focused on solving problems of poverty and building a world based on dignity. Founded in 2001 by Jacqueline Novogratz, Acumen has raised and invested over $154 million of Patient Capital in 167 early-stage, social enterprises that have impacted the lives of more than 500 million people living in poverty in Africa, Latin America, South Asia, and the United States. To support growth in the impact investing sector that followed, Acumen used its 20 years of learning and experience to create an online school of social change called Acumen Academy. This university re-imagined has over 1.2 million sign ups and a community of over 1200 “Foundry members” who are actively accompanied and supported on their entrepreneurial journey. As social enterprises scale, Acumen’s for-profit investment funds (managed under Acumen Capital Partners) provide access to capital that can unlock social and environmental impact at scale, transforming markets and social system to provide pathways out of poverty.