Kenya client Watervale Investments receives intensive COVID-19 support

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The COVID-19 pandemic has wreaked havoc on economies around the globe – and the small business sector is taking the biggest hit by far. As a result, small businesses have seen their income all but disappear, while also facing increased input costs. Many have been left struggling to cover operational costs, including salaries. Businesses had to innovate to survive.

GroFin’s response to the pandemic was to provide intensive business support to its clients, including Watervale Investments in Kenya which employs 215 people. Watervale Investments, trading as Moko Home and Living, manufactures mattresses and furniture. Watervale offerings include low-cost, zero-waste cushions made from by-products of European foam factories. These are distributed through Moko’s partner network of over 150 micro-enterprises operating across Kenya which in turn retail Moko products to serve the end customers.

GroFin’s investment in Watervale goes back to 2017 when the company needed funds to meet working capital needs to purchase raw materials required to expand its operations.

GroFin Kenya assisted the business by giving cash flow management and social media training, as well as training and implementation of COVID-19 infection control measures. Training in COVID-19 infection control measures and implementation of ESG policies have improved the company’s workplace safety for all employees. Watervale shifted all B2C sales and marketing activities to digital channels to make up for reduced retail showroom activity. Its digital sales grew from 50% pre-COVID to 70% of all sales during the COVID period.

COVID-19 has also affected the cost of raw materials which was on the high. Luckily, the company had diversified its supplier base before COVID, especially for imported raw materials, to ensure that Watervale is not dependent on a single country or supplier. This has been extremely beneficial for Watervale and it has been able to adjust its sourcing dynamically and minimise supply interruptions during the lockdown.

In an effort to reduce cost and improve performance, Watervale has innovated to use steam as a utility.

The rationale was that this would reduce the steam cost of our factory since we would only pay for steam used and that an expert service provider would have the responsibility for maintaining the boiler to avoid downtimes. – Eric Kouskalis, Director of Watervale Investments

By switching from diesel-powered boiler to biofuel, Watervale is making a huge step toward reducing its carbon footprint.

GroFin introduced Watervale to the Challenge Fund for Youth Employment that is seeking to co-invest in innovative private sector-led initiatives. Watervale’s application has been submitted and is being reviewed by the investors. With this new investment in perspective, the business wants to launch new products soon.

We have grown the business successfully over the past two years providing sofas and mattresses. We have developed concepts for dozens of new home furniture products, and we are working to secure the financing and build our internal capabilities to bring them to market at scale. – Eric Kouskalis

Helping Fountain Gate Academy to improve private education in Tanzania

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Founded in 2007, Fountain Gate Academy started its activities with a nursery and primary school in Dar-es-Salam. As the founder, Japhet Makao saw an opportunity he introduced a day-care service as well.

GroFin’s intervention helped the school to improve its finance department by implementing appropriate accounting software and assisted in hiring qualified staff for the department. The management information system (MIS) for the school has improved in terms of pupil academic data including results, progress, and financial reporting. MIS for the academic records is now available on a centralised school database using the reliable school software package.

Since several parents had moved to Dodoma, Japhet seized the opportunity to start a new branch there. GroFin helped the entrepreneur to formalise the land ownership of the Dodoma campus. The school also managed to get the Certificate of Right of Occupancy at the Dodoma Campus in the name of Fountain Gate Academy. As part of GroFin’s business support, we helped the school improve its architectural dining drawing to be ready for the construction of a high-quality dining hall. GroFin also recommended putting up an ICT laboratory so that students can learn ICT at a young age.

Since COVID-19 struck, all schools had to close their doors, leaving Fountain Gate without revenues from March 2020 to July 2020. Japhet explains that most parents are still in arrears on the payments for the period though they are trying to ensure payment for the new terms is paid. Fountain Gate continued salary payments to the staff during the school closure which had a significant impact on its operating cash flow. With guidance from GroFin, Fountain Gate managed to reduce unnecessary operating expenses, freeze salary staff increment, establish all health recommended infrastructure for COVID-19 precaution before reopening of schools.

“My dream for the future is to establish a special talent school and expand Fountain Gate footprint to other regions of Morogoro and Arusha,” – Japhet Makao, Founder of Fountain Gate Academy