US$100 Million Grofin SGB Fund Supporting SMEs in Africa
The Fund has initial commitments of US$100 million, which is expected to grow to US$150 million in two years, making it one of the largest funds specifically targeting small and growing businesses. * This Fund is a follow-on to the US$170 million GroFin Africa Fund that is fully invested * The GroFin Small and Growing Businesses (SGB) Fund aims to support over 9,800 under-served entrepreneurs and help create 47,000 sustainable jobs across Africa over the next 10 years. * The Fund has attracted investment from a range of development funders and investors including Shell Foundation (an independent charity), KfW Development Bank (KfW), the Dutch Good Growth Fund (DGGF) and Norfund. * The GroFin SGB Fund seeks to provide business development assistance and finance to small and growing businesses that are currently under-served in Africa.
Kampala, Uganda – Wednesday 23 September 2015 marked the official launch of the GroFin Small and Growing Businesses (SGB) Fund in Africa that aims to catalyse sustainable job creation through supporting small and growing businesses in Ghana, Nigeria, Uganda, Zambia, Kenya, South Africa, Rwanda, Tanzania and Egypt. The GroFin SGB Fund seeks to provide an integrated solution of patient risk capital and end-to-end business support for SGBs. Each year the Fund aims to support up to 100 entrepreneurs, with an estimated average loan size of US$ 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 its launch. The fund is an uncapped and unlimited-life fund, and GroFin aims to initially grow the dedicated SGB Fund to US$150 million.
Typically, SGBs and entrepreneurs in Africa lack the vital resources they need to succeed: access to flexible patient capital; access to business skills and training; and linkages to the supply chains of larger organisations.
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 under-served 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 under-served, with 50-90% 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 makes 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 healthcare, education, agro-processing and energy in addition to other sectors that support inclusive growth.
By Grofin
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“This is a clear demonstration of the high levels of interest that investors have for smaller investments in Africa that deliver both quantifiable investment and development returns. The confidence shown in the GroFin team and our unique business model that integrates risk finance with business development assistance to develop entrepreneurs, local business and employment at scale is heartening.” Jurie Willemse Chief Executive Officer GroFin
“In many parts of Africa, SMEs account for over two thirds of GDP and are therefore critical to economic growth and poverty reduction. However many entrepreneurs struggle to access the finance and skills they need to grow their businesses successfully. With the launch of the GroFin SGB Fund, entrepreneurs across nine countries will be able to access critical ingredients for growth that will also create jobs and support inclusive economic development. Having co-developed the model with GroFin and built a 10 year track record, we are pleased to see the model being adapted to serve the SGB market across Africa. One of the key innovations offered by the SGB Fund is its tiered capital structure which allows a range of different funders to co-invest both pre-and post-launch. Shell Foundation is excited to be working in partnership with KfW Development Bank, the Dutch Good Growth Fund and Norfund to scale the initiative.” Sam Parker Director Shell Foundation
“Entrepreneurs are the driving force behind economic growth and innovation. German “Mittelstand” companies – SMEs – are a leading example. Supporting small and growing businesses at home and abroad is therefore a key priority for KfW. We are thus very pleased to partner with the leading specialist SME developer GroFin to grow this important sector in Africa.” Dr Klaus Müller Director KfW Development Bank
“Small and Medium-sized Enterprises (SMEs) are essential for economic growth, innovation and prosperity of any nation. SME growth is an important engine for poverty reduction in developing countries. However, lack of access to capital is a critical limitation for this. GroFin’s loans and equity capital in local currency, its active approach to its investments and ability to act as advisor in fields such as management, financial planning and reporting, is a good starting point for establishment of viable small enterprises over time. Being a partner with GroFin is thereby an important element in Norfund’s strategy for strengthening SMEs in developing countries.” Kjartan Stigen Regional Director: East Africa Norfund
“I am pleased with the selection of the GroFin SGB Fund as one of the first investments of the DGGF. Reaching out to the missing middle in a scalable way is a huge challenge and we are impressed by GroFin’s commitment to this difficult market segment as well as its ability to innovate a fund structure aligned with the reality of those businesses.” Clemens Gerteiser, responsible for DGGF Investments within Triple Jump
For more information, please contact: Elsa Arouff – elsa@grofin.com or +230 483 4782 Marketing & Communications Administrator GroFin
Heidi Hafes – Heidi.Hafes@shell.com or +44 207 934 2221 Communications and Business Manager Shell Foundation
Laura Knierim – laura.knierim@kfw.de or +49 69 7431-6334 Project Manager KfW
Inger B-A Nygaard – Inger.nygaard@norfund.no or +47 22 01 93 93 Communication Manager, Strategy and Analysis Norfund
Claudia Vroom – claudiavroom@triplejump.eu or +31 20 7600632 Manager Investor Relations, Business Development Triple Jump On behalf of DGGF
About GroFin 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 worlds 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 Germanys 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 middle- income countries. In order to achieve this, the DGGF provides debt, equity, mezzanine 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/
About Norfund 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
