This forms part of the establishment of the larger Business Partners International East Africa (BPI EA) company which aims to provide SME focused investments ranging from $50,000 to $1 million.
According to Mark Paper, the chief operating officer at BPI, “BPI East Africa will initially focus on investments in East Africa, namely Kenya, Rwanda and Uganda, but we foresee that in the short-to-medium term we will include other countries.”
Founding shareholders in BPI East Africa include South African SME risk financier – Business Partners Limited, which is leading a consortium, the IFC (International Finance Corporation, the World Bank Group private lending arm), Swiss Investment Fund for Emerging Markets (SIFEM), Dutch impact investor Stichting DOEN and the Dutch Development Agency (FMO), the Canada-based Mennonite Economic Development Associates (MEDA) and Norfund, the Norwegian development agency.
Paper explains that BPI seeks to reach out to small family-owned companies and those enterprise owners whose businesses are doing well but cannot attract the full commercial lending support that they need for traditional bank attention. “Private equity firms often refrain from lending to these SMEs as they are either too small, or prefer not to deal with the complexities of doing business with a family management team rather than a board of members. This is however the area that BPI specialises in and the exact service offering that we are working to expand to entrepreneurs across Africa.”
Speaking at opening, Daniel Kaggwa, country manager at BPI Uganda, says that the company has recognised Uganda as a growth centre for Africa due to the country’s growing economy over the past five year period, and the fact that the East African region continues to prosper, with a forecasted GDP growth of 5.5% expected in 2016. He says that entrepreneurship is thriving in Uganda and currently contributes approximately 90% to the country’s GDP.
He points to the 2014 Global Entrepreneur Monitor (GEM) – a report measuring 73 economies across the world – which revealed that Uganda was rated as the world’s most entrepreneurial nation. The country reported the highest new business ownership rate (28.13%) and established business ownership rate (35.94%) – far exceeding other global economies. It also reported the highest perceived opportunities (76.91%) and lowest fear of failure (12.55%).
Kaggwa adds: “While entrepreneurship may be thriving in the country, access to finance continues to be a challenge across the continent and restricts entrepreneurs in their ability to truly unleash the positive spin offs that entrepreneurship can offer a country.
“With BPI Uganda, we seek to provide access to funding, post-investment technical assistance support and mentorship for entrepreneurs and SMEs, thereby fostering entrepreneurship, facilitating wealth creation, broadening tax bases and ultimately creating jobs.”
BPI Uganda has a specific mandate to operate exclusively in the SME space, and the business model will replicate the South African Business Partners Limited model, which specialised in investing capital, skills and knowledge in entrepreneurs. Since establishment in 1981, Business Partners Limited has facilitated over 70 000 transactions with SMEs and created 600 000 in the process.
Both business and commercial property finance will be available to local entrepreneurs, and the BPI Uganda investment transactions will be structured using equity, royalties and term loans, or a combination of these. Entrepreneurs can apply for loans between UGX200 million and UGX3.5 billion.
Kaggwa explains that all applications will be assessed on the viability of the business, the entrepreneur’s integrity, drive and experience, as well as their ability to manage a successful independent enterprise. “Capital and security are not necessarily required for an application to be accepted, as each investment is individually structured according to the entrepreneur’s needs and profile.
“We seek to structure investment opportunities for entrepreneurs that suit their cash flows, aligned with their business growth trajectory which, at the same time, provides us with a return proportionate to our investment risk.”
For more information on BPI Uganda, or to apply for finance, please visit our BPI Uganda page.