Accion, a non-profit organization, has introduced the Accion Digital Transformation Fund, a $152.5 million initiative aimed at offering growth capital and strategic assistance to major financial institutions, particularly microfinance banks, focusing on underserved small businesses in Africa and other areas. The fund’s partners comprise entities like BII, FMO, IDB Invest, IFC, Mastercard, OeEB, and Swedfund.

Abhishek Agrawal, Managing Partner at Accion Digital Transformation Fund, explained the motivation behind the fund, noting the persistent neglect of rural and digitally late customers by traditional financial institutions. “The challenge was twofold,” Agrawal said. “Rural customers or digitally late customers often lack trust in digital technology. Additionally, traditional banks and financial services institutions frequently lack the knowledge or internal support necessary to invest in meaningful digital customer engagement.”

To address these challenges, the fund will support companies that serve micro, small, and medium enterprises (MSMEs) across Africa, South and Southeast Asia, and Latin America. “Our preference in this case would be traditional microfinance, affordable housing companies, and microfinance institutions converting to banks,” Agrawal added.

The fund plans to make equity investments ranging from $12 million to $15 million, supplemented by contributions from its limited partners. The initiative aims to invest in 10 to 12 traditional financial companies, excluding follow-on investments in fintechs previously supported by Accion’s Venture Lab.

Five years ago, Accion launched the Accion Venture Lab, a $23 million fund dedicated to early-stage fintech startups, providing seed funding and strategic support to innovative companies. To date, Accion Venture Lab has funded over 65 seed-stage and Series A startups across more than 30 countries, including notable African investments like Apollo Agriculture in Kenya, Lulalend in South Africa, and Khazna in Egypt.

The Accion Digital Transformation Fund is managed by Accion Impact Management, which also oversees the Accion Venture Lab. Additionally, Accion Emerge, another investment initiative, supports growth-stage companies in embedded finance, agritech, and the future of work.

Through this new fund, Accion aims to bridge the gap in financial inclusion by empowering traditional financial institutions to better serve underserved communities, thereby contributing to the economic development and financial stability of these regions.

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