Norfund has announced a $7.5m investment in Inside Equity Fund II, a private equity fund dedicated to supporting small and medium-sized enterprises in some of the most underfinanced and least developed markets in Southeast Africa.

"We look forward to seeing Inside Capital Partners continue its important work, driving economic growth and sustainable impact in Africa’s least developed countries," Norfund said in a statement.

This investment brings the fund’s total capital to at least $62m, strengthening its ability to provide long-term financing to businesses that drive job creation, waste reduction, access to clean energy, and gender equality.

Access to finance remains one of the biggest barriers for SMEs in Africa’s least developed countries. Many businesses with strong strategic and growth potential struggle to secure the capital needed to scale, particularly in high-risk markets where private equity funding is scarce.

Inside Equity Fund II addresses this gap by targeting one of the most challenging SME segments, providing financing to businesses that can drive economic transformation. The fund prioritizes sectors that contribute to sustainable development, such as recycling, renewable energy, and sustainable construction, fostering both economic and environmental progress.

The fund will initially invest in Madagascar, Zambia, and Mauritius, potentially with opportunities for expansion into Mozambique and Tanzania—countries where SME growth is equally critical to economic resilience.

This partnership builds on the success of Inside Capital Partners’ first fund, which supported high-impact businesses across the region. Our investment was formalized in Lusaka, Zambia, reinforcing our commitment to financing SMEs that strengthen local economies and create opportunities in underserved communities.

“At Inside, we view investment as a powerful catalyst for transformation. By welcoming Norfund as a Limited Partner, we are deepening our commitment to sustainable growth in Africa’s most underfinanced markets and leveraging our collective expertise to drive meaningful change. Together, we are channeling capital into high-impact SMEs, creating lasting economic opportunities and advancing sustainable development across the region,” said Jérôme Lagesse, Managing Partner at Inside.