Financing fashion businesses in Africa

We know, looking for financial resources, is usually a daunting task and one of the main priorities for many entrepreneurs and businesses. The situation is even harder in some African countries and when we focus on the textile and apparel sector. “Getting credit” is the Doing Business indicator that presents the worse results in Sub-Saharan Africa (SSA), even behind “Getting electricity”. 41% of women-owned small and medium businesses interviewed in SSA for a World Bank study answered that “access to finance” was a major constraint (vs 36% of men-owned SMEs).

Through the Fashionomics Africa initiative, the African Development Bank, wants to support the fashion sector in Africa, and this logically includes easing access to finance. The Bank in itself lends to other commercial banks and finances large investment projects. As part of the Fashionomics Africa initiative, the platform will collect useful information relative to financing your business. Additionally, the Bank is defining the final configuration of the Fashionomics Africa support with a long-term view on supporting the sector and developing partnerships with other financial providers.

Source: D5.2 Best-Practice Guide for Crowdfunding. Project: Collective enHanced Environment for Social Tasks (CHES).
Taken from: Hemer, J. (2011): A snapshot on crowdfunding. Working Papers, Firms and Region, Nr. R2/2011, Fraunhofer ISI

If you are considering external financing for your business venture, we suggest that you register as a user in the Fashionomics Africa platform and publish your needs in the “Business Opportunities” section. Our team will help you in case you need some support (write to

Financial alternatives to banks

Some useful definitions:

  • Seed capital
    The initial capital used to start a business. Seed capital often comes from the company founders' personal assets or from friends and family. The amount of money is usually relatively small because the business is still in the idea or conceptual stage.
  • Start-up
    A startup is a company that is in the first stage of its operations.
  • Business angel or angel investor
    Affluent individuals who inject capital for startups in exchange for ownership equity or convertible debt. Some angel investors invest through crowdfunding platforms online or build angel investor networks to pool in capital.
  • Venture capital
    Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money.
Venture capital and Business angels

Traditional venture capital is structured through “Private Equity” firms. AVCA is the African Private Equity and Venture Capital Association:

Consult 2016 figures for Private Equity in Africa in this interesting report by EY and AVCA

The African Development Bank invest in the sector through investments in some of these Private Equity firms, like Africinvest, a Tunisian PE house with investments in retail companies, such as Maille Club Group (Algeria, Tunisia), Folly Fashion (Marwa - Morocco) or SIL (Societé Industrielle de Lingerie - Tunisia).

To attract this source of capital the fashion businesses need:

  • • An attractive industry
  • • Certain size
  • • A strong team of founders
  • • Good growth perspectives
  • • A clear exit strategy (in 3-7 years)
  • • Attractive financial returns (>30% return on equity)
Micro finance

Through our research we identified that only 5% of the fashion SMEs in the two pilot countries (Côte d’Ivoire and Ethiopia) are getting financing through micro credits. In some African countries the micro finance institutions are well developed. This source of capital can be interesting for certain entrepreneurs and SMEs in the fashion industry but be aware that (based on our research):

  • • Interest rates can be very high (even higher than commercial banks)
  • • They will ask you for guarantees (physical or financial assets)
  • • The documentation is usually as demanding as with banks
  • • Amounts of loans are small (usually USD 500-5,000)

The Fashionomics Africa feasibility report covered the analysis of the potential of crowdfunding for the fashion industry in Africa.

The figure below describes the main crowdfunding platforms globally:

Main crowdfunding platforms

  • There are over 1,500 different corwdfunding platforms globally
  • Most of them are for general purposes niche crowdfunding is rapidly growing
  • For crowdinvesting, two models are developed:
    • "All-Or-Nothing" (AON):
      Entrepeneurial firms set as a capital-raising goal below which the entrepeneruial form does not keep any of the pledged funds, and the crowd does not get any reward.
    • "Keep-It-All" (KIA):
      The entrepeneurial firm can keep the entire pledged amount, albeit at higher fees.
  • Crowfunding is not developed in Africa yet. In our interviews we detected that crowdfunding was not known
  • The leading crowdfunding platform (based on web traffic: 775 ranking Alexa)
  • AON campaigns
  • Success rate: 43.4% (for fashion projects: 29.2%)
  • Stricter acceptance rules then other platforms
  • Second highest tracking crowdfunding platform based on web traffic
  • It allows AON or KIA campaigns (KIA campaigns have higher transaction fees)
  • Success rate: less than 10% or projects reached 100% of goals
  • This platform is best for artistic and idea based projects
  • Partnership with A&E TV network
  • 4% commission fee + 4% credit card handling fee if the goal is reached (8+4% if not)
  • Success rate: 11%
  • Focused on US, Canada, Australia, New Zealand and Netherlands
  • This platform allows you to receive donations for anything you want
  • AON or KIA allowed
Source: Companies websites; D5.2 Best Practice Guide for Crowdfunding; Project collective enhanced environment for social Tasks (CHES); Crowdfounding Your Fashion Business Resource Guide and Workbook for Emerging Fashion Brands (published by Startup Fashion and Luevo)

Additionally, there have been some crowdfunding platforms focused on African countries. Consult the list below:

Africa-focused crowdfunding platforms

Crowfunding website
Based In...
South Africa
Uprise Africa is South Africa’s only equity crowdfunding platform for entrepreneurs and retail investors
Afrikstart is an online crowdfunding platform that provides funding, training and mentorship to entrepreneurs in Sub-Saharan Africa. It was created by a group of students at Stanford University as part of their online course Technology Entrepreneurship
Founded in 2013, Jumpstart Africa offers rewards in exchange of donations
South Africa
Thundafund was created in 2013 by two South African social entrepeneurs. They raised USD 350,000 in their first 18 months
Lelapa Fund is a French-based crowdfunding platform intended to finance African start-ups and SMEs
M-changa is a platform for mobile development created by a Kenyan entrepeneur. It allows crowdfunding campaigns and collecting donations via SMS or online
Thanks to SliceBiz, investors can fund via mobile payments, bank accounts or credit cards
South Africa
StartMe raises funds for social, creative projects and NGOs in South Africa
Through Start Crunch, anyone with either bank account or Paypal in any part of the world can raise funds
Shekra is a crowdfunding platform that links a closed network of investors with potential startups and companies
Orange Collecte
Côte d'Ivore
Orange Collecte partnered with HelloAsso to create this crowdfunding platform for clients of Orange Money
Malaik is the world's first impact focused equity crowdfunding portal. Malaik connects impact investors with high impact African companies in need of equity finance
Wamda is a platform of integrated programs that aims to accelerate entrepreneurship ecosystems throughout the MENA region
Source: Companies websites; AFK Insider, CNN
Private Equity Investors
Private Equity Investor
Impact Fund for African Creatives (IFFAC)
Impact Fund for African Creatives aims to address a lack of capital and management skills required to leverage the power of African creative and cultural industries. IFFAC intends to expand the social capital of African countries thus contributing to the United Nation’s Sustainable Development Goals and promote inclusive growth in these economies. IFFAC intends to build on the sector and thematic experience of RACP’s historic investment activity in the creative space in Africa. The Fund will be participated by the African Fashion Fund (AFF) as one of its direct investors
AfricInvest was founded in 1994 and is part of Integra Group, an investment and financial services company based in Tunisia. Uniquely positioned as one of the most experienced private equity investors on the continent, AfricInvest has dedicated investment teams focused on Africa, and employs 75 professionals based in ten offices
Helios Investment Partners
Helios was founded in 2004 by Tope Lawani and Babatunde Soyoye, and has since grown into the largest Africa focused private investment firm
ECP Investments
ECP is one of the largest and longest-established private equity fund managers focused on Africa
Through four funds, launched in 2003, 2007, 2012 and 2016 respectively, Adenia has raised $500m of capital. Adenia seeks to invest in a variety of sectors including, but not limited to agribusiness, manufacturing, financial services, ICT and telecommunications, hospitality and healthcare
Commercial Banks
Access Bank plans more funding for the creative industries
SME Connect is a FirstBank initiative designed for Small and Medium-Sized Enterprises in Nigeria. At FirstBank, we are passionate about helping your business grow on all fronts. Beyond financial support, we offer you strategic advisory services, business seminars, periodic updates as well as information that will guide you in growing your business.
Our scope of SME services covers small/medium scale manufacturing firms, merchants (suppliers, distributors, etc.), professional firms (law, consulting, audit, etc.), agricultural, Churches, Mosques and NGOs whose annual debit turnover is between N5M and N500M
Keystone Bank, Afreximbank and other partners to promote the African creative industries
Creative Industry fund
The Creative Sector Finance is in partnership with the Central Bank of Nigeria to improve access to long-term and low-interest financing to entrepreneurs and investors in the Nigerian creative and information technology sub-sectors. It is particularly focused on these businesses: fashion, information technology, movie production, movie distribution, music and software development
Fashion & beauty fund
Creative Africa Exchange (CAX) program to support the production and trade of African cultural and creative products
Mobilization in favor of the access of women entrepreneurs from Côte d'Ivoire to financing, through the support granted to 45 new beneficiaries of the Fund for the promotion of SMEs and female entrepreneurship
Côte d'Ivoire
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