Melanin Kapital is the 1st digital impact investment bank driving financial inclusion for Africa and its diaspora. They believe that African problems will be solved by African solutions and resources. However, today, only 30% of African private capital is invested towards the Sustainable Development Goals on the continent. They realized that this deficit in private finance stems from the lack of bankable local solutions that support inclusive growth and environmental protection.
Melanin Kapital has created a digital impact investment banking platform that aims at preparing impact businesses for impact investments. To do so, they offer capital raising and blended finance solutions, building an entire pathway to finance for small impact businesses through their Education, Advisory, Connection, and Financial modules. Their technology builds trust towards small impact investment transactions by collecting financial data, automating traditional due diligence processes, and providing entrepreneurs with digital capacity building, adapted accounting tools, dataroom solutions, auditing services, and guaranteed funding.
Currently, Melanin Kapital works with blue-chip international organisations such as Absa Bank, the African Guarantee Fund, and GIZ to finance up to 3,000 investment-ready impact ventures through USD 25M guaranteed credit by the end of 2022.
Their CEO, Mélanie KEITA, further explains how they do this below.
What kind of innovative financial instruments does your organization use?
Melanin Kapital uses both Debt and Equity financial instruments. The debt instrument is made available to our entrepreneurs through the partnership we have with Absa Bank Kenya. The equity instrument is financed by our financial partners such as Victoria Business Angel Network.
What have you learned through the course of designing and implementing these structures? What's working, what's not?
We have learned the importance of incorporating several financial partners who are able to offer different financial instruments, hence creating an impactful synergy. The importance of using technology to offer our services empowers us to reach out to many entrepreneurs at the same time and at a reduced cost.
How does innovative finance help you maximize impact?
The Melanin Kapital online impact platform has enabled us to access many SME’s and increase investor confidence. Through the platform, we are able to educate, and offer advice and financial services. In the Academy section, we offer a selection of Masterclasses that enable entrepreneurs to enhance their businesses. The startup lab assists entrepreneurs to strengthen their business profiles by having all the necessary documents required by investors. At this stage, we also offer advisory, risk rating, and audit services. The club sections enable entrepreneurs to interact with investors, other entrepreneurs, and business mentors. All these combined help in de-risking the businesses making it easy for the financial institutions and partners to offer to finance them.
If you use blended finance, tell us about some of the innovative partnerships you have employed
We have a partnership with the African Guarantee Fund that offers grants to our financial partners reducing their risk and enabling them to offer unsecured loans to our entrepreneurs. We also use Capacity Building Grants to finance the annual Tuungane Program that allows us to reach out to over 300 SME’s and get them investor ready.
