Kenafric launches Sh1.3 billion fund to back African consumer businesses

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Kenyan consumer goods manufacturer Kenafric Group has launched a $10 million (Sh1.3 billion) fund to help young African businesses expand their operations and reach more customers.

The fund, known as Kenafric Ventures, will invest between $100,000 (about Sh12.9 million) and $2 million (about Sh258 million) in businesses that have already attracted customers and are ready to grow.

The money will target businesses in food and drinks, beauty and personal care, as well as retail platforms that sell products directly to consumers.

The initiative comes as consumer businesses face challenges in raising growth capital and navigating fragmented distribution networks, varying regulatory requirements and uneven infrastructure across the continent.

Kenafric Ventures will target food and beverage, beauty and personal care businesses, as well as consumer-facing retail platforms, direct-to-consumer brands and experiential consumer businesses with sustainable business models.

The fund is managed by S2E Africa, with support from FSD Africa, a financial sector development organisation.

Kenafric Group chief executive Mikul Shah said the company intends to use its nearly four decades of experience in manufacturing and distribution to help young businesses overcome barriers to growth.

“Building a great product is only the beginning. We have spent nearly four decades learning how to get a product from a factory in Nairobi onto shelves in shops across East Africa,” said Shah.

“That knowledge can be as valuable to a young consumer business as the cheque itself. Our ambition is to become the scaling partner of choice for Africa’s most promising consumer businesses.”

The fund will also allow startups to tap into corporate partnerships that could support manufacturing, distribution and entry into new markets, with the possibility of future acquisitions.

S2E Africa founder and chief executive Pulkit Srivastava said corporate investors could offer consumer businesses capabilities that traditional financing alone cannot provide.

“For consumer founders, the right corporate partner brings capabilities that are hard to replicate through capital alone. A relationship that begins with an investment can grow into distribution, manufacturing, expansion into new markets and, potentially, a future acquisition,” he said.

FSD Africa director of early-stage finance Juliet Munro said the initiative could encourage more established African companies to invest directly in growing businesses rather than limiting their support for entrepreneurs to corporate social responsibility programmes.

“Corporate capital in Africa is abundant, but very little of it reaches startups,” Ms Munro said, adding that corporate investment could provide both financing and operational expertise to help businesses grow.