(Ecofin Agency) - The United Nations Development Program (UNDP) has joined forces with African nations to develop an innovative fund named "Timbuktoo". This tool is aimed at bolstering the African startup ecosystem and supporting the growth of high-potential enterprises across the continent.

According to an official UNDP statement, the $1 billion fund will raise both catalytic and commercial capital from African governments, investors, businesses, and universities. These stakeholders will play a vital role in all aspects of startup creation and development, fostering the growth of innovative and high-potential businesses throughout the continent.

"What makes Timbuktoo unique is its design, which blends commercial and catalytic capital to de-risk private investment, with a pan-African approach to supporting startups, while also focusing on the whole ecosystem, engaging and deepening the linkages between government policy, universities, corporates, development partners, catalytic partners, and commercial investors," explained the UNDP.

Launched with the collaboration of several African states, including Rwanda and Ghana, Timbuktoo will receive an initial financial contribution of $3 million from Rwandan President Paul Kagame.

The fund, headquartered in Rwanda, will raise capital to "turn ideas and nascent innovations into meaningful scaling and disruptive pan-African enterprises that attract global and local investment, generating wealth and wellbeing for millions of people in Africa and beyond, focusing on innovative solutions for people and the planet,” stated Ahunna Eziakonwa, the director of the UNDP's Africa office. Currently, details regarding whether the fund will be generalist or sector-specific, cover the entire continent, or focus on specific countries, and the allocated amounts per project remain undisclosed.

In Africa, 89% of venture capital comes from abroad. This capital, which experienced a 36% decline in 2023, is concentrated in four countries: Nigeria, Kenya, South Africa, and Egypt, with 60% of it directed towards a single sector, fintech. The Timbuktoo fund aims to diversify this landscape by nurturing innovation and entrepreneurship across various sectors and geographical regions within Africa.