Proparco has provided a €1.5 million ($1.7 million) investment guarantee to Teranga Capital, aimed at supporting the growth of small and medium-sized enterprises (SMEs) in Senegal. The guarantee is designed to cover part of the risks associated with a €3 million portfolio dedicated to Senegalese SMEs, enabling the private equity firm to expand its investments in companies that are in a growth phase and require capital for commercial and operational development.
The mechanism functions as a risk-sharing tool, allowing Teranga Capital to deploy equity investments in sectors with high development impact, including agribusiness, energy access, and information and communications technology.
By lowering the cost of risk for the investor, the guarantee enables the firm to target SMEs that previously faced limited access to financing. In May 2025, Teranga Capital had already strengthened its capacity through a CFA2 billion ($3.55 million) fundraising round, which expanded potential investment tickets to as much as CFA1 billion per company.
Proparco, a subsidiary of the French Development Agency (AFD) focused on private sector financing, said the guarantee increases the firm’s ability to invest in SMEs while supporting the broader goal of private sector development in West Africa. According to Sadio Dicko, Proparco’s regional director for West Africa, the guarantee is intended to mitigate part of the financial risk borne by Teranga Capital, allowing the fund to scale investments while maintaining prudential safeguards.
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Teranga Capital, which has operated since 2016 as part of the Investisseurs & Partenaires (I&P) network, addresses a structural financing gap often referred to as the “missing middle.” The fund provides both equity investments and tailored technical support for companies with funding needs up to CFA300 million, a segment underserved by commercial banks. Its approach targets businesses that have the potential to grow and contribute to local employment and economic output.
SMEs form a critical part of Senegal’s economy, representing 99.8 percent of enterprises, generating 80 percent of jobs, and contributing 36 percent of GDP. Despite their economic importance, access to finance remains limited: only 9 percent of bank credit is allocated to SMEs, and approximately 60 percent of new enterprises fail within their first year, according to Senegal’s Secretary of State Ibrahima Thiam in July 2025. Teranga Capital’s expanded investment capacity is therefore intended to help reduce these constraints, offering capital and expertise to companies with growth potential.
The guarantee also supports Teranga Capital’s regional expansion into Mauritania, Guinea-Bissau, and Cape Verde, complementing its existing operations in Senegal and Gambia. The firm’s broader investment approach is aligned with efforts to strengthen the resilience of local economic ecosystems, particularly in sectors that can drive inclusive growth, create jobs, and improve access to essential services.
By backing private investment in high-impact SMEs, Proparco aims to foster a more sustainable business environment in Senegal and the region. The guarantee provides financial stability for investors while enabling small companies to scale operations, navigate market challenges, and meet growing local demand. In a context where SMEs face high operational and financial barriers, such mechanisms are essential for bridging gaps in financing and supporting economic diversification.
With this intervention, Teranga Capital is positioned to expand both the scale and scope of its portfolio, targeting companies that can contribute to long-term economic growth and resilience. The partnership with Proparco reflects an ongoing strategy to strengthen West Africa’s SME ecosystem through targeted financing, risk-sharing mechanisms, and capacity-building support.
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