Fund of Funds as a Catalyst for African Development: A Mauritius-Based Approach
Gilles Kichenin of Providentia Fund Managers Ltd proposes a pioneering Fund of Funds model for the continent that is driven by real-time data, empowered by AI, and structured using Mauritius’ VCC framework.
Africa’s economic story is at a critical turning point. With its young population, fast-growing digital economy, and expanding middle class, the continent holds all the fundamentals for long-term growth. Yet in 2024, Africa attracted only USD 97 billion in foreign direct investment1- just 6% of global flows – despite accounting for nearly 18% of the world’s population2.
What is a Fund of Funds model?
This glaring mismatch between opportunity and capital reveals an urgent need for new investment vehicles that can move faster, think smarter, and deliver deeper impact. Among the tools available, the Fund of Funds (FoF) model stands out as both underutilised and uniquely suited to address Africa’s capital gaps.
A Fund of Funds invests not in companies directly, but in other funds where each has its own regional focus, sector expertise, and on-the-ground access. This structure diversifies risk, aggregates capital, and supports smaller, specialised African fund managers. Already, institutions like the African Development Bank have committed over USD 1.36 billion across 74 private equity and venture capital funds3 using this approach, unlocking thousands of investments into SMEs, startups, and infrastructure across the continent.
How Providentia envisages a Fund of Funds for Africa?
But Providentia believes it’s time to take this model a step further. While the traditional FoF offers reach and diversification, it still relies heavily on static investment policies and manual oversight.
By Gilles Kichenin,
Managing Director
We envision something sharper: an Intelligent Fund of Funds, driven by real-time data, empowered by AI, and structured using Mauritius’ newly introduced Variable Capital Company (VCC) framework. The goal? Not just to deploy capital, but to allocate intelligence, to shift from passive funding to strategic activation. Four ideas shape this vision:
- First, we believe that the future of investing lies in platforms that combine human insight with algorithmic reasoning. This is the essence of our proposed “Mother Platform” which will be a digital command centre that would use machine learning to monitor macroeconomic shifts, fund performance, and ESG compliance across Africa’s key markets. Though still in its early design phase, the platform is envisioned as a real-time dashboard, continuously optimising allocations and stress-testing exposure to everything from political risk to currency swings. It won’t replace human judgment, but it will amplify it.
“A Fund of Funds should do more than just pool capital, it should amplify it”
- Second, a Fund of Funds must do more than just pool capital, it should amplify it. A well-placed investment in a strong African fund manager can unlock many more opportunities: from attracting co-investors to enabling funding for dozens of promising SMEs and startups. The key is to back credible local fund managers, professionals with real networks, deep market knowledge, and a track record of navigating African realities. This strategy doesn’t just deploy money, it builds the investment ecosystem itself. It allows the Fund of Funds to serve as a launchpad for emerging fund managers, especially first-time teams and women-led funds, strengthening Africa’s financial fabric from within.
- Third, the fund structure itself matters more than ever. The introduction of the Variable Capital Company in Mauritius is a game-changer. Unlike traditional fund vehicles, the VCC enables a single legal entity to host multiple sub-funds, each with its own strategy, investor base, and risk-return profile. This allows fund managers to run ESG, infrastructure, FinTech, or regional cells independently, while enjoying operational efficiency, ring-fencing, and simplified regulatory treatment. For Providentia, the VCC offers a chassis to run a multi-strategy FoF in a seamless and scalable way. It enables us to pivot quickly as market needs evolve, without redrafting the entire structure every time.
- Fourth, and perhaps most importantly, Africa’s future does not lie in oil rigs or copper mines. It lies in AI, clean energy, FinTech, climate resilience, and digital infrastructure. These sectors are often deemed “too risky” by conventional investors, but with a smart FoF structure powered by analytics and backed by diversified exposure, we believe they are not only investable, they are essential. We are entering a world where risk needs to be better understood, not avoided. Our job is to unlock capital for Africa’s most transformative sectors, confidently and intelligently.
Mauritius to lie at the heart of Africa’s Fund of Funds
Mauritius remains at the heart of this strategy. It offers more than a tax-friendly regime. It is a credible, well-regulated jurisdiction with access to more than 50 Double Taxation Avoidance Agreements and robust investor protections.
The Financial Services Commission is tech-forward, open to innovation, and supports FinTech through tools like the Regulatory Sandbox License. With over 450 PE funds already domiciled in the jurisdiction and more than USD 82 billion of cross-border investment4 routed through it, Mauritius combines regulatory credibility with business efficiency.
The VCC structure, now part of its legal toolbox, is a further demonstration of how Mauritius is adapting to the needs of modern fund design. At Providentia, we see this not just as a domicile of choice, but as a launchpad for financial innovation.
“A well-structured, AI-enabled and VCC-based Fund of Funds is the need of the hour for Africa”
Why smart capital is no longer a luxury but a necessity?
The African investment landscape is evolving fast, but the systems that allocate capital have not kept pace. A well-structured, AI-enabled and VCC-based Fund of Funds can fix that. It can mobilise institutional and private capital into African hands. It can support grassroots innovation, green growth, and financial inclusion. And it can do so with intelligence, agility, and integrity.
At Providentia, we are preparing to lead this shift. Our goal is not just to operate within the fund ecosystem, but to elevate it. We are building a platform where strategy meets structure, where innovation meets compliance, and where Africa’s future meets the capital it deserves.
In a continent defined by its potential, smart capital is no longer a luxury, it is a necessity. If we get this right, the next decade of African development will not be remembered for what was promised, but for what was delivered, with funds that did not just follow the trend, but defined it.
- UNCTAD World Investment Report 2024
- United Nations Population Division – World Population Prospects 2024
- African Development Bank – Private Sector Portfolio
- Economic Development Board (EDB) Mauritius
At Providentia, we believe this macro transformation offers a timely opportunity to build resilience and long-term value. The question isn’t if crypto belongs in your portfolio—it’s how to position it.
- investment@providentiamanagers.com
- (+230) 468 1908
