A Challenge to Business: Unlock African Potential

The UK today became one of the first donors to get behind a new fund which will support businesses to help people in Africa become economically active.

Leader of the House of Lords, Baroness Amos, announced that the UK will provide $20 million over three years to the Africa Enterprise Challenge Fund (AECF).

The AECF will provide match-funding for business innovations that improve the economic prospects of the most excluded in Africa, as employees, entrepreneurs or consumers.

Speaking at the World Economic Forum on Africa in Cape Town, South Africa, Baroness Amos said:

"Business development is essential in the fight against poverty. Last week the G8 reaffirmed the importance of this in stimulating economic growth in developing countries and encouraged businesses to improve the level of sustainable investment in those countries.

"The Africa Enterprise Challenge Fund will help to deliver this. It encourages innovation in trade and commerce to help those who are most excluded enter the world of business. The Fund will become operational in 2008 and I hope that businesses will see its potential and use it to stimulate growth."

Other donors who have already committed to support the Africa Enterprise Challenge Fund include the African Development Bank, the Consultative Group to Assist the Poor (CGAP) and the International Fund for Agricultural Development (IFAD).

The AECF will become operational in early 2008. It will offer grants of up to $1.5 million to businesses that provide innovative proposals for improving people's chances to take part in economic activity, particularly in the areas of finance and agriculture. Seventy per cent of Africans work in agriculture.

An example of the type of project that might receive funding from the AECF is a mobile phone system that is helping Kenyans without bank accounts to transfer money.

The M-Pesa system run by Safaricom, and partly funded by the UK's Department for International Development, allows users to borrow, transfer and make payments using text messages. Customers visit one of a network of shops, pay a cash deposit, and then 'text' the sum to the recipient - who uses a secure pin number to pick up the funds at another shop.

The number of mobile phone users in Kenya - more than 6.5 million - is far greater than the number of people with bank accounts so the system provides an affordable financial service to many who have no other way to access such services.

Notes to editors:

1. The Commission for Africa's report in 2005 recommended that more needed to be done to harness the private sector's resources to promote innovation and access to markets for the poor. At the Gleneagles summit in 2005, the G8 made a commitment to do this. Two years on from the Gleneagles, lives are being changed for the better.

See www.dfid.gov.uk/g8 for further details

2. Valerie Amos (Rt Hon Baroness Amos of Brondesbury) was appointed Leader of the House of Lords and Lord President of the Council in October 2003. As well as her duties as Leader and Lord President she continues to speak on international development issues for the government in the House of Lords. Baroness Amos was Secretary of State at the Department for International Development from 12 May 2003 to 5 October 2003.

3. For more details on the Africa Enterprise Challenge Fund, go to http://www.africaenterprisechallengefund.org