The Africa Finance Corporation (AFC), yesterday, said its board has approved a commitment of $100 million to invest in Africa-focused technology fund managers.

The commitment comes amidst growing interest in the continent’s nascent digital economy and concerns about the inability to mainstream its funding.

The digital economy is projected to contribute over $700 billion to the continent’s output by 2050, with many analysts tipping it as the biggest thing to happen to the continent’s economy in the next few years.

Driven by a digitally connected youth population, it is expected to drive the much-needed demographic dividends.

Home to about 530 million young people between 15 and 35, with a third of the population unemployed, the growth in interest in different areas of the fast-growing digital economy could help the continent tackle youth restiveness.

Even with the momentum, a statement by the AFC said, a persistent gap in long-term institutional capital continues to constrain the development and scaling of high-potential technology businesses.

With the commitment, the AFC will deploy catalytic capital in leading Africa-focused technology funds and African-owned fund managers, it stated.

The corporation aims to address the underrepresentation of local capital in venture funding by triggering more participation from African institutional investors and deepening local ownership within the ecosystem.

It is hoping to capitalise on the growing African venture capital ecosystem, which has demonstrated real potential.

The continent has produced nine unicorns, with some of its leading fund managers generating returns of up to 128 times the capital originally invested, reports have said.

Last year alone, African start-ups raised $3.8 billion, even as local institutional capital remains significantly unavailable across many fund cap tables.

Most of the venture funding comes from international sources, a trend the AFC’s commitment is designed to change.

President and CEO of the AFC, Samaila Zubairu, said: “Across the continent, young Africans are not waiting for the digital economy to arrive; they are seizing the moment — adopting technology, creating markets and solving real economic problems faster than infrastructure has kept pace.

That is the investment signal. The AFC’s $100 million Africa-focused Technology Fund will accelerate the convergence of growing demand, rapid technology adoption, youthful demographics and the enabling infrastructure we are building.

“Digital infrastructure is now as fundamental to Africa’s transformation as roads, rail, ports and power – enabling productivity, payments, logistics, services, data and cross-border trade, while creating jobs and industrial scale.”

As part of the initial deployment, AFC has made anchor commitments to Lightrock Africa Fund II and Future Africa Fund III, positioning the Corporation across the full innovation lifecycle – from early-stage venture capital through to growth-stage scaling, the statement said.

The initial commitments represent the first tranche of a broader deployment, while the organisation said it is actively evaluating a pipeline of additional Africa-focused funds spanning a range of strategies and stages.