GroFin’s model of combining finance and business support ideal for growth of the small and medium enterprises (SME) sector in Rwanda

Research has shown that it is not only access to finance that is important for SMEs to succeed but also business support needed to assist entrepreneurs to grow their businesses. Finance and value-adding business support offered as a package helps to address the core challenges SMEs face improving their chances of success.

This particular thinking is given more prominence when one considers the high mortality rate of Rwandaís SMEs. Official statistics from the Ministry of Commerce and Industry (MINICOM) shows that over 30 percent of Rwandaís 200,000 SMEs do not survive beyond their second year.

In order to offer a more sustainable solution, funding sources in Rwanda need to consider how they support their clients and help steer businesses towards a path of success in a more predictable fashion. Among funding institutions that are known to be taking this unique approach is GroFin Rwanda Ltd. GroFin is a pioneering SME development financier providing entrepreneurs and business owners with tailored finance and experienced business support, to start and grow successful businesses.

Their multinational team has been investing in SMEs for over 13 years and manage 7 funds on behalf of 25 international investors, development funders, banks, corporate and family foundations with committed capital in excess of USD320 million.

The organization has 14 offices across 12 countries and current expansion plans will see this increasing to 17 offices in 15 countries with approximately USD550 million in committed capital by the end of 2013. Christian Bugabo, Acting General Manager at GroFin Rwanda says; Our ability to effectively combine appropriate finance and expert business support in developing countries,  traditionally considered difficult environments for SMEs, has resulted in GroFin being supported by respected  international organizations such as IFC, African Development Bank, CDC-the UK’s Development Finance institution, The Shell Foundation, European Investment Bank, The Netherlands Development Finance Company(FMO), Norfund and Proparco amongst others. Bugabo adds; ìThere are a number of challenges SMEs face. Typically many of these are proportionately  much more difficult to resolve or manage than  it could apply for large businesses.

These can be infrastructure related with regards to transport or electricity. Perhaps water for certain types of businesses or even human resources or access to the skills the business needs.

These are all valid challenges but in our experience there are three core challenges SMEs face and these are access to; the appropriate finance, business support and an enabling environment that makes doing business as easy as possible and provides access to opportunities.

GroFin is keen to positively impact Rwandaís economy. Supporting businesses will increase job creation opportunities and support efforts geared towards Rwandaís economic development. In addition to job creation, creating wealth for entrepreneurs, GroFin takes pride in seeing supported businesses paying more taxes that contributes to the construction of public infrastructure such as public schools, hospitals and health centres and roads. ”We want to play our role in assisting Rwandans to achieve their social and economic aspirations in line with The Vision 2020 that places  the private sector as a true engine for economic growth”, Bugabo notes.

More than money

As indicated, GroFin does not simply lend money, we partner with committed local entrepreneurs and business owners and finance businesses that we remain actively involved in supporting for the duration of our investment period. Our finance is structured according to each businessís needs and its cash flow projections on a case-by-case basis and can take the form of debt, quasi-equity or equity. Finance provided ranges from US$50,000 to US$1,500,000 for a term of 4 – 6 years and can be used for a variety of purposes including:

•  Starting a business
•  Expanding your business
•  Purchasing a business
•  The purchase or expansion of business premises
•  Growing a new product line

GroFin Network

GroFin Africa

1. Ghana
2. Kenya
3. Mauritius
4. Nigeria
5. Rwanda
6. South Africa
7. Tanzania
8. Uganda
9.  Zambia

GroFin Middle East  North Africa (MENA)

1. Dubai    2. Jordan     3. Oman

GroFin is set to open new offices in Egypt, Kingdom of Saudi Arabia and Iraq by the end of 2013 thereby increasing its presence to 17 offices in 15 countries.

GroFin‭ ‬follows a structured and proven process

1.    Apply:  Your application will be reviewed based on the information provided by you     and a decision will be made as to whether GroFin is able to proceed further with your application.

2.    Support:  Should our initial review indicate that we may be able to support your proposal, our team will provide expert pre-finance business support to help finalise your application and business plan.

3.    Screen:  GroFin will then undertake a detailed analysis of your business. This includes analysing your business proposal within our pioneering viability model and on the basis of finance affordability.

4.    Verify:  As part of our screening process, GroFin will also verify any information that has been provided and highlight further information that is required. The output of our business analysis and verification of information is to enable us to review your business plan and request for finance and support based on complete and objective information.

5.    Plan:  A further output of our business analysis is a financial plan which along with your business plan provides a road map for your business. Together these plans cover all areas of your business including management and staff, sales and marketing, finance and administration and operations and highlights potential opportunities and key risks to be addressed.

6.    Finance:  Our Board of Directors provide final approval of your application including the structuring of finance provided and any terms and conditions thereon. This will be documented in an “offer” letter to you.

7.    Implement:  Once you have formally accepted and met all conditions and requirements of the offer including payment of any applicable fees, implementation can proceed. Importantly at this point you become liable for any interest and capital repayments as per the repayment schedule agreed with you.

8.    Support:  As part of our integrated solution including structured finance, GroFin provides you with continuous value adding business support for the duration of the finance period. Our business support focuses on your businessís needs and is designed to enhance the success of your business including supporting the implementation and monitoring of the business and financial plan.

9.    Exit:  On payment of a final instalment according to an agreed financial plan or other agreed settlement, our formal involvement with your business will end. While additional funding and on-going support can be discussed at any point, final settlement presents a good opportunity to review your business and discuss any future plans and finance requirements with GroFin.