Mapping Blended Finance and Green Venture Capital in African Entrepreneurial Ecosystems

Abstract

This study investigates the impact of blended finance investments and green venture capital on improving entrepreneurial ecosystems in African countries. The primary aim is to understand the relationship between development finance for sustainable development and entrepreneurial ecosystems in developing countries, highlighting the particular mechanisms and dynamics different from those in the Western world. This research conducts a comprehensive quantitative analysis using the latest available data. Using a sample of 27 countries in Africa, three hypotheses are used to test how blended finance investments are distributed, what is their long term relationship with entrepreneurial ecosystems, and whether there is a interaction effect between green venture capital and blended finance. The findings indicate a positive and significant relationship between blended finance and the quality of entrepreneurial ecosystems. Conversely, the effect of green venture capital activity on entrepreneurial ecosystems remains unclear. These results suggest that targeted financial investments can enhance entrepreneurial ecosystems while promoting sustainable development. However, they also highlight the need for a more holistic approach, particularly focused on riskier and less developed countries. For practitioners and policymakers, these findings underscore the importance of strategic co-investment and supportive policies to foster favorable conditions for entrepreneurship, entrepreneurial and development finance across Africa.