Swedfund Invests $15 Million in TLG II to Support SME Growth and Job Creation in Africa

Swedfund, the Swedish government’s development finance institution, has announced a $15 million investment in the TLG Africa Growth Impact Fund II (TLG II), a strategic move aimed at strengthening the small and medium-sized enterprise (SME) sector across Africa. The investment is designed to improve access to tailored financial solutions for SMEs, particularly those that are viable but temporarily distressed, helping to protect existing jobs and foster the creation of new employment opportunities.

SMEs play a critical role in Africa’s economy, employing about 80% of the continent’s workforce. These businesses are responsible for creating nine out of ten new jobs, making them key drivers of economic growth and poverty reduction. However, many SMEs face challenges in accessing debt financing that meets their specific needs. Traditional financial institutions often lack the flexibility to provide loans with appropriate terms, particularly for companies undergoing temporary financial strain. With its investment in TLG II, Swedfund aims to close this financing gap. According to Jakob Larsson, Senior Investment Manager at Swedfund, “To protect existing jobs and to create new ones is crucial for poverty reduction. For African SMEs to survive and grow, it is important that there is a functioning market with the right, fit-for-purpose financial services addressing diverse local challenges. Through this investment, we help achieve that, generating long-term impact.”

TLG II brings an innovative approach to the African debt financing landscape. The fund offers a blend of flexible, long-term loans, equity participation, and bank guarantees. This structure allows TLG to design customized credit solutions for SMEs, including lower interest rates and extended loan tenors. Such flexibility enables businesses that are struggling in the short term to recover and grow sustainably. This investment is part of a broader $75 million capital raise for the fund, which also includes contributions from other major development finance institutions such as Norfund (Norway), the International Finance Corporation (IFC), and BPI France. Swedfund’s latest investment builds upon its earlier relationship with TLG, having previously committed funds to the TLG Credit Opportunities Fund in 2018. By backing TLG II, Swedfund reinforces its commitment to sustainable development through job creation, private sector support, and financial inclusion. The focus on SMEs ensures that capital reaches the most impactful segment of the African economy, empowering businesses to scale and innovate despite market volatility or temporary setbacks.