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