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GroFin Rwanda supports SME clients to mitigate COVID-19 impact

GroFin Rwanda, a specialist impact-driven SME financier, is providing extensive support to its SME clients in different countries to help them mitigate the effects of COVID-19 on their businesses.

GroFin clients in Rwanda, Ivory Coast, Senegal, and Ghana are also benefitting from €5,2 million in funding from the Investing for Employment (IFE) facility. GroFin is partnering with IFE, which is a subsidiary of the German Development Bank (KfW) and forms an integral part of the German Government’s Special Initiative on Training and Employment (“Invest for Jobs”).

Under the Invest for Jobs brand, the German Federal Ministry for Economic Cooperation and Development (BMZ) offers a package of measures to support investment activities that have a high impact on employment in Africa, of which IFE is one key pillar

GroFin is a multinational, private developmental finance institution committed to the successful development of SMEs to create sustainable wealth, employment, and economic growth. It provides funding to the underserved market of small and growing businesses that often struggle to access funding from traditional financiers.

Rwandan entrepreneurs have received 40% of the total €5,2 million in funding and these local beneficiaries have commended GroFin for its support in aiding their recovery, enabling them to sustain their operations, and to protect employment.

Wilson Gafurama, managing director of GroFin client RGL Security, explained that some of its business activities were halted due to COVID-19, while some of its clients failed to pay their debts to the company. He thanked GroFin for interventions that helped the company to return to normalcy. RGL has over 3000 employees.

“Some clients halted their operations due to the COVID-19 pandemic. We used to work with 400 institutions, including gaming companies. Some suspended their activities without clearing payments,” he said.

GroFin assisted RGL by conducting an assessment to gauge the impact of COVID-19 on the business and enabled it to access IFE grant funding to pay its employees for two months.

“It is in this context that GroFin came to us and analysed our business. In November, they provided two-month salaries for our employees,” Gafurama noted.

Dr Ubarijoro Sowaf, managing director of Ubuzima Polyclinic, says his business has enjoyed a good partnership with GroFin for the past eight years and benefitted from deepened support during the COVID-19 pandemic.

Wenceslas Habamungu, managing director and owner of Ecoplastic, a recycling business producing plastic bags in Mageragere in Nyarugenge district, says GroFin has helped the company in the areas of business advisory and training.

“Working with GroFin has tangible and mutual benefits. Unlike some banks, GroFin never abandons its clients and continues equipping you with soft skills and tangible support until your business is successful and sustainable,” he said.

Christian Bugabo, the Investment Executive who heads up GroFin Rwanda, says the funding provided through GroFin’s partnership with KfW is aligned with national efforts to support economic recovery amidst the COVID-19 pandemic.

Bugabo says GroFin will continue to walk with beneficiaries on their journey to regain growth. “We are optimistic that their operations will progress further. GroFin will sustain closer collaboration with beneficiary companies and provide all the necessary support for their businesses to thrive,” he reiterated.

Headquartered in Mauritius, GroFin offers financing and support to SMEs in 14 countries in Africa and the Middle East. It is supported by 34 international finance institutions, development organisations, and private funders who have committed nearly $535 million in capital.

GroFin has been operating in Rwanda for 13 years – since 2007. To date, it has invested $24 million to support 56 entrepreneurs in the country. This paved the way for the creation of 4033 jobs, of 32% of which are held by women and 75% of which are held by unskilled or semi-skilled workers.

GroFin provides loans ranging between $100,000 (over Rwf 98 million) and $1,5 million (over Rwf 1,4 billion) to help them increase profitability, create jobs, and contribute to national economic development.

This article was originally published by Igihe.

In the bag: Recycling keeps EcoPlastic going despite COVID-19

I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country.

Habamungu Wenceslas, Entrepreneur behind EcoPlastics

EcoPlastic, a recycling business in Rwanda, collects 88 tons of plastic waste every year and turns it into new plastic bags, tubing, and sheeting. Habamungu Wenceslas, the entrepreneur behind EcoPlastics, recognised the business opportunity when Rwanda passed a law banning the use and importation of plastic bags. “I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country,” he says.

Habamungu approached GroFin for financing in 2017 to purchase new equipment to expand EcoPlastic’s production capacity. By the end of 2019, he had managed to grow the business’s sales by over 400% compared to its early years of trading in 2010 and 2011. But when COVID-19 struck earlier in 2020, EcoPlastic was forced to close completely for two weeks and the impact of the pandemic on its customers suddenly saw the business’s sales plummet.

Our main customers were also forced to close. Some – like hotels, restaurants, and the airport – were still closed in November last year.

Habamungu says COVID-19 has also made it more difficult and costly to import raw materials.

Trucks have to stay on the border for several days due to compliance checks and this has increased transport costs by 10%. Luckily, part of my business does not require imported raw materials so production could continue – although at a lower level.

As part of our efforts to support our SME clients, GroFin developed a specially designed Resilience Tool Kit to guide them in protecting their revenue and reducing their expenses. We assisted Habamungu in conducting a rigorous cashflow stress test to gauge the expected impact of the pandemic on four aspects of his business: demand, supply chain, staff, and finances. We also provided him with a COVID-19 ESG Framework to better protect his staff and customers from infection.

Our advice has helped EcoPlastic’s employees avoid COVID-19 infection so far. The business was able to cut cost and maintain all its staff. Today, the business succession plan is well established. Habamungu’s wife has 40% shares and is familiar with the company’s activities.

Richard Tambineza, GroFin Rwanda Investment Manager

Following a grant from the Investing for Employment (IFE) facility that the business has benefited from, EcoPlastic was able to constitute enough cash flow to introduce innovation in its production lines. The company has now installed its own printing line (a service previously imported from Kenya) to provide branded packaging materials at affordable prices and within a short period. EcoPlastic also installed a studio to manufacture the plates that will be used in this new printing line.

As a result, EcoPlastic has retained its existing clients and gained new ones, especially public institutions involved in the agriculture and healthcare sectors. This has increased the monthly average sales by 88% in Q1 2021.

Habamungu says GroFin has not only provided him with moral support during this difficult time but also helped his business to remain profitable. For example, GroFin advised him to shift some production teams to work at night when electricity costs are lower and to focus on acquiring more local plastic waste as raw material rather than relying on imports.

Instead of losing confidence, we continued to focus on marketing strategies and how we can expand our collection areas. It made me realise that even if we are in difficult times, we will resume and grow the company.

EcoPlastic directly employs 52 people and supports another 35 who collects plastic waste for recycling. Despite the setbacks caused by COVID-19, Habamungu chose to retain all his employees and continued to pay their full salaries.

Nzeyimana Fidele has been working as an accountant at EcoPlastic for more than two years. He supports his spouse, two young children and a domestic worker. Nzeyimana says the pandemic has already cost some members of his extended family their jobs.

We are forced to make some contribution to support them as our family and this comes as food prices are increasing due to supplies issues caused by COVID-19.

Nzeyimana Fidele, Accountant for EcoPlastic

He says he feels very lucky to have been able to keep his job at EcoPlastic despite the crisis.

It made me happy. I cannot explain the joy that I feel. There is hope.

Rwanda woman entrepreneur lifts local community out of poverty

Agasaro Organic helps local farmers by adding value to their produce

Pineapples grow easily in the fertile soil of the Nyamasheke District in Rwanda’s Western province. But with the fruit in such high supply during the harvest season and no local means available to process it, farmers here have always struggled to get a decent price for their produce.

As in the rest of the country, agriculture is the main source of income for many households. The Rwandan economy may boast a low unemployment rate, but national labour statistics show that over 60% of the country’s workers are in fact self-employed in the agricultural sector. These subsistence farmers typically have little control over the prices they are paid for their produce and so remain trapped by poverty. Women are also most likely to bear the brunt of poverty as, according to Oxfam, they head close to a third of agricultural households and provide almost two thirds of the labour on family farms.

Agasaro Organic is helping to change this for the 552 farmers in Nyamasheke who now act as its contracted suppliers, Agasaro is a woman-owned business which processes pineapple, maracuja, strawberry, honey and other agricultural products to make organic juices and biscuits.

Agasaro not only offers farmers fair pricing, but also assists them with training and fertilisers to improve their yield. Sindayigaya John (33), a pineapple farmer who employs 25 workers to work his land, says working with Agasaro has allowed him to earn more than double the income he did when he sold his fruit at local markets:

“Working with Agasaro has improved our lives. My two children are now going to a better school and I am paying my employees’ salaries on time, which has also improved their lives. My vision is to one day also start a business like Agasaro.”

Isimwe Noella (26), also farms pineapples with her parents and five brothers. The family supplies three tons of fruit to Agasaro every week to earn around Rwf1,500,000. Before they could only make Rwf200,000 to 300,000 at local markets:

“The quality of my crops has also improved because of the assistance and fertilisers which Agasaro provides us. Working with Agasaro has financially transformed our lives at home,” Noella says.

While Agasaro’s were increasing steadily, inadequate packaging equipment was limiting its ability to increase production. In 2017, a lack of packaging materials even started to impede sales growth. Agasaro and other Rwandan manufactures previously relied on imports from Kenya to obtain plastic packaging. But stringent new Kenyan legislation banned the use of manufacturing of certain types of plastic bags used for commercial and household packaging.

Isabelle Uzamukunda, the owner and managing director of Agasaro, approached GroFin for working capital to finance the purchase of new packaging machines to help address this shortage. As part of its business support offering, GroFin assisted Uzamukunda in the selection of appropriate packaging machines and helped her to review her business plan.

Uzamukunda says the financing and support she has received from GroFin has helped to increase Agasaro’s sales and staff complement:

“Before receiving GroFin’s support my monthly sales were never above Rwf20.2 million. Now my current turnover stands at Rwf29 to 30 million. I had 16 staff members, but now my team has grown to 26 employees.”

Ntwali Victor (34) is one of these new employees. Victor tried to support his wife and child by doing casual or temporary jobs before he started working as an electrician at Agasaro a year ago. His wife couldn’t find permanent work either but earning a steady salary has helped to change that too:

“I paid for my wife to complete technical school and now she has a small sewing business. I can pay my rent on time, pay for medical services and send my child to a better school. We were two jobless people at home – now one of us has a permanent job and the other a business to run.”

GroFin has also assisted the business with networking and market identification and Uzamukunda says this has helped Agasaro to qualify for grants from different donors:

“I have the contract for a $199,000 grant for the construction of a modern plant in-hand and signed. This is all because of GroFin’s financial support and business advice which have taken me to another level as a businesswoman.”

Bugesera Agribusiness: Impacting bottom of the pyramid farmers in Eastern Rwanda

Opening a large business in an area where almost 50 percent of the population live below the poverty line might deter some of the hardiest business people, not so Mr. Christophe Kanyandekwe, owner of Bugesera Agribusiness Company Ltd, also known as BABC.

A mechanical engineer, Mr. Kanyandekwe bought BABC which is located in Gashora, Bugesera district, Eastern Province of Rwanda, in 2014. Prior to his acquisition the company which started operations in 2008 was run by a farming cooperative called Indakuki Cooperative. When Mr. Kanyandekwe bought the factory, he retained the 328 members of the Indakuki Cooperative as suppliers of maize kernels, as he did not want the members to lose their livelihoods.

Today BABC is the largest agribusiness in Eastern Province and it has supply contracts with 86 cooperatives who represent approximately 70,000 farmers. In a province struggling to deal with poverty and with people thinking about how they will put food on the table, companies like BABC provide a lifeline. Each of the farmers that supply the company through their cooperatives are at the very least assured of having a captive market for their products. As many Rwandan farmers are at the bottom of the pyramid, agri-businesses like Bugesera Agribusiness encourage local farmers to see farming as a viable enterprise.  This is important in a country where agriculture is a mainstay for thousands of families.

In the first quarter of this year, according to the National Institute of Statistics of Rwandaagriculture contributed 31 percent to the country’s GDPAgriculture is expected to play a vital role in reducing poverty and ensuring the country is self-sufficient in its nutrition needs.

Mr. Kanyandekwe is also a shrewd businessman in that he finds reliable buyers for his products. One of these buyers is Africa Improved Food Ltd., a company who is taking the fight against malnutrition in Africa head on. BABC signed a contract with the company to provide them with 600 to 1500 tons of soy beans a year for the next three years.

As BABC grew it found itself in need of finance and in GroFin it found a partner willing to help. GroFin, which has made a name for itself investing in small growing businesses(SGBs) has agribusiness as a sector of focus  across sub-Saharan Africa and MENA. Another large Rwandan agribusiness that GroFin supports is Yak Fair Trade. Therefore, partnering with a company like BABC made sense for GroFin. The financing allowed BABC to purchase new equipmentbuy additional raw materials and expand its warehousing capability. In addition to the financing the GroFin Rwanda team provided business support to BABC, which started pre-finance, when the company was advised to properly register its assetsPost finance the company received help on how to better structure its sales and marketing strategy. Additionally, advice was provided on production process automation, improvement of packaging system, and looking into export possibilities. To further help BABC, GroFin Rwanda will introduce BABC to PUM experts who will be providing advice on product certification.

Through GroFin’s finance and business support, BABC is able to sustain 62 permanent jobs of which 24 are held by women and 51 are low skilled/semi-skilled.

“Thanks to GroFin, I was able to expand capacity and make a greater impact in our province of Eastern Rwanda. I think agribusinesses in Rwanda must not hesitate to invest in our agricultural sector.” – Christophe Kanyandekwe

GroFin Rwanda deepens agribusiness reach in East Africa

After transforming Rwanda into a model for conflict-affected states, the Government of Rwanda is now focusing its reform efforts on a vital needs sector: agribusiness. What makes this sector so crucial is that over 75% of Rwanda’s workforce is concentrated in agriculture. Against this backdrop, GroFin is deepening its efforts to reach out to agribusinesses such as Yak Fair Trade Ltd, based in the Rwamagana district of Rwanda’s Eastern Province.

Yak Fair Trade Ltd was founded by entrepreneur couple Mediatrice Uwingabire and Janvier Gasasira in 2010. The agribusiness works hard to improve the quality of maize and beans, two of the most consumed staple foods of East African Community, through a project aimed at controlling quality from production to final consumption. The company has signed exclusive supply contracts with 65,000 farmers grouped into 52 cooperatives in Eastern, Southern and Northern Provinces, both ensuring grain supply for its own use as well as benefitting farmer livelihoods in its community. It also sells the surplus to other institutions such as the World Food ProgramAfrica Improved Food and UNHCR.

Besides, given the importance of animal protein as a readily available source of nutrition to low income households, Yak Fair Trade Ltd is also diversifying into the processing of quality cowsgoatrabbitfishpork, and chicken meat through a mini-processing plant that it has recently installed in Kigali-Nyarugenge. The plant relies principally on supplies from small holder farmers supported by the Girinka project. The One Cow per poor family or Girinka project is based on the premise that providing a dairy cow to poor households helps to improve their livelihood by commercialising dairy products. Since its introduction in 2006, more than 203,000 families have benefited from the programmewith a target of reaching 350,000 Rwandese families by end 2017.

In August 2017, Yak Fair Trade approached GroFin for finance to expand the milling capacity of its maize flour plant that currently produces at 40% of its daily production capacity. In addition, the agribusiness secured a sizeable new supply contract from Africa Improved Food (AIF) in mid-2017. A joint venture created in 2015 between Government of Rwanda and a consortium of four partners: Royal DSM, the majority shareholder, the Dutch Development Bank (FMO) and the British government’s development finance institution CDC Group; AIF produces high quality nutritious complementary foods for infants as well as pregnant and breastfeeding mothers.

In addition, for its meat processing venture, the company needed finance to purchase a distribution van with refrigeration capabilities for easy distribution of meat products to consumers within Kigali.

Apart from finance, GroFin is also assisting the business with conducting a detailed Environmental Impact Assessment and re-defining the duties and responsibilities of the main shareholders towards improved corporate governance.

GroFin’s capacity to extend business support to agribusinesses such as Yak Fair Trade has been enhanced by a grant from the USAID East Africa Trade and Investment Hub (the Hub)The grant will involve GroFin screening 200 agribusinesses and offering tailor-made technical assistance to promising SMEs across Rwanda, Tanzania, Kenya and Uganda, ensuring that many more agribusinesses such as Yak Fair Trade can benefit from this partnership between GroFin and the Hub.

Already, this grant has catalysed the creation of 55 skilled and semi-skilled jobs as well as sustained 16 existing jobs at Yak Fair Trade. Moreover, all 65,000 farmers that supply to Yak Fair Trade will benefit from the enhanced business value chain. Finally, our investment and support has high implications for women empowerment as the company is led by a female CEO and female employment stands at 43%.

With GroFin’s finance and support, we are set to deepen our reach to farmers, expand employment to four times the current levels, and improve food security for the community,” concludes Janvier, the company’s co-founder and Chief Operations Officer.

Impact Investing & Education–Learning to make a difference in Africa

Africa’s education story is waiting to be written, but whether it will be written by Africa’s children is a pressing question that haunts the emerging continent.

Consider this – Sub-Saharan Africa (SSA) still has 30 million children out of school, and tertiary education is suffering from severe capacity constraints. SSA is also the worst-performing region globally for educational quality and learning outcomes, with up to 40% of children not meeting basic learning outcomes in literacy and numeracy. Moreover, by 2035, the number of Africans joining the workforce (15–64) will exceed that of the rest of the world combined, but SSA’s education systems are not meeting workforce needs.

Sounds like a challenge for any government? It certainly is, and one that no government can possibly rise to. A report highlighting the key role that the private sector is poised to play in Africa’s education landscape then comes as a fitting response to this challenge, replete with a powerful foreword by Liberia’s President, Ellen Johnson Sirleaf.

This definitive report by Caerus Capital is aptly titled “The Business of Education in Africa”, focusing as it does on the contribution of the private sector and on how government can act as the steward of the whole education system.

“The Business of Education in Africa” paints the current landscape of private education in Sub-Saharan Africa, goes on to discuss how African governments can better engage with private education players, highlights opportunities for investing in private education in SSA and delves deep into case studies of interesting companies in education in SSA. It ends with case studies of the education market in South Africa, Nigeria, Kenya, Ethiopia, Senegal & Liberia that may well be some of the most comprehensive insights into the education markets of these key African economies as on date.

While Sustainable Development Goal (SDG) 4 mandates that governments have and must continue to commit to access to a free, quality education for children, statistics highlight that around one billion African children will need to be educated over the coming three decades. Keeping pace with this demand requires enormous investment in schools, universities, and other infrastructure; recruitment and training of teachers, school leaders, and support staff; and learning materials. Public education systems will struggle to keep up with this unprecedented increase in demand.

Private sector education is then key to unlock the potential of this vital sector, and meet the rising tide of demand that otherwise threatens to engulf the continent’s children in a sea of darkness.

The report notes that the private sector is already playing a significant role in SSA. While publicly reported data compiled by UNESCO indicates that the private sector has a share of 13.5% in the education sector across 15 countries, the report’s own surveys indicate that the actual share of private schooling might be 21% (or one in five pupils), and this number is only set to rise (to one in four) over the next five years.

However, this enormous opportunity comes with the significant challenge of financing private players in education, with the report identifying a private investment requirement of US$16–$18 billion over the next five years.

The report highlights that education makes for a compelling investment opportunity because it delivers wider benefits in the form of high individual, social, and economic returns, and investors & donors are consequently willing to secure lower financial returns, or even a purely social return on investment.

Impact investing that focuses on social returns over purely financial returns then comes to mind as a lasting solution to the financing woes of private sector schools. While impact investing is a nascent field and impact investors in Africa are few and far between, some stories of positive change in local communities are already being written.

Be it Kenya’s Nairobi International SchoolTanzania’s Daystar SchoolRwanda’s Highland SchoolGhana’s Firm Foundation or South Africa’s Zambesi Akademie, these small businesses hailing from across the African education landscape have one strong link that binds them all — GroFin.