Sustainable Job Creation


Inclusive economic growth, if sustained over time, is the only way to tackle poverty on a global scale. Since 2002, we’ve worked to uncover new ways to catalyse the small and medium sized enterprises (SME) sector in developing countries as a primary driver for sustainable economic growth and job creation.

The SME sector in some parts of Africa contribute less than 15% to annual GDP

SMEs contribute more than half of annual growth in OECD countries – and nearly two thirds of employment. By contrast, entrepreneurs who seek to start and grow businesses in emerging markets are woefully under-served, with the SME sector in some parts of Africa contributing less than 15% to annual GDP.

Start-ups and small businesses often struggle to access the capital they need to expand. Too large for micro-finance and too small to interest private equity funds, they cannot access the type of funding they need from banks – typically between $50,000 and $1.5m – due to a lack of collateral, track record and business skills. This creates a finance gap in most markets known as the “missing middle”.
To-date, over 24,000 have been created and sustained
 In 2004 we co-founded GroFin – a specialist SME developer and financier that delivers an “integrated solution” to serve the missing middle based on the provision of business skills, risk capital and market linkages to start–up and growing businesses judged on the basis of their viability (as opposed to collateral).  Such start-up and growing business create jobs and drive socio-economic development.

  GroFin has grown to become the world’s largest SME financier targeting the “missing middle” – with over $500m under management across 14 countries in Africa and the Middle East. To-date they have supported 825 businesses to create and sustain over 24,000 jobs and provided skills support to over 7,000 entrepreneurs.  

Our partnership has pioneered the creation of a new asset class, Growth Finance, specifically targeted at start-up and growing SMEs. Related to this we were one of the co-founders of the Aspen Institute for Development Entrepreneurs which provides a blend of support to organisations that assist start-up and growing businesses (SGBs) in emerging markets.


SMEs in developed countries are the primary drivers of economic growth and job creation. Start-up and growing businesses generate the lion’s share of new jobs, account for 60-70% of employment and contribute more than half of annual GDP growth.

By contrast in some African countries this can be as little as 10%. The developing world is missing out on a huge engine for sustainable job creation to help tackle poverty and improve livelihoods.

Unmet credit needs for SMEs is estimated at more than $850 billion

The African Development Bank reports that more than 70% of SMEs in Africa lack access to medium-term finance. Few organisations are equipped to provide this. The type of finance that entrepreneurs need to grow their businesses – between $50,000 and $1.5m – is typically too large for microfinance, too small for private equity and too risky for commercial banks. This leads to a major funding gap for SMEs in developing countries, popularly known as the “missing middle”, which the
IFC estimate at more than $850 billion.

Entrepreneurs often face an equal if not bigger challenge to find the business skills support and mentorship that allow them to develop viable growth plans and ensure the business succeeds. This problem is more acute in developing countries where a major lack of collateral, business planning skills and track-record frustrates the growth of start-up enterprises.

Without the right blend of support, even the most talented entrepreneurs cannot sustain and expand their business operations, despite their tremendous potential.


The “missing middle” represents a global market failure. The solution involves:

boxed_number_blue_1.png   Providing both the business skills support and type of risk capital appropriate to the needs of start-up and growing businesses
boxed_number_blue_2.png   Delivering this integrated solution in ways that generate both acceptable financial returns to investors as well as development outcomes at scale

Searching for integrated solutions to this problem, we chose to test two approaches: one based on partnering with an existing financial institution in Uganda and one in South Africa based on creating a new specialist SME fund (the “Empowerment through Energy Fund”).  We concluded that a new specialist intermediary was the most effective way of providing business skills and finance in ways that best developed a viable small and growing business sector.

  In 2004, we partnered with Jurie Willemse, a serial entrepreneur with a long track-record working to support SMEs, to co-create GroFin – a pioneer SME development financier that provides tailored finance and business skills to help entrepreneurs start and grow successful enterprises as a means to create jobs and drive socio-economic development.  

An integrated solution

GroFin manages a number of dedicated SME funds with investment from a range of foundations, development finance institutions, impact investors and commercial banks. SME clients are chosen based on the viability of their business plans – not on the availability of collateral.
The GroFin Africa Fund is the largest in the world targeting the "missing middle"

GroFin provides both mezzanine finance (typically medium-term loans tailored to specific business needs) and extensive business support from local teams of experts to help entrepreneurs develop robust growth strategies and achieve success.

Over the last 12 years, GroFin and SF have formed a close strategic partnership to demonstrate that this model is a financially-viable way to generate impact at scale. The business has now supported nearly over 7,000 entrepreneurs across 14 countries in Africa and the Middle East, employs around 130 staff, and has over $500m under management. The GroFin Africa Fund is the largest fund in the world targeting the “missing middle”.

Their work has created and sustained over 18,000 new jobs to-date.


GroFin has a vision to operate in over 25 emerging economies worldwide by 2020. But even if this vision is achieved, the SME sector as a whole will remain critically under-served across the world.

To encourage greater investment, both SF and GroFin are promoting “Growth Finance” as new financially-viable asset class, targeting start-up and growing enterprises, with the potential to grow beyond the size of microfinance (a $20 billion sector) and deliver significant global impact.

To support the growth finance sector, we established Optima and in 2009 co-founded the Aspen Network for Development Entrepreneurs (ANDE). To-date, over $500m has been deployed by ANDE to create jobs
As part of our efforts to build this sector, we helped establish Optima in 2008, a specialist provider of skills and training support to SME fund managers, investors and entrepreneurs. They provided specific business advice around valuation, deal structuring, mentoring, skills audits and performance assessments – and delivered customised training to bridge the skills gap in this emerging asset class.

We also co-founded the Aspen Network for Development Entrepreneurs (ANDE) in 2009, a global network of organisations that support small and growing businesses. ANDE works to share best practices in metrics and evaluation of socio-economic impact, research and disseminate market data, and to facilitate collaboration between the wide range of actors in the sector (including foundations, investment funds, capacity development providers, academic institutions, development finance institutions and corporations).

  ANDE now over 200 members from more than 150 countries that have collectively supported nearly 350,000 entrepreneurs to create jobs, stimulate long-term economic growth and deliver environmental and social benefits through support for start-up and growing businesses.  




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