LuxAid Challenge Fund for Beninese Enterprises

The Luxembourg Development Cooperation has created the LuxAid Private Sector Engagement Funds to support pioneering business solutions to development challenges. Among these funds, the LuxAid Challenge Fund targets start-ups that have already tested their innovative product or service on the market, obtained their first customers and generated commercial revenues.

The LuxAid Challenge Fund co-financing will support companies to implement projects lasting 1-2 years with a demonstrable impact on the SDGs through increasing the customer base, adapting the business model to the market, and/or preparing for a first external investment.

Aim

• This call for projects aims to support companies offering innovative digital innovations that contribute to sustainable and inclusive development in the AgriTech, EdTech, Tourism, HealthTech and FinTech sectors.

Funding Information

• As part of this call for projects, a budget of nearly 490 million FCFA (750,000 EUR) was allocated to finance 6 to 8 Beninese companies requiring co-financing ranging from 30 to 90 million FCFA (50,000 to 140,000 EUR).

Outcomes

• The ideal results of a project co-financed by LuxAid Challenge Fund will consist of:
  • a proven, cost-effective solution delivering direct and measurable business, financial, social and/or environmental results;
  • a consolidated business model, ready to be accelerated/expanded in order to extend its impact on the target;
  • the mobilization of other capital (ideally private) to enable the expansion of the solution within two years of the end of the project.
  • The company is solely responsible for the proper execution of the project. For any project not completed, LuxDev may request reimbursement of its co-financing.

Geographical Focus

• LuxAid Challenge Fund is looking for initiatives from companies legally established in Benin that generate a positive impact for the country's population.

Eligibility Criteria

• You are eligible for LuxAid Challenge Fund if:      
  • your company is a formal commercial or cooperative company legally registered in Benin between 01/06/2017 and 01/06/2024. Sole proprietorships, associations and NGOs are not eligible;
  • your company employs at least 2 people with legal employment contracts;
  • your company has not obtained more than 196 M FCFA (300,000 EUR) of external financing (grants, equity, loans, etc.) during the three years preceding the submission deadline;
  • your company has a project proposal focused on digital innovation for sustainable and inclusive development, for example in AgriTech, EdTech, Tourism, HealthTech, FinTech, as well as in other sectors, as long as they contribute to improving the quality of life of local populations or to protecting the environment;
  • the proposed innovative product/service has been tested in the market, has generated revenue for at least 3 months prior to submission of the application and has a clear commercialization plan including proof of customer interest;
  • your company can co-finance at least 30% of the total cost of the project through external investments, its own cash available at the start of the project and its sales.

Selection Criteria

• The selection committees will prioritize systemic development solutions that target root causes rather than symptoms of structural problems. The fund aims to strengthen innovative and inclusive economic models that address the vicious cycle of poverty/access to basic socio-economic goods and services. The fund uses a “do no harm” selection approach.
• Projects will be evaluated according to the following selection criteria:
  • Innovation and (cost-) efficiency
    • For a solution to be considered innovative, it must be sufficiently distinct from products, services or approaches already present on the local market. This may include differences in design, distribution, target audience, business model and anticipated resistance to future developments.
  • Societal impact and “futureproof”
    • The solution must contribute to the Sustainable Development Goals (SDGs), such as job creation, poverty reduction, access to healthcare, preservation of ecosystems and biodiversity, the fight against climate change, etc. Projects must take into account adaptation to future risks and trends (“futureproof” approach).
  • Project viability and financial sustainability
    • Partners must demonstrate that the project will be able to generate revenues in the short or long term, thus ensuring its continuity beyond the co-financing period. Projects that present additional funding opportunities at the end of the project will be valued.
  • Execution capacity
    • Companies must demonstrate sufficient execution capabilities in relation to the amount of co-financing granted. This includes, but is not limited to, management capabilities, knowledge of production and accounting standards.
  • Additionality and neutrality of co-financing
    • Projects must present an added value that would not have been created without LCF's financial support. However, LCF will not be able to create market distortion by co-financing projects similar to initiatives already present on the market.

For more information, visit Luxembourg Development Cooperation.