The proposed investment, which remains subject to board approval by the IFC, forms part of broader efforts to support growth-stage businesses that often struggle to attract institutional capital.

Aruwa Capital Fund II, managed by Lagos-based Aruwa Capital Management, is designed to raise $50 million with a possible increase in its hard cap to $60 million.

Under current plans, the IFC’s contribution would come in equity and be limited to no more than 20 per cent of the total fund size.

The fund focuses on growth-stage SMEs in Nigeria and Ghana, with about four out of five dollars expected to be deployed in Nigeria and up to 20 per cent directed toward Ghanaian firms.

It aims to make initial investments of between $1 million and $3 million in businesses that have moved past early start-up phases but are still too small to attract larger private equity players.

Aruwa Capital applies a gender-lens investment approach, targeting companies that are led by women, feature gender-diverse management, or provide products and services that disproportionately benefit women.

The fund’s priority sectors include consumer goods, clean energy and renewable technologies, financial services, and healthcare, sectors seen as critical for broad-based economic development.

In addition to equity, the IFC is expected to use blended finance tools to help attract private investors into the fund.

This includes a subordinated co-investment of around $3 million through the IFC’s Concessional Capital Window, which is designed to absorb a portion of the early risk and encourage participation in segments perceived as underserved.

Aruwa Capital Fund II builds on the firm’s first fund and its track record backing SMEs on the continent.

By filling a gap between early-stage financing and larger private equity capital, the initiative reflects growing interest among development institutions to support inclusive growth and broaden access to investment capital for smaller companies in West Africa.