Kampala, Uganda — September marked the official launch of the GroFin Small and Growing Businesses (SGB) Fund in Africa that aims to catalyse sustainable job creation through supporting small and growing businesses in Ghana, Nigeria, Uganda, Zambia, Kenya, South Africa, Rwanda, Tanzania, and Egypt.
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Typically, SGBs and entrepreneurs in Africa lack the vital resources they need to succeed, such as access to flexible patient capital, access to business skills and training, and linkages to the supply chains of larger organisations.
The GroFin SGB Fund seeks to provide an integrated solution of patient risk capital and end-to-end business support for SGBs. Each year, the fund aims to support up to 100 entrepreneurs, with an estimated average loan size of US$ 350,000.
Over the next 10 years, the fund will target the creation of 47,000 sustainable jobs. The Fund’s tiered capital structure is a distinguishing feature that enables a range of social and commercial investors to join the fund post-launch.
The fund is an uncapped and unlimited-life fund, and GroFin aims to initially grow the dedicated SGB Fund to US$150 million.
The fund was co-created by GroFin, a pioneering SME development finance organisation and Shell Foundation, an independent charity with an 11-year track record of providing vital support to underserved SGBs in Africa and the Middle East; the German development bank KfW, a seasoned founder of structured funds; the Norwegian Investment Fund for Developing Countries (Norfund); and the Dutch government through the Dutch Good Growth Fund (DGGF).
Over the next two years, with grant funding from the German government through KfW, GroFin plans to expand the fund’s support to SGBs to three more African countries.
Since 2004, GroFin has helped to sustain more than 18,000 jobs, provided business support to more than 8,000 SGBs, and invested in 600 business owners’ dreams. Having generated US$2.4 billion in economic impact, GroFin, Shell Foundation, KfW, DGGF, and Norfund are now bringing this proven, integrated solution to more SGBs in Africa.
In most OECD countries, the SGB sector is a major contributor to inclusive economic growth and job creation. However, entrepreneurs in Africa are grossly underserved, with 50 to 90 percent of SGBs failing within the first five years.
As a result, many African countries are missing out on a major engine for sustainable job creation that can help tackle poverty and improve livelihoods. Start-ups and small businesses often struggle to access the capital they need to expand. Their limited track record, fluctuating cash flows, low levels of collateral, and capacity limitations make it difficult to meet the lending criteria of most banks.
The GroFin SGB Fund seeks to address these market barriers by providing African entrepreneurs with an integrated solution of patient growth finance, tailored business support, and access to markets.
Based on the viability of an entrepreneur’s business and growth plans — and not the availability of collateral — entrepreneurs will be able to access loans ranging from US$100,000 to US$1.5 million for a period between two and six years.
A unique feature of the fund is the Business Support Facilities, where business owners can obtain advice from GroFin’s local and international SGB experts. Through pre-investment business support, GroFin’s team of locally based investment managers will help entrepreneurs develop viable business plans, identify and mitigate potential risk, and execute effective growth strategies.
For those who qualify for investment, the business support services continue for the entire duration of the investment. The launch, held at the Kampala Serena Hotel, hosted international representatives of the public, private, and non-governmental sectors interested in learning how efforts such as the GroFin SGB Fund can spur inclusive economic growth through supporting Africa’s SME sector.
Attendees included the Honourable Shem Bageine, Uganda’s Minister of State for East African Affairs; Mr. Günter Nooke, the German Chancellor’s Personal Representative for Africa and the German Federal Ministry for Economic Cooperation and Development (BMZ) Commissioner for Africa; Dr. Peter Blomeyer, German Ambassador to the Republic of Uganda; Dr. Klaus Müller, Director of KfW Development Bank; Mr. Hans Peter van der Woude, Head of Development Cooperation and Economic Affairs of the Netherlands Embassy in Uganda; Mr. Kjartan Stigen, Norfund’s regional director for East Africa; Dr. Margaret Blick Kigozi, Shell Foundation Trustee and President of the International Federation of Business and Professional Women in Uganda.
The keynote address by Mr. Günter Nooke reinforced the importance of investing in emerging markets. Other notable speakers included Shell Foundation’s Mr. William Kalema, Norfund’s East Africa Regional Director Mr. Kjartan Stigen, Mr. Anton Koonstra on behalf of the Manager of DGGF, GroFin Group CEO Jurie Willemse and two existing GroFin clients, Mr. Caleb Muhairwe of Kiruhura Dairy Development Co. Ltd and Mrs. Beatrice Mawano of SAS Dental Clinic.
GroFin operates fully staffed offices in Kenya, Uganda, Rwanda, Tanzania, Zambia, South Africa, Ghana, Egypt, and Nigeria. While each country has specific development goals, the GroFin SGB Fund’s key focus is investing in high-impact sectors such as health care, education, agro-processing, and energy in addition to other sectors that support inclusive growth.
GroFin is an international development finance organisation with over US$500 million in committed capital specializing in the small and growing business sector across Africa and the Middle East. GroFin is a pioneer of “impact investing” at the bottom of the small and medium sized enterprise pyramid. The company is one of the very few private financial organisations capable of tackling a development challenge historically addressed by the public sector and NGO programmes.
GroFin’s key differentiator is the integration of appropriate finance and tailored business support. With such support stretching beyond finance, GroFin partners with committed entrepreneurs to help them realise their aspirations and business objectives. For more information, please visit www.grofin.com.
About Shell Foundation
Shell Foundation is an independent charity established by the Shell Group in 2000 to create and scale new solutions to global development challenges. They apply business thinking to major global development challenges including job creation through SMEs, urban mobility and access to energy.
The Foundation deploys a blend of financial and non-financial resources to accelerate social innovation and harness private markets to deliver public benefit at scale. The Foundation works with a small number of entrepreneurial partners to identify underlying market failures behind intractable problems and co-create new social enterprises to solve them, such as GroFin.
Over the last 15 years these partners have created nearly 40,000 jobs, improved over 32 million livelihoods, saved 7.9 million tonnes of CO2 emissions and secured over US$5 billion of investment. For more information, please visit www.shellfoundation.org.
About KfW Development Bank (KfW)
KfW is one of the world´s leading and most experienced promotional banks. Established in 1948 as a public law institution, KfW is owned 80 per cent by the Federal Republic of Germany and 20 per cent by the federal states (“Länder”). KfW Development Bank is Germany’s leading development bank and an integral part of KfW. It carries out Germany´s Financial Cooperation (FC) with developing countries on behalf of the Federal Government.
The 600 personnel at headquarters and about 200 specialists in its 70 local offices cooperate with partners all over the world. Its goal is to combat poverty, secure the peace, protect the environment and the climate and make globalisation fair. KfW is a competent and strategic advisor on current development issues. For more information, please visit www.kfw.de.
About the Dutch Good Growth Fund
The DGGF was established in July 2014 by the Dutch Ministry of Foreign Affairs. The Fund provides finance and insurance to create the conditions for development related trade and investment in 68 countries. By linking aid to trade, the DGGF improves access to finance for entrepreneurs in both the Netherlands and developing countries. One specific part of the Fund focuses on the support of the missing middle in low- and middleincome countries. In order to achieve this, the DGGF provides debt, equity, mezzanine 6 financing or guarantees to development-relevant funds that invest in local SMEs.
The DGGF has set specific targets for investment funds that invest in young or female entrepreneurs and entrepreneurs in fragile states. For more information visit http://english.dggf.nl/.
Norfund – the Norwegian Investment Fund for Developing Countries – was established by the Norwegian Parliament in 1997. The organisation is the government’s main instrument for combatting poverty through the private sector development and Norfund’s objective is to contribute to sustainable commercial businesses in developing countries. Funding is provided via capital allocations from Norfund’s development assistance budget.
Norfund provides equity, other risk capital, and loans to companies in selected countries and sectors where businesses lack access to sufficient capital to develop and grow. The sectors in which Norfund invests are clean energy, financial institutions and agribusiness, in addition to small and medium sized companies through investment funds. For more information, please visit www.norfund.no