REGIONAL INDIC ATIVE STRATEGIC DEVELOPMENT PL AN 8 1 provide one example of transnational private equity funds • Government loans (low interest facilities) with a mandate to invest in infrastructure in developing • Loan guarantee facilities (guarantee of institutional countries or emerging market economies. a) Private Equity and Venture Capital Funds loans) • The main forms of venture capital finance are Equity guarantee facilities (guarantee of institutional equity) business angels, entrepreneurs' own sources, friends • Tax incentives (tax credit) and relatives, corporate venture finance and • Investor regulations (institutional investors) government sources. b) Infrastructure Funds Business angels: Business angel capital is equity There are various infrastructure funds sponsored by investment in new and unquoted businesses by international development agencies and regional individuals acting on their own or as part of informal institutions that are a potential source of finance for syndicates. the implementation of the RISDP. These funds make Business angel capital complements the venture capital industry by providing smaller amounts of equity finance capital at the earlier stages than most venture infrastructure projects. Examples include: capital are able to invest. This form of capital takes the • or debt investments particularly in Comafin Fund investee business to the point at which it is attractive to a The Comafin Fund is an initiative by Commonwealth venture capital firm. Creation and strengthening of Heads of Government to create a new source of risk business angel networks is an important step in the capital for commercial and infrastructure investment development of a venture capital industry. in Africa. This investment was designed to improve Corporate venturing: Corporate venturing is a new but capital market development in the region; give increasingly important phenomenon in venture capital practical support to regional integration; and facilitate where public or private firms provide equity investment in new businesses outside their activities and spinout new direct foreign investment flows into the region. • AIG Africa Infrastructure Fund (AAIF) independent firms. It is one of the useful growth tools for This fund involves the setting up of a Pan-African growth oriented companies and has a potential to equity fund for infrastructure investment, with a invigorate economic growth. Private corporate venturing strong SADC focus. It will invest in equity and quasi- responds to market forces, while public corporate equity and convertible debt instruments in private venturing may require government direction and support. sector infrastructure projects. The Fund has a • Corporate venture capital may involve passive mandate to invest in continental Africa, however its investment in technologies and business activities focus at present is on those countries where outside the venturing firm to monitor growth ahead of economic reforms have been implemented, or are acquisition. being implemented and where there is a high level of The second option of corporate venturing entails political stability, good economic growth prospects, investing in ideas that spring from within the and where the necessary mechanisms exist to venturing firm. Such investments are active and facilitate the Fund's exit strategy. • aimed at building new, independent businesses that • Emerging Africa Infrastructure Fund (EAIF) relate back to the core business of the venturing firm. Emerging Africa is a recently established facility Government venturing: The traditional role of govern- originally proposed by the UK's Department for ment in promoting venture capital has been indirect International Development (DFID). Emerging Africa through creating the fiscal and legal framework to assist will make long-term debt financing available for the market channel resources to new and innovative private sector infrastructure companies in Sub- enterprises, that is establishment of an environment Saharan Africa. It is managed by Standard Infra- conducive for venture capital development. In the new structure Fund Managers (Africa) Limited, a Standard role government is a venture capitalist itself by providing Bank Group, Netherlands Development Finance direct supply of risk capital in the form of: Company and Emerging Market Partnership joint • venture. Government equity investment (matching funds)