Vol. 7, No 2, 2003
GATSBY
Promoting Micro Enterprise
in AFRICA
Inter Trust Newsletter
Produced by:
MidWest Digital
P.O. Box 7064
Dar es Salaam, Tanzania.
Tel: +255 22 266 8732
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The Gatsby Inter Trust Newsletter is published twice a year by Tanzania Gatsby Trust, P. O Box 8695, Dar es Salaam in association
with the Kenya Gatsby Trust, Uganda Gatsby Trust, Cameroon Gatsby Trust and Gatsby Charitable Foundation, U.K.
It is registered in, and coordinated from, Dar es Salaam, Tanzania by the Tanzania Gatsby Trust General Manager Mrs. Olive Luena.
For contributions, advertising and subscription, contact:
Cameroom Gatsby Trust
Tanzania Gatsby Trust
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Tel.
: 237 426800
Fax
: 237 427902
E-mail : [email protected]
Contact : Susan Elango
General Manager
P O Box 8695, Dar es Salaam, Tanzania
Tel.
: 255 22 2112900
Mobile : 255 742 781129
Fax
: 255 22 2112899
e-mail : [email protected]
Contact : Olive Luena
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Kenya Gatsby Trust
Uganda Gatsby Trust
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P O Box 44817, 00100 GPO
NAIROBI, KENYA
Tel. :254 2 2720711,2720703,2720571
Fax :254 2 2721707
E-mail : [email protected]
Contact : Timothy Nzioka
Chief Executive Officer
P O Box 7062, Kampala, Uganda
Tel.
: 256 51 531048
Fax
: 256 41 531048/542377
E-mail : [email protected]
Contact : Dr. J. K. Byaruhanga
General Manager
In this Issue . . . .
1.
Philanthropy in Theory and Practice . . . . .4
2.
Philanthropy and Volunteerism in
East Africa . . . . . . . . . . . . . . . . . . . . . . . .6
3.
Rewarding Competence . . . . . . . . . . . . . .8
4.
A New Look, New Programme Focus . . . .10
5.
Innovative Philanthropic Socio-Economic
Projects in Cameroon . . . . . . . . . . . . . . .16
6.
Technology Transfer and Financial
Services for the Small Scale
Industrial Sector in Uganda . . . . . . . . . . .17
7.
UGT Clients’ Success Stories . . . . . . . . . . 19
8
Product Development & Design
Improvement . . . . . . . . . . . . . . . . . . . . .21
8.
President's Choice - My Story . . . . . . . .22
Volume 7, No 2 2003 - Inter Trust Newsletter
Gatsby Charitable Foundation
& Sainsbury’s Family Charitable
Trust
Allington House 1st Floor, 150 Victoria St.
London S.W.1E
Tel. (Dir) : 020 7410 7044
Tel.(Gen) : 020 7410 0330
Fax
: 020 7410 0332
E-mail : [email protected]
Contact : Victoria Hornby/
Laurence Cockcroft
Cover Pictures
Suzie Laizer in front of her
products in Shoprite Supermarket
in Dar-es-Salaam, Tanzania.
Gatsby Women win first
prize in Textiles on the
International Day of the
Woman in Limbe, South
West Province, Cameroon.
3
VIEW POINT
Philanthropy in Theory and Practice
By Faith Kisinga, Programme Officer - Research, at the Centre for Philanthropy and
Social Responsibility, known in Kiswahili as Ufadhili
Definition
Philanthropy literally means "love of mankind". The word
originates from the Greek word philanthropia; where philos
means love and anthropos, man. Greek anthropos also gives
us words such as misanthrope, one who hates mankind and
anthropoid, resembling man.
By definition, philanthropy denotes more than simply
giving and volunteering. Along with the action of giving,
there must be the mental component, which is the love of
mankind. Hence, the act of giving and volunteering must be
geared at reaching a certain end - transforming the
beneficiary's life for the better.
fundamental in African societies, has also played a key role
in shaping philanthropy in Africa. It needs to be woven into
the definition, in order to promote an appreciation for the
responsibility each and every member of society has
towards others.
The definition will also have to be situated in today's reality
if African philanthropy is to be effective in today's society.
Cross-sectoral giving, for example, where the formally
organised profit-making sector gives to the non-profitmaking sector, for their use in enhancing the well-being of
the less endowed members of the community, is one aspect
of contemporary giving.2
Crafting a definition for philanthropy for Africa
Unfortunately, popular perceptions of the meaning of
"philanthropy" as currently understood and practised lie in
stereotypical associations of the word with charity. Indeed,
philanthropy is often misconstrued to mean routine,
comfortable charity, where the less needy donate to the more
needy. There is need, however, for a wider perspective of
philanthropy, for example, one which will help to ensure
support for empowerment of the disadvantaged, and which
will ensure that the concept is understood in the broadest
sense, to include all forms of resources-human, time and
material-and not be limited to financial resources. With such
a definition, philanthropy will be positioned to play a
transformational role of critical intervention in a dynamic
society.
Part of the reason why philanthropy could have come to be
associated with charity may stem from the fact that there is
a tendency to view the west as the standard setter for
contemporary procedures. Philanthropy however, is not new
to Africa. It has been practiced successfully for years and
has in many communities become part and parcel of the way
of life. There is need to craft an operational definition for
philanthropy in Africa; one that incorporates aspects of
societal life, while retaining the characteristics that have
sustained the practice on the continent.
There are, no doubt, aspects of African philanthropy that are
well integrated into African social contexts and every day
reality, which have sustained local philanthropy. One
example is commonality of purpose. This aspect is revealed
in the practice of "horizontal giving, where members of the
same social strata combine their resources for the common
good"1 . The concept of social solidarity, which is
Purpose Of Philanthropy
The prevailing social, cultural, economic and political
environment calls for a reorientation of commonly held
perceptions regarding philanthropy. Widespread and
increasing poverty, reduction in social sector spending and
government funding, and rising social and economic
inequalities pose a challenge to today's African societies.
Increasingly, more and more countries are seeking solutions
to these challenges. Those that have relied on external
support in meeting societal demands and needs are now
searching for effective means of tapping or mobilizing local
resources for development.
Philanthropy plays an important role in mobilizing local
resources for development. Of more significance though, is
the role philanthropy plays in transforming communities
that were dependent on external funding. As philanthropy
begins to lift people from the level of inertia and
dependency, to the level of empowerment, where they begin
to take control of their development, take advantage of
whatever resources are available and realize what they had
set out to do, a transformation begins to take place.
Society begins to look at the government less as the provider
of their every need, and more as a partner in development.
The more successful initiatives undertaken by communities,
the more confidence communities will have in managing
their own development. As a result, philanthropy will be
woven more tightly into the canvas of a society's social and
economic development. Eventually, the growth of the scope
and quality of philanthropy may serve as an indicator of
societal progress.
The economic value of philanthropy is usually
underestimated. Indeed, whenever the question of how
1
Connie Ngondi-Houghton Laws, Policies and Attitudes Influencing Local
Philanthropy In Kenya- A Report Commissioned by the Africa Philanthropy Initiative
(Unpublished, Nairobi, 1999), p..5.
4
2
Ibid
Volume 7, No 2 2003 - Inter Trust Newsletter
VIEW POINT
much is contributed by philanthropy is raised, the tendency
is to limit the answer to cash and in-kind (where these have
a value) contributions. Rarely do time, skills and other nonmaterial resources get computed as part of the contribution
made by individuals and the private sector towards
development. Yet, these resources constitute an important
and substantial proportion of philanthropic contributions.
Consider the following example:
A recent survey3 on giving and volunteering in Kenya
established that respondents volunteered a substantial
amount of their time monthly. 6517 hours were contributed
to Social Services, 5428 hours went to Religion, and 3104
hrs were given to Education and Research. The corporate
sector has also played a visible role in volunteering. Last
year, employees of Barclays Bank of Africa volunteered an
equivalent of 465 years.
If these hours were to be converted to cash, the economy
could be said to have received a tremendous boost. Indeed,
the estimation of the economic value of non-material
benefits that accrue to the economy from material and nonmaterial philanthropic efforts.
Ufadhili's Role In Promoting Philanthropy
Vision and Mission of Ufadhili
Ufadhili, the Centre for Philanthropy and Social
Responsibility, is based in Nairobi. The Centre plays a
crucial role in promoting philanthropy in East Africa.
Ufadhili's vision is "East Africans in control of their
development". Ufadhili believes strongly that the reduction
of poverty in East Africa will to a large extent depend on the
society's willingness and capacity to create wealth and
mobilize and manage existing resources effectively.
Ufadhili's mission is "to promote philanthropy and the use
of local resources to improve people's lives". The mission of
Ufadhili has evolved over the past year or so but has focused
primarily on increasing the quantity and quality of resources
available to support the work of civil society organizations
(CSOs).
The Vision and Mission statement reflect the concept of
"philanthropy", which is not a new concept in the region.
Ufadhili seeks to re-kindle the spirit of philanthropy within
the community, encourage the extension of philanthropic
acts beyond the immediate family and ensure that the
concept is also understood in more than just monetary terms.
Purpose and Programmes
Information Resource Centre
Ufadhili's purpose is to become the organization that East
Africans seek for guidance, capacity building, training and
information on philanthropy and local resource
mobilization. Ufadhili is also focused on contributing new
knowledge, lessons learned, information and linkages on a
regional and international basis, through training and
information dissemination.
In light of this goal, Ufadhili, through its Resource Centre,
maintains the largest regional library and data-base of
materials on philanthropy, volunteerism, corporate
involvement in social development and resource
mobilization. In addition, Ufadhili has embarked on an
exploration to identify studies and surveys that have been
conducted, or papers that have been written on philanthropy,
with the intention of facilitating the publication or
dissemination of the findings.
Facilitating Cross Sector Partnerships
Ufadhili also endeavours to promote and facilitate
collaborative links within and between communities,
individuals, local businesses, non-profit organizations and
government to increase efforts in releasing resources from
various local sources. Currently its pilot initiative of crosssector partnerships is comprised of five cross sector
partnership models.
Creating an Enabling Environment for Philanthropy
Ufadhili is working with Government, the Private Sector
and Civil Society to create an enabling legal and policy
environment for giving in East Africa. Currently, the work
in this programme is geared at improving the tax regime to
ensure increased mobilization of resources.
Recognition of Philanthropy and Volunteerism
Through conferences, seminars, and award giving
ceremonies, Ufadhili provides a forum for the discussion,
celebration, recognition and growth of philanthropy and
volunteering in the East African region. In June, last year,
the Centre held a regional conference on philanthropy and
volunteering. Participants from Tanzania and Uganda were
in attendance. The Centre held another Conference in June
this year, whose theme was "Kujitegemea".
Professional Organizations
The Center engages professional organizations in
discussions on how their membership can volunteer their
professional expertise to the communities in which they
conduct their work.
Enhancing the effectiveness, credibility and image of
Non-profits
While Ufadhili appreciates the fact that one of the greatest
challenges facing civil society over the next few decades is
that of mobilizing adequate resources to support sustainable
development work, it also recognizes the value of a good
image if non-profits are to gain and retain the public's
confidence in, and support for, their work in furthering
development. Through extending training and support in the
areas of local resource mobilization, leadership,
management, governance and effective communication,
Ufadhili enhances the effectiveness, credibility and image of
nonprofits.
3
The Kenyan Component of the Johns Hopkins Comparative Non-Profit Sector
Project
Volume 7, No 2 2003 - Inter Trust Newsletter
5
VIEW POINT
Philanthropy and Volunteerism in East Africa
The Centre for Philanthropy and Social Responsibility, known in Kiswahili as Ufadhili hosted the Second East Africa
Conference on Philanthropy and Volunteerism on 11th to 13th July 2003 at the Kenya School of Monetary Studies in
Nairobi. This article by Sella Ouma of Ufadhili Trust highlights the major issues raised at the conference.
The planning of the regional conference was done in
partnership with the Kenya Medical Women Association,
Maendeleo ya Wanawake, Media and Development
Association, Nairobi Central Business District Association,
Southern Volunteer Programme - Kenya, Ungana and
Young Muslim Association. The theme of the conference,
"Kujitegemea", was well chosen as the conference intended
to raise awareness on the value of philanthropy and
volunteerism in enhancing self-reliance for development in
the East Africa region.
The Chief Economist, Mr. Nelson Muturi, on behalf of the
Kenyan Minister for Planning and National Development,
read the keynote speech. The speech acknowledged the need
for the government to create and promote an enabling
environment for philanthropy and volunteerism, as a means
of enhancing self-reliance and the use of local resources for
development. He said "we, recognize that it is not
sustainable for Kenya to continue on the path of high
dependency on external resources".
The conference ,which generated a lot of discussions and
useful contributions, had very well chosen speakers. It
attracted people from the civil society, the private sector, the
public sector and individuals. The representation from
Uganda and Tanzania was much lower than from Kenya.
There was a suggestion that the conference venue should
move from country to country to give a chance for more
contribution by people from Uganda and Tanzania.
Dr. Kiarie Mwaura, who spoke on the Director's Role in
Social Responsibility, urged the government to develop a
legal framework to ensure good corporate governance. He
advocated for reform in the law to provide an enabling
environment for transparent channeling of corporate
philanthropy and ensure directors embrace corporate social
responsibility. He called for inept directors being
disqualified from continuing to serve as directors.
According to Gladys Kimanzi of YWCA some reasons why
people give include: desire to use special knowledge and
Ufadhili Team and Trustees: (front row, L-R) Elkanah Odembo-Director, Christine S. Kilalo-Trustee, John H.
Mramba-Chairman, Olive D. Luena-Trustee, Dr. Variner Singh Sur-Trustee. (Back row, L-R) Faith KisingaResearch Assistant, Sheila Muthoka-Admin. Assitant, Amb. Matiya Lubega-Trustee, Mumo Kivuitu-Programme
Officer, P.L.O Lumumba-Trustee, Sonia Rasugu-Research Assistant.
6
Volume 7, No 2 2003 - Inter Trust Newsletter
VIEW POINT
skills; the need to be part of activities that have
neighbourhood, community, regional or national
importance; the desire to help others; the desire for
recognition; the need for a sense of security that results from
feeling ones life has purpose, meaning and significance. She
felt that volunteerism may be more productive when done in
a structured way, particularly when it is in terms of skill and
time.
Patrick Ochieng of Ujamaa Centre spoke on Community
Philanthropy at the coast of Kenya. He observed that in
Mombasa organizations such as Venus Tea Brokers, A.O.
Bayusuf, Van Leer (EA) Ltd., BP/Shell (K) Ltd. and
Mombasa City Council are increasingly getting more
philanthropic and interested in the community driven
activities. Ochieng said "May be the leaderships of these
companies have given enterprises a hard look and they
know the future depends on how best the corporate sector
builds bridges with society in a manner that for the first time
compromises neither the aims of profit nor the long-term
development goals of communities.
Monica Mutuku (KCDF) emphasized the need for building
endowment so that the value of good deeds of any
philanthropic organizations could be carried into the longterm future without these organizations continuing to be
dependent on external funding which could become
unreliable.
Ms Nilu Khan represented her father, Dogo Khan of
Shabana Hardware in Kisii. Dogo's guiding philosophy is
"The beauty of life doesn't depend on how happy you are,
but on how happy others can be because of you." Shabana
hardware employs 29 disabled people and this enables them
to earn a living. The disabled work with a lot of gratitude as
the jobs make them self-reliant in a society in which they
would have otherwise been just dependents. Dogo also
supports community members financially in the area of
healthcare and education. He supports community
initiatives, for example sponsoring Shabana Football Club,
a renown team in Kenya. Nilu highlighted the hard
economic times, which posed great challenge to corporate
philanthropy.
The marketing manager of KTN/East African Standard,
Ann Njagi, said that it was the media's corporate
responsibility to draw attention to irresponsible corporate
and individual practices. KTN Baraza is active in relief
campaigns and a variety of other philanthropic practices.
Volume 7, No 2 2003 - Inter Trust Newsletter
Thematic group discussions, which generated a lot of
debate, were on the topics community based volunteering;
professionals volunteering and giving; corporate social
responsibility and volunteer management.
The Corporate Social Responsibility group noted that the
concept was broad and not entirely understood by a number
of corporate executives in
East Africa. Some organizations had an interest in gaining
publicity mileage from philanthropy, a showy practice that
may be even sideline the recipient's interest. The group felt
that linking corporate philanthropy and credible
beneficiaries in East Africa was also a key issue that needs
follow up.
Professional Volunteerism was identified as a good tool for
engaging in social development, enhancing corporate
image, motivating employees and enlarging the experience
and networks of volunteers. There was a common feeling
among participants in the area of volunteerism that there
exists a gap between volunteers and potential beneficiaries.
It was noted that it is necessary to have a database that
facilitates identification of volunteer needs and provides a
link to the potential volunteers.
The conference ended with a Gala Dinner at which
outstanding philanthropists and volunteers selected from
East Africa were honoured and given awards for positive
service in their communities. Those awarded included:
Tanzania 4-H Organisation, Tanzania
Kigali Institute of Science, Technology and Management
(KIST), Rwanda
Mathare Youth Sports Association (MYSA), Kenya
Mkomani Clinic Society, Kenya
Childlife Trust, Kenya
Monica Ngumi, Kenya
Rose N. Kuloba, Kenya
Pius Masiga Azunga, Kenya
Annabelle Iraki, Kenya
Sugu Salim Ajarwalla, Kenya
Lule Ssenkungo Mary Theopista, Uganda
Robert Mbatia, Kenya
Meera Shah, Kenya
Salome Kimata, Kenya
Mr. Ramji Patel, Kenya
Pastor Righton Kyomba, Tanzania
Aids Orphans Education Trust, Uganda
7
COUNTRY INITIATIVES
TANZANIA
Johns Hopkins University International Philanthropy Fellows Programme
Rewarding Competence
The Johns Hopkins Institute for policy studies, centre for
civil society studies-USA, selected Mrs. Olive D. Luena, the
General Manager of Tanzania Gatsby Trust for its
international Fellows in philanthropy program for the spring
of 2003. The fellowship was funded by the Ford
Foundation.
"The award is given to people who
have demonstrated a high degree of
interest,
experience,
and
professional competence in research,
management, or general leadership
related
to
the
voluntary,
nongovernmental, nonprofit, or
philanthropic sector; or to people
who play a role in linking with
nonprofit organizations through
Mrs. Olive D. Luena project partnerships, legal reform
initiatives, and a variety of other
activities."
Mrs. Luena was joined by two other fellows who had been
nominated for the Award as International Fellows from
Ukraine and Chile. Each fellow was expected to complete a
study project related to the role or operations of private
nonprofit, voluntary or philanthropic organizations in the
U.S. to include a comparative analysis of how the nonprofit
functions in the fellows' country of residence. Finally each
fellow was to produce a research paper on the topic that she
he had chosen. Mrs. Luena's topic was, "Building and
Managing Endowment Funds for the Non Profit Work in
Tanzania."
In the course of the study several foundations were
identified and visited. The interviews and discussions were
carried out based on questionnaires sent to the participants
prior to the visits. The study also included review of the
literature and of reports collected during the visits.
The issues that were studied include the historical
background, their evolution, cumulative assets, governance,
management of the asset/endowment funds, policy issues
and the challenges that they face in the process of building
and managing their endowment funds.
The following considerations determined the choices of the
foundations that were visited:
Foundations that have or operate endowment funds
e.g. The Baltimore Community Fund , United Way of
Central Maryland, The Abell Foundation, the
8
Association of Baltimore area Grantmakers, etc.
The similarities of their mission and objectives
compared to those of the NGOs in Tanzania e.g.
foundations addressing socio-economic issues,
poverty, community needs, health and education
The foundations should have been in existence for at
least ten years. This criterion was deliberately arrived
at given the age of many NGOs in Tanzania. (The
majority of the 2000 NGOs referred to in the
background information in Tanzania were
incorporated in the late 1980 have achieved in the past
10 to 20 years compared to the Tanzania NGOs in
terms of local resources mobilization.
The diversity in their historical background e.g.
family/individual based foundations, (the Abell
Foundation), community foundations, (The Baltimore
Community Foundation) coalitions/councils of
foundation (The Association of Baltimore Area Grant
makers), Religious foundations (The Jewish
Community Foundation).
The study on foundations that have built or are continually
building endowment funds was limited to Baltimore in
Maryland. The size of the foundations: most of those
selected to be visited are among the largest in Baltimore.
The study also took into account the availability of literature
on the field of study including the internet where there is a
wide range of information regarding the subject.
The other dimension of the study take into account of the
emerging opportunities presented by unique "one-off"
opportunity for tapping a large private sector asset from
privatization or debt swap in the sector that can be
capitalized in Tanzania for resource mobilization for
building endowments are from the privatization of the
parastatals.
A good example, from the Czech Republic, was revealed in
a discussion with Andrew Green of the Institute of Policy
Studies and later on verified through literature and as
confirmed in the discussions with the IMF officials. The
Czech Republic was chosen in this study because of some
similarities to the Tanzania scene.
Like the Czech Republic Tanzania was for 30 years a
socialist state whereby all the major sources of its economy
was run or operated by the state through parastatals or
government corporations. Like the Czech Republic
Tanzania is in the process of privatizing all such parastatals
and corporations.
Volume 7, No 2 2003 - Inter Trust Newsletter
TANZANIA
Equally, opportunities derived from and possibilities of the
debt swap proceeds, going into building endowments for the
non -profit sector in Tanzania as the case of Mozambique.
To this end, literature review on how the Mozambique
Community Development Foundation managed to raise its
endowment fund through debt swap, together with meetings
with the IMF and World Bank officials, enriched the study.
Summary of the study findings
According to the Chronicle of Philanthropy of February
2003,i over the years Americans have grown more interested
in setting up endowment foundations. From 1990 to 2000
the number of such foundations in the United States rose to
more than 56,000.
Some observers say that as Americans seek more control
over their charitable dollars, they will continue to create
foundations, which allow them and their heirs to say where
donations should go, and when they should be distributed.ii
Foundations are the structures through which the
endowments are built, channeled to and managed legally.
Individuals give money to build up endowments, and they
volunteer in the nonprofit sector so much time that if
translated into money the same could have created a huge
endowment fund or funds. The Independent Sector survey
in the web reveals that 89 percent of households give and
the average annual contribution for contributors is $1,620.
The study revealed that most of the foundations visited
within Baltimore decided to build their endowment at one
stage of their lifetime (between 5-10 years). The reasons for
establishing or deciding to build endowment funds
commonly fall within the following categories:
Perpetual financial independence,
Changes in priorities of the organization and its
environment,
Enhance existing programs by supporting their current
needs,
Expansion of new programs and growth of the
organization,
To cover unforeseen short term stresses,
Acquisition, improvement, replacement and ongoing
maintenance of facilities,
Replace and an income stream that is drying up,
Support a particular programmes etc.
Steps for building endowment funds
Most foundations generally start with a large gift and
increase it by re- investing earnings, asset appreciation etc.
The emphasis from the onset is to put into place sound
policies for legal and accounting issues. Endowment
policies are narrower and relate solely to the creation and
COUNTRY INITIATIVES
the operation of the endowment fund. These can be broken
in five parts. Each of these steps must be taken in sequence
to effectively build a well-thought through fund. The written
expression of the intent and the implementation of these
thoughts is the embodiment of the endowment policy or that
which the organization promises the donor it will do with
the contributed funds. The five steps are:
1. Determine the purpose for which the organization will
hold the endowment;
2. From the stated purpose, develop a board resolution;
3. From the purpose, set an investment objective that can
attain the income or growth necessary to achieve that
purpose;
4. From the investment objective and actual performance,
establish a spending rule, including both distribution for
program as well as charges against the fund if any, for
administrative expenses; and
5. Create a documentation that governs the fund.iii
Indeed in most cases the foundations board policies that
were studied, included acknowledgement, and commitment
by the board agreeing to play a role of asking, commitment
to production of materials that convey the organization's
vision, mission, values and management capacity etc.
Nevertheless endowment funds are built not only from
individual giving but also from various means and ways and
for various activities within the USA as demonstrated in the
State of Maryland. Many organizations and entities end up
building endowment funds as a means of either long term
sustainability of the various causes they are involved in or to
cushion endowment funds.
Cross-cutting governance Issues
In all the study cases the role of the board was seen as very
crucial, and diversity in the board composition is also very
vital. The broader the composition drawing expertise from
the corporate, non-profit and the public sector, the better for
the foundation, especially in mobilizing resources for
endowment building , investments and good governance in
terms of accountability to the stakeholders.
The Cross-cutting challenges.
All foundations mentioned the increase in demand for their
resources, due to increased community needs of the target
group. On the other hand, all the foundations that were
visited are facing a decline in their assets (between 10-15%)
due to the stocks market down turn as a result of the
September 11 events. The study identifies also the strengths,
weakness, threats and opportunities for Tanzania in building
and managing endowment funds and concludes with several
proposals on the way forward .The detailed study paper is
available for a fee at Tanzania Gatsby Trust.
i
Page 6 of Chronicle of Phlantrhopy, February 6, 2003
Ibid page 8.
ii
Volume 7, No 2 2003 - Inter Trust Newsletter
9
K
COUNTRY INITIATIVES
E N Y A
Promoting Sustainable Wealth Creation
A New Look, New Programme Focus
By Timothy Nzioka - CEO Kenya Gatsby Trust
OVERVIEW OF KGT PROGRAMMES AND ACHIEVEMENTS
INTRODUCTION
Background
Kenya Gatsby Trust (KGT)
underwent major restructuring
between 2001 and 2002 culminating
to the current programme focus.
Current strategic goal of KGT is to
facilitate
wealth
creation
(improving living standards) for the
Kenyan population through support
to the Micro and Small Enterprise
(MSE) sector. The current
programme focus of KGT is to
Timothy Nzioka
facilitate
access
and
Chief Executive
sustainability of markets for
Officer, KGT
local products through a three-tier
approach that is Business Development Services, Micro
Finance Services and technology based services.
Business Development Services (BDS)
Through this arm, KGT identifies local products with
potential for growth and that involve a large number of
micro and small producers. The next steps involve
understanding the supply chain through the identification of
constraints and leverage points within the supply chain,
together with appropriate intermediaries and business
service providers (those with strong backward linkages).
The process also involves developing markets and
facilitating appropriate local, regional and international
market linkages.
Micro Finance Services
Some of the emerging local markets (the government as
well as the large private sector eg supermarkets, hotels,
industries) purchase on credit the terms of which micro and
small scale producers cannot sustain due to their limited
working capital and inability to access finance from both the
commercial banks as well as conventional micro finance
institutions (most micro finance institutions provide group
loans that do not cater for those with specific individual
financial needs). Once the micro and small producers
(including traditional Jua Kali as well as farmers) have sold
their products on credit to larger outlets, KGT gives them
the option of converting their receivables (invoices) into
cash ahead of due dates thereby removing uncertainty in
cash flow.
10
Technology development and transfer
For some products to access certain markets, they require
technological
interventions
to
ensure
quality,
standardization, economies of scale etc. In this regard, KGT
is collaborating with Jomo Kenyatta University of
Agriculture and Technology (JKUAT) and the Kenya
Bureau of Standards (KeBS) to facilitate this process. The
role of JKUAT is to develop affordable and commercially
viable technologies required for value adding, quality
enhancement and standardization of products. It is
envisaged that, the technologies will be appropriate to the
needs of the producers and the demands of the markets.
KBS on its part is expected to undertake laboratory sample
analysis and develop necessary standards to enhance and
guarantee customer confidence.
BUSINESS DEVELOPMENT SERVICES
(BDS)
INTRODUCTION
Current interventions under the Business Development
Services are divided into three broad areas including
Food processing (The lead person is Thomas Obiero a
Business Advisor)
Good woods (The lead person is Constantine Kandie - a
Business Advisor)
Fair trade, policy and advocacy. (The lead person is
Mary Onyango - the BDS Manager)
The three technical staff receive back-up support from
Susan Lusega who is the Market Information Coordinator.
FOOD PROCESSING SUB SECTOR
The activities in the food-processing sector have been
geared towards establishment of market linkages between
large and small enterprises. Following in-depth assessment
a number of food products were chosen and activities geared
towards accessing their markets commenced as highlighted
below.
Fresh Fruit processing sub-sector
A survey undertaken by KGT confirmed that there were a
very limited number of fresh fruit juice processors selling
their products to the hotel industry. However majority of
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COUNTRY INITIATIVES
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Thomas Obiero
Business Advisor
MSEs were not able to pack and
sell their products directly to retail
outlets because one, their products
have a short shelf life and two, due
to lack of customer confidence
specifically on the hygiene. The
shelf life could only be increased
through pasteurization, which is
quite an expensive process for the
MSEs, or through adding
chemical preservatives, which
again, takes away the products'
unique selling point.
KGT is working with the Kenya Bureau of Standards
(KeBS) to develop standards for different fruit juice
products and a system of providing quality stamps for those
meeting the set standards. Other key stakeholders in this
project will include the Department of Micro and Small
Enterprise Sector in the Ministry of Labour and Human
Resource Development, Nairobi City Council (NCC), the
Department of Public Health, and a Media House. The
media house will undertake to promote the concept and the
respective products; NCC will ensure security and
infrastructural facilities for the new enterprises selling the
fresh juice.
Selected Small and Micro entrepreneurs in this project will
be trained and graded on the developed systems to ensure
quality both in production as well as packaging. A system
will also be put in place to constantly monitor each
enterprise to ensure continued compliance. This will
increase customer confidence and loyalty and MSEs will be
able to sell their juice products within the city and town
streets, which is huge market as majority of potential
customers either purchase bottled mineral water or soda.
This process will potentially absorb the surplus fruits that go
to waste in the glut seasons.
KGT is in addition collaborating with Jomo Kenyatta
University of Agriculture and Technology to develop
appropriate and affordable equipment in this sector for both
processing and marketing the final products.
Improving quality of mangoes in the Coast Province
KGT has identified women mango farmers in Watamu in
Kilifi District who are in need of agricultural extension
services. Consequently, KGT is exploring the potential of an
innovative approach to deliver the services in a cost
effective manner to the farmers. The intervention involves
building the capacity of a local youth group1 in the area to
carry out the extension services. The stakeholders in this
initiative include KARI in Kilifi to provide technical input;
KWETU an NGO that shall assist in mobilization; Watamu
Volume 7, No 2 2003 - Inter Trust Newsletter
Dried Fruits who shall offer the market to the farmers and
Debaso Youth Group1 who shall provide the extension
services to the mango farmers.
Herbs Sub-sector.
Companies processing herbs, vegetables and spices to
produce food additives for both local and regional markets,
are growing to reach all classes of the society. Among other
Unilever Kenya Ltd uses dried and ground coriander and
tomatoes in large quantities as ingredients for a popular
product called "Roiko Muchuzi Mix". KGT has linked up
with Unilever Kenya Ltd to source part of these ingredients
from farmer groups since currently Unilever sources most of
these ingredients from large factories. As a first step, KGT
has sourced sample ground coriander from the farmer
groups and taken it to both KBS as well as the food
processing department of the Nairobi University for
microbiological analysis. Once the quality is ascertained,
KGT will facilitate linkage of the farmer groups to Unilever
who have promised to guarantee a specified quota from the
groups.
A random survey in the supermarkets has shown that most
curry and masala powders amongst other spices have the
grounded coriander seeds powder as an ingredient, and
therefore the project has the potential to attract other buyers
besides Uniliver.
The success of this linkage will be replicated to other
products and benefit immensely the farmers who for a long
time have been exploited by cartels of brokers.
E-toolbox
Kenya Gatsby Trust (KGT) is currently working with Post
Harvest International, a partner in the UK, on a project
known as the e-tool box. The project is funded by DFID's
Enterprise Development Initiative Fund in the UK, and
involves collecting and collating information that will go
towards developing a database of institutions, /organizations
e.g. co-operatives, CBOs and others, involved in agroprocessing and especially those that are a linked to support
or have strong backward linkages to small enterprises and
producers. KGT has been charged with the responsibility of
compiling this information in Kenya, Uganda and Tanzania.
Of major importance to the project is to collect relevant
information concerning value adding agricultural activities
encompassing aspects of processing, nature of products,
quality, product development, markets, trading, marketing,
exporting, fair trade, business development, and market
information.
1
Debaso youth group currently provides extension services to cashew nut farmers in
the area.
11
COUNTRY INITIATIVES
This information shall end up in an interactive CD ROM
that shall be integrated with a dynamic web site, whose main
purpose shall be to assist the potential users assess the
potential and possibilities to create, expand, diversify or
strengthen Micro Small and Medium Enterprises.
The potential users shall be a wide range of BDS providers,
NGOs, and other related organizations that seek to promote
MSEs, income generating, business and trading activities both explicitly and implicitly
The first phase of the project which involved identifying and
setting up a database of stakeholders working with the small
and micro enterprises in food processing has come to an
end, and the next phase which began in April 2003 is
concern with documenting unique successful food
processing MSEs case studies on an interactive CD ROM.
THE 'GOOD WOOD' SUB-SECTOR
Background
There is no doubt that
environmental
degradation
exacerbates poverty and reduces
the quality of life. Our
environment in Kenya continues
to be degraded, notably through
forest loss, soil erosion, loss of
biodiversity and lack of clean
water. Indeed, as a general rule,
less forest means less rain. The
country is currently facing
serious threats in terms of Constantine Kandie
Business Advisor
unsustainable harvesting of
wood for carving, timber, fuelwood, charcoal production, poles, among other end uses.
As a direct and/or indirect consequence of this degradation
and obviously in combination with other contributing
factors, serious and negative impacts are emerging: erratic
rainfall patterns, scarcity of wood, soil erosion, siltation and
drying up of rivers and boreholes. Effective sustainable
development should help poor people, particularly those
living adjacent to forest resources and hill-tops, to pursue
sustainable livelihoods with continued access to the natural
resources on which they depend including clean water, logs
for timber and carving purposes, fuel wood for energy,
pasture for livestock, fertile soils, traditional medicines, etc.
KGT has focused on three main areas under 'goodwoods',
namely:
Carving industry
Furniture making industry
Forest Herbs such as Neem
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Carving industry
The wood carvers in Kenya, have for a very long time had
preference for a limited number of indigenous hardwood
species for carving. A current campaign to have certified
forest products sold on the international market (to ensure
that the logs are from sustainable forests) has resulted in the
loss of three quarters of the Kenya's export market for
woodcarvings in the last three years. This is due to the fact
that, the past 10 to 25 years has witnessed vast depletion and
in some cases total extinction of these traditional trees used
as source of logs for carving. Indeed the European market is
increasingly becoming sceptical of the source of woodcarvings and more and more inclined to purchase products
from sustainable good woods.
Consequently, the business that used to earn $20 million
every year for the country is now making less than $5
million and the value is still dropping. The effect is felt
country wide as wood carvings make up to 25% of the
timber business, employing 80,000 directly and half a
million others indirectly.
The BDS's contributions in this sub sector has been through
3 co-operatives, the Akamba Handicraft Society from
Mombasa town in the coast which has more than five
thousand carvers, Malindi Handicrafts Society with over
2,400 members and Machakos District Co-operative Union
from Eastern Province which has a membership of 8
Carvers Co-operatives totalling to 2,300 members.
Akamba Handicraft Society in Mombasa Coast Province.
The society is currently using Neem tree as a major source
of Good wood. However the Neem tree has different
properties when compared to the other traditional carving
woods. Due to the unique properties, carving products made
from Neem normally crack and mould. KGT in
collaboration with World Wildlife Fund, Oxfam (UK),
Costal Forest Conservation Unit and Kenya Forestry
Research Institute are working on a programme to assess the
existing conditions and appropriateness of current methods
used to dry Neem, establish appropriate drying techniques
to ensure recommended moisture levels, recommend proper
handling and storage methods for Neem logs to reduce
checking and develop a manual for use by the society to
ensure products don't crack and/or mould and eventually
link them to markets.
Several activities have been carried out and the manual is
almost complete before testing and dissemination can be
undertaken.
Malindi Handicraft Co-operative Society
Following a Business Counseling and assessment carried
out by the Kenya Gatsby Trust BDS Advisors in October
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K
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2002, this cooperative has made tremendous improvement
including paying off an old bank loan, staff salary arrears,
improved roads and security leading to the co-operative.
The cooperative. is now prepared to undertake certification
and KGT will work with WWF to assist the cooperative to
improve their approach to product development and
marketing.
Machakos District Co-operative Union (MDCU)
Eventually, several prototypes
were developed as a result of this
intervention and KGT is now in
the process of developing a
strategy that will include among
other activities a local buyer
matchmaking event to introduce
the new products to local
exporters of handcrafts and
display of the new products in
European exhibitions by MDCU.
Susan Lusega
Market Information
Co-ordinator
KGT will work with WWF and
UNESCO in the certification of carvings from MDCU.
Already the cooperative has an ambitious plan to purchase
land for tree planting and encourage its members to plant
1million trees within the next five years.
Furniture making
In the year 2002, KGT made a Business linkage between
selected carpenters and Project Furniture which is a leading
furniture manufacturer in this country with far reaching
networks and supply contracts. The linkage has continued to
date and has provided much needed business to the
carpenters who have been able to meet the high quality
standards demanded by Project Furniture customers. Their
latest supply of chair frames for delivery to the ultra modern
Continental Building now occupied by Kenya's MPs is just
one example of the business that has been successful.
KGT is looking at ways in which this and other linkages can
be strengthened to ensure that MSE's can be mainstreamed
and it is expected that through KGT's intervention, many
MSE's will be able to do business with larger organisations.
Forest Herbs
Neem Soap Making
Under the 'goodwoods' sub sector, the uses of the Neem tree
have been explored, and one such use is the traditional
'muarubaini' soap that is made by several women groups in
the coastal area using the neem oil, leaves and bark. In
August 2002, KGT carried out an advanced technical skills
training for over 15 women's groups in Kwale and Kilifi. At
the time there was no Kenyan Standard for Neem soap. A
task force was set up and the first meeting with the Kenya
Volume 7, No 2 2003 - Inter Trust Newsletter
COUNTRY INITIATIVES
Bureau of Standards (KeBS) was held in August 2002. In
July 2003, the last meeting of the task force was held and
now we expect that a KeBS standard for Neem soap making
will be available by December of this year.
The women's groups have expressed a need to work together
to market and develop the soap to a quality that will ensure
competiveness in the formal markets. They would like to
work together in ensuring the achievement of the KeBS
Diamond Mark of quality. KGT will work with the Coast
Development Authority and KWETU Training Centre in
Kilifi district in facilitating the formation of an association
of the groups. It is expected that KWETU will provide
facilities and training on a continuous basis and act as a
quality assurance facilitator for the products from all the
groups.
Fairer Terms of Trade in Herbal Products
KGT together with Traidcraft Exchange and ITDG East
Africa and with support from the Ford Foundation are
working to develop sustainable trade in herbal products. The
purpose is to promote/enable more beneficial terms of trade
for the communities producing herbal products and link
them with opportunities that will increase their livelihood
options, in particular by building their capacity to engage
and link with markets. The 1st phase of this project will start
in September 2003. Traidcraft will lead on the international
generic trade issues including market research, market
access and trade policies. ITDG will lead in creating
awareness at the community level, advocacy and
community capacity building while KGT will lead on local
trade issues and on delivery of enterprise development
inputs including market research, market access information
and product development.
FAIR TRADE, POLICY AND ADVOCACY
Promotion of Fair Trade
Fair trade is gaining new and
vibrant impetus with more and
more consumers, especially
from the west, inclining to
purchase fair traded products.
Indeed most consumers are
willing to pay a premium as a
way of promoting fair trade. The
premium in some instances does
not benefit individual producers
directly, but benefits the
Mary Onyango
community within which the
BDS Manager
produce comes from.
KGT is working in collaboration with Traidcraft Exchange,
Tea Direct (UK) And Fair Trade Labelling Organisation to
facilitate Kenyan tea factories sales, using the fair trade
13
COUNTRY INITIATIVES
principles, high quality tea for blending with other teas from
Tanzania and Uganda. As a pilot, Kiegoi Tea factory in
Maua in Meru was selected mainly because it is on the
leeward side of Mt. Kenya and suffers from extremities
posed by very dry conditions. The areas was also found to
have problems with access to clean water and health
facilities. Fairly traded tea attracts a premium price above
market prices. This premium (sales earned over and above
total market prices) is sent back to the community that has
grown the tea for community projects.
A premium committee was set up and a premium bank
account opened to receive the premium from the Tea Direct.
A workshop facilitated by Traidcraft and BDS assisted the
community to understand their roles as well as prioritise
community needs. To date one shipment earned the Kiegoi
community more than Kshs. 2.3 Million. The
representatives of the community identified upgrading of
roads and piping of water as their most urgent needs.
Way Forward
BDS and Traidcraft have facilitated Kenya Tea Development
Agency (KTDA) to be registered as a Fair Trade Exporter.
This means that social audits will be conducted on KTDA by
the Fair Trade Labelling Organisation annually. Further,
other factories can now be registered as Fair Trade Tea
Producers and be able to sell tea to Fair Trade buyers so long
as they meet Fair Trade standards.
Kenya Federation of Alternative Trade
In addition, KGT has spearheaded the registration of Kenya
Federation of Alternative Trade (KEFAT) as the local
representative of International Federation of Alternative
Trade (IFAT) of which KGT is a member and was
consequently appointed as the secretariat. It has eight
members with recruitment going on. Among the major goals
of KEFAT are to:
Co-operate in local, regional, and international
marketing with the aim of increasing the market share of
Kenyan fair traded products.
Encourage fair trading practices by organizations
towards the common goal of raising economic self
reliance as a strategy of wealth creation and poverty
alleviation.
Recruit additional members so that more MSEs can get a
fair and just reward in return for their labour, and the
Federation encourages the building of sustainable future
on peoples own abilities.
MICRO FINANCE SERVICES
INTRODUCTION
The pressure for small enterprises to increase their
participation in mass markets is increasing as markets
14
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integrate and liberalise in
developing countries. The
participation of small-scale
producers in mainstream mass
markets
is
however
significantly restricted because
channels for mass marketing
(or accessing prime markets)
demand reliable supplies in
relatively large volumes of
consistent quality products
within tightly defined time
limits which many MSEs
Alex Kimanzi
acting individually cannot meet.
FSD Manager
Many MSEs lack the financial
capacity to enable them maintain healthy cash flows such
that they could take advantage of new and profitable orders
from large traders, be they local supermarkets chains, or fair
trade overseas buyers.
To address the specific working capital needs of these small
scale producers, KGT developed an innovative micro
finance product, Factoring, that has already been piloted
with great success.
FACTORING FACILITY
KGT's factoring facility is still in its pilot testing stage and
is becoming increasingly popular among the target group.
Members of the public have come to learn about it and the
list of enquirers is getting longer by the day.
Our factoring facility is an innovative micro financing
arrangement aimed at that market segment of the microfinance sector whose financial needs cannot be met by the
mainstream micro finance institutions who use the group
guarantee system of lending and the commercial banks
cannot lend to them owing to lack of credit history,
collateral security etc.
The factoring facility is focused on supporting small scale
producers to sustain their market. KGT is serving the
financial needs of producers of all sorts who sell their
products to buyers whose buying practices include a credit
period which the small producers cannot sustain. To
facilitate this support, KGT is working with buyer
institutions who have a strong backward linkage with small
producers by offering them steady markets for their
produce/products.
Current buyers
Currently KGT is working with 5 buyers who provide
market avenues for a large number of small scale producers.
The five buyers include Njoro Canning Factory Ltd. in
Njoro area of Nakuru who buy fruits and vegetables from
small scale farmers in Njoro to produce canned fruit juices
and other food products to sell locally and internationally,
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K
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CRISSAM ACRES LTD who buy fruits from small scale
farmer in Embu, Muranga and Machakos to produce fresh
fruit juice for sale in tourist hotel in Nairobi. Others include
Fimbo Secury/printers and stationary ltd and Creative
Cleaning Ltd. As at July 31, 2003 KGT had factored
invoices valued Kshs.13,033,614.
New Buyers
Hermes Dairy
One more new buyer by the name HERMES DAIRY has
been admitted. This is a small milk processing plant
situated at satelite market of Nairobi. This business has a
strong backward linkage with milk producers as they buy
most of their milk from farmers in Kinangop area in
Nyandarua district. They buy an average of 1,000 litres
daily which they process to add value and make final
products such fresh milk, yoghart, maziwa mala etc.
Aberdare Multipurpose SACCO
Another buyer which has applied for factoring facility is
ABERDARE MILK PROCESSING SACCO of Engineer
township of Kinangop who also buy their milk from the area
and process in their milk processing plant at Uplands area
and sell the milk in Uchumi Supermarket using Uchumi
brand name. We are evaluating their application and would
soon be admitted as a buyer under factoring as they are
working with our target group.
PROJECT MANAGEMENT SERVICES
KGT has developed capacity to provide a home for national,
regional and international projects for donors and other
development agencies with programmes to implement in
Africa.
COUNTRY INITIATIVES
is characteristic of setting up
office in a foreign country. KGT
provides a legal umbrella for
such projects and runs them as
part of its own. It enters into
legal contracts, takes up all
associated legal liabilities,
contracts staff for the project as
well as take up registration for
them with all necessary statutory
bodies, including obtaining work
permits and payroll processing.
Peter Githinji
On the financial aspect, KGT Finance & Admin
opens separate bank accounts for
Manager
the projects and operate them as
per the mandate specified by the donors. On a quarterly
basis, KGT prepares financial management accounts to the
donors and also contracts external auditor to audit the
projects on an annual basis. In addition, KGT provides an
internal audit function to ensure that the projects' operations
are carried out in compliance with internationally accepted
accounting and reporting standards.
Since 1998, KGT has provided the above service for
Microsave Africa, a Programme which is mainly funded by
the World Bank through the Consultative Group to Assist
the Poorest (CGAP), the British Department for
International Development (DFID) and other donors
including United Nation Development Programme, Ford
Foundation and the Austrian Regional Bureau. KGT also
provided similar programme management for the
Microfinance Capacity Building Programme in Africa
(AFCAP), funded by both CGAP and DFID.
KGT's Project Management Service consists of KGT's
providing a fully integrated administrative and financial
function to donor funded projects, especially those that
would prefer to avoid the long and bureaucratic process that
Gatsby Charitable Foundation's financial support to the Tree
Biotechnology Project in Kenya is also administered and
managed by KGT.
KGT Board. Standing L to R, CEO - Timothy Nzioka, Chairman
the Board Mr. Aleke Dondo, Mr. Harris Mule Ms. Sunita Kapila,
Mr. Isaac Awuondo. Seated L to R , Mr. Laurence Cockcroft,
Mr. Joseph Kibe, Professor Mohamed Hyder
The Chairman Mr. Aleke Dondo, CEO Mr. Timothy Nzioka
and Mr. Harris Mule during a Board meeting
Volume 7, No 2 2003 - Inter Trust Newsletter
This function of KGT will be expanded in line with KGT's
experience in order to extend our capacity for networking
and enhance the sustainability of our other projects.
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COUNTRY INITIATIVES
C
A M E R O O N
Innovative Philanthropic Socio-Economic
Projects in Cameroon
Cameroon Gatsby Trust (CGT) has joined the Development
efforts in Cameroon through innovative philanthropic socioeconomic projects initiated by Gatsby Women's
Association:1.
Lelem Mouantong : Creation of a Handicraft Centre
for female school dropouts
2.
Melong : Distribution Centre for R & W King Textiles
to serve the local population
3.
Penda-Mboko : Palm oil processing unit to facilitate
the production of this essential food commodity
4.
Lelem : Cassava transformation plant for
manufacturing water fufu for Douala and Gabonesse
markets. The equipment which includes a cassava
grinding mill was donated to the Association by
European Institute for Co-operation and Development.
5.
Ekombe : Construction of a women's Multipurpose
Hall started on a piece of land donated by the
traditional ruler of Ekombe in support of the women's
self-help efforts in his village.
6.
Melong II and Loum : Drying of fruits and
vegetables in gas dryers constructed locally by CFAPP
and financed by the French Technical
Cooperation Mission in Cameroon.
CGT gets in the Control Committee of the Cameroon
National Association of Micro-Finance Institution
(ANEM-CAM) formed on May 23rd, 2003 in
Yaoundé.
16
Gatsby Women win first
prize in Textiles on the
International Day of the
Woman in Limbe, South
West Province.
Ekombe Traditional ruler supports activities in his
village by donating land for a Women's Development
Centre.
CGT joins Presidents of Rural Micro Banks (MC2),
African Women Savings and Credit Co-operative
(MUFFA) to reflect on philantropic activities by way of
socio-economic projects which help the poor rural
populations to help themselves.
Volume 7, No 2 2003 - Inter Trust Newsletter
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COUNTRY INITIATIVES
Technology Transfer and Financial Services for The
Small Scale Industrial Sector in Uganda
UGANDA GATSBY TRUST FINANCIAL SERVICES TO THE SMALL SCALE INDUSTRIAL SECTOR
1.0 MISSION STATEMENT OF UGT
Uganda Gatsby Trust (UGT) was launched by the Faculty of
Technology, Makerere University to act as an institutional
framework through which linkages with the SSE sector
could be established and maintained. UGT therefore has the
following mission.
needs. Finding financial support for machinery and working
capital was particularly difficult because the sector was
viewed as very risky. The money market, which is mainly
composed of commercial banks, development banks and
most recently the micro finance industry did not meet the
needs of this sector
"To assist in developing the technological base of the small
enterprise sector in Uganda and enabling the growth of such
enterprises".
The sector is considered very risky and with small financial
demands such that the commercial banks are not interested
in them and the micro finance industry finds their demand
too big for them to handle. This situation creates what has
come to be known as the missing middle, which is not
targeted by financial institutions. Reasons being that:
UGT started in 1994 with seed funding from the GCF which
has continued to support UGT although they have
encouraged UGT to generate income and seek other donors
so as to diverse funding sources.
2.0
SMALL AND MICRO ENTERPRISE SECTOR
IN UGANDA
The Small and Micro Enterprise Sector is very crucial for
economic development and poverty alleviation. In the
Ugandan case SSEs:
Contribute over 20% of the GDP second to agriculture.
Employs over 20% of the workforce
Produces about 80% of the manufactured output.
3.0 THE MISSING MIDDLE
SSE sector in Uganda has not received adequate technical
and financial support in the past from both government and
other support agencies. This is mainly because it has been
perceived as very unorganized, undependable and risky. In
order for this sector to grow, there was need for a betterplaced agency to act on behalf of this sector in order to make
sure that its needs were met.
A needs assessment of the sector carried out by UGT
revealed that the sector faced a number of problems, which
varied from sector to sector. UGT therefore designed her
interventions to solve as may of these problems as possible.
Poor managerial skills
Lack of working capital
Lack of up-to-date machinery and equipment
Lack of technical skills
Inadequate working spaces
Frequent power cuts, etc.
UGT offered training opportunities to solve SSEs
managerial problems but it was realized that training alone
was not adequate in solving the problems of the sector. The
enterprises continued having machinery and working capital
Volume 7, No 2 2003 - Inter Trust Newsletter
SSE and SME sector is considered a risky area since it is
susceptible to both economic and social conditions.
Clients from this sector lack collateral, which are
required to access loans.
The sector has been very fragile since it is informal, with
no strong voice, and no sustainability.
Clients in this sector have no or a poor credit history.
The poor debt repayment culture makes it a very risky
area for investment
However, when compared with the micro-enterprise sector,
the missing middle has greater potential for growth. UGT
thus considered this a good area to target.
Commercial banks
10
Loan
Size
(Shs m)
Missing Middle
1
0
Micro-finance Institutions
4.0 FOCUS ON THE SSE SECTOR
UGT initially focused on small-scale enterprises with the
following characteristics.
Involved in transformation of materials and value
addition through application of technology.
Must be on-going businesses not start-ups
Have potential to contribute to employment creation.
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5.0 POSSIBLE SOLUTIONS
Uganda Gatsby Trust sought to improve this situation by
putting in place the followings:
Business development services - This service would
1.
help the SME sector to solve heir managerial
problems.
2.
Market Promotion. This would help expend the SMEs
market share.
3.
Technology transfer to SSEs through various avenues.
This service would develop and disseminate
affordable and appropriate technology to the sector.
4.
Financial Services-The sector would benefit from
credit and leasing products that are tailored to suit the
needs of these clients.
6.0
THE GATSBY ENTERPRISE CLUB IDEA
UGT desired to offer services to SSEs in a such a way
that:
They were demand-driven
Services were paid for by the receivers
They led to improvement in performance
A clear path to sustainability could be developed
They led to a continuous interaction between UGT and
the clients and among themselves.
This led to the Gatsby Enterprise Club idea.
A Gatsby Club comprises of members who are usually
entrepreneurs in the small manufacturing sector. The
members pay a joining fee of Shs 100,000/= and an annual
subscription of Shs 50,000/=. This ensures that only serious
enterprises join Gatsby Clubs.
7.0 MANAGEMENT OF CLUBS
The club is managed by an executive elected from among
members. This establishes ownership of the club and
ensures full participation in its affairs by members. The
executive comprises of:
Chairman
Vice Chairman
Secretary
Treasurer
Committee Members.
The executive is responsible for liaising with UGT
Headquarters about service delivery to the members.
The club may have some committees such as:
Loans Committee
Development Committee.
These assist the executive to implement various activities.
As the membership grows, there arises a need for a contact
office. Such an office is manned by a full time administrator
since the executive is comprises of busy business people.
The administrator's main duties include:
Receiving visitors and handing out promotional
materials about the club and UGT.
Delivering messages to members.
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G A N D A
Assisting members fill in application forms, business
plan outline forms etc.
Running the office affairs including bookkeeping,
receipt and banking of funds, drafting minutes and
reports for the Executive.
The Clubs provide an institutional framework through
which services are provided to paid-up members. In return
the members make their payments through the club.
8.0 GATSBY LOAN SCHEMES
Uganda Gatsby Trust (UGT) has two loan schemes:
Those run at club level, commonly known as the local
saving and credit scheme.
Those run at national level by the UGT Loans
Committee, commonly known as the UGT Loan.
The club level loan scheme is run by the members
themselves to alleviate their emergency financial needs.
The loans are made from members' savings and are usually
less than Shs 1,000,000/=. UGT plays a role of guidance
and sometimes provides top-up finance to boost the scheme.
The UGT Loan Scheme is meant for Small Scale
Enterprises (SSEs) in the missing middle and enables firms
to purchase some equipment and increase their working
capital.
Characteristics
The scheme is four-tier so as to cater for growing of
enterprises.
Loan No.
1st Loan
2nd Loan
3rd Loan
4th Loan
Maximum
Shs 3m/=
Shs 6m/=
Shs 10m/=
Shs 15m/=
Charges
Processing fee
Insurance
-
Grace Period
2 months
2 months
2 months
2 months
Loan Period
12 months
15 months
18 months
24 months
2%
1% for loans below 6m/=
1.5% for loans above 6m/=
20% p.a. flat
Interest Rate
Security/Collateral
Post-dated cheques
Peer group (4 members per group)
20% cash deposit
Land/buildings
Machinery
Vehicles etc.
Current Performance of UGT Loan
Number of Loans :
250
Value
:
800,000,000/=
Repayment Rate
:
93% and improving.
Volume 7, No 2 2003 - Inter Trust Newsletter
U
COUNTRY INITIATIVES
G A N D A
9.0 TECHNOLOGY TRANSFER
The GCEP was set up with the following objectives:
To develop student prototypes into marketable
technologies
To develop new appropriate technologies on a demanddriven basis
Link up with SMEs to develop and transfer technology
10.0 ACHIEVEMENTS
This has resulted in the following achievements:
Year
Achieved
Achieved
Achieved
By 2000
By 2002
By 2003
No. of Gatsby Clubs
11
15
18
No. of Club Members
500
1,000
1,200
Enterprises Assisted To Grow
250
400
600
0
1
2
3,000
10,000
15,000
200
300
400
700
1,000
1,200
Mentorship Visits
100
3,000
6,000
Student Projects Sponsored
130
170
200
4
6
8
1
2
3
Shs 300
million
Shs 500
million
Shs 800
million
1 Volume
6
8
Small Industrial Park
Courses/Seminar
Participants (Cumulative)
Members Sponsored
to Trade Fairs
Members Receiving
11.0 FUTURE PLANS
To supplement the existing UGT efforts at SME
development, a new project to be called "Economies of
Scale Project" will soon be launched.
The project will assist sub-sector groups to form joint
companies, which will have a large capital base thereby be
able to participate in business ventures, which individually
the subsector members could not afford to.
Such ventures include:
Large stocking of raw materials (at lower cost)
Tendering for large jobs/contracts.
UGT will participate through equity holding and extending
loans to the group.
This new project is likely to utilize the opportunities of
economies of scale hence leading to increased turnover,
higher profitability and growth of the subsector groups.
Extension Services
Appropriate Technologies
Developed
Training Manuals Developed
Loan Portfolio
Newsletters Produced
JUA KALI FORUM
UGT Clients’ Success Stories
NUMA Feeds Limited, Kabwohe - Mbarara Gatsby Club
NUMA Feeds was established in 1995 as a family business
between Mr. and Mrs. Robert Matsiko to process animal
feeds and millet flour for human consumption. The firm was
later in 1997 registered as a Limited Liability Company.
The member joined the Gatsby Club of Mbarara in 1998 as
a Gold Card member and one of the good benefits the
entrepreneurs recalls is a loan of 6.5 m/- through the defunct
Co-operative Bank. UGT was again around to assist him in
drawing a business plan, which recommended a loan of Shs.
5m/- and from this the company would acquire a millet mill
besides boosting its working capital to stock enough raw
materials. In October 2001 the firm requested for another
loan of 6m/- to improve its distribution aspect by getting
own truck. Due to the company's good credit history, they
have acquired a 10,000,000/= loan from UGT which they
are servicing on time
Volume 7, No 2 2003 - Inter Trust Newsletter
Besides loans the member has also got UGT promotion
support through exhibition of his products during local,
regional and international trade fairs. The member has
participated in shows in; Lugogo UMA shows, Jua Kali in
Kenya, Tanzania and Uganda, local shows in Mbarara, Jinja
and Masaka. He was also able to connect a mobile phone
that enables him co-ordinate his businesses from Kabwohe.
Finally, the Manager NUMA Feeds has this to thank UGT:
The training in management has helped him improve
business management skills.
UGT has promoted his products through market
exposure in the club showroom, trade fares, interaction
with other clubs, etc.
The loans got have made his business grow, now he has
a big market and can supply many big orders prior to any
deposits.
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JUA KALI FORUM
With expansion of his business he has now a big
collateral and employs about 15 people.
Ms Edith Night - Hotel Complex -Kabarole Gatsby Club
Ms Edith Night runs a small hotel called Rwatanite. The
hotel is located in Fort portal, Kabarole District. She joined
Kabarole Gatsby Club in 1999 at its inception. She went
through all the training seminars that UGT organized and
benefited by having a consultant to assist her develop a
business plan for her business. During 2000, she accessed a
loan of Shs 3 million from the UGT credit scheme. The
main purpose of the loan was to improve on the rooms,
beddings and catering utensils.
She has used the funds carefully and has been able to attract
more customers to stay at her hotel. This has led to
improved income which she has ploughed back to make the
business grow. She now employs 10 people up from 3
before the loan. She has since paid off the loan and started
on an expansion programme by adding a storeyed complex
for executive rooms, which will attract a higher class of
clientele. UGT appreciated her efforts and extended a
second loan of Shs 6 million to ensure that her expansion
programme is successful. This loan has been fully serviced
and the enterprise expanded.
Baseje Enterprises - Masindi Gatsby Club
Mrs. Jennifer Byeitima is a member of the Masindi Gatsby
Club dealing in tailoring and embroidery. She joined
Masindi Gatsby Club in 1999 and has been acting as
Treasurer.
Like all members, she accessed all UGT services like
training and extension services. She particularly took up the
idea of specialization in a niche market of embroidery by
purchasing an embroidery and design machine. Since she
was the only one with this machine in Masindi, all tailors in
Masindi and Hoima started bringing their clothes to her
shop for designing and finishing. She was more convenient
than going to Kampala some 200kms away.
U
G A N D A
Africa, which is facing severe drought and famine. The
exporters want large quantities of dry maize grain
containing less than 14% moisture. (It transpires that maize
millers would also like to dry the maize especially after
soaking and hulling).
So Mr. Kyokuhaire who has worked with the Uganda Seed
Company in Masindi approached UGT with the idea of
constructing a dryer, which can handle over 10 tonnes per
day. While he had a process flow chart, he needed the
technical advice and funding to construct the dryer.
UGT staff visited him to offer extension services and held
discussions about the dryer. In addition UGT advanced a
loan of Shs 3m/= to Mr. Kyokuhaire to construct his dryer.
Now Mr. Kyokuhaire has a dryer whose main fuel is maize
cobs (agricultural residues)and can dry up to 18 tonnes per
day at Shs 20/= per kg.
In future UGT plans to link Mr. Kyokuhaire to other maize
millers who require to dry their hulled maize so as to speed
up the milling process and therefore productivity and
profitability. He has since constructed over five dryers for
maize exporters.
Charles Lwanga -LEEM 40 - 50 Kva Voltage Stabilizer Kampala Gatsby Club
Charles Lwanga, holder of a Higher Technical Diploma, is
a successful manager of his small scale enterprise, Lwanga
Electronic and Electrical Machines (LEEM). The firm's
products include voltage stabilizers, DC/AC inverters,
AC/DC adapters, step-up and step-down transformers,
automatic voltage sensors, battery chargers, DC bulb and
tube igniters and many other related electronic and electrical
machines. Immediately after completing his studies in 1985
Charles Lwanga opted for self-employment with an initial
capital of Uganda shillings 20,000/= (about $20). He started
by rewinding transformers in a small compartment in a
friend's shop on Luwum Street in Kampala.
UGT came again to assist her improve on the capital base by
giving her a loan of Shs 1 million which has now been
followed by another of 3,000,000/=. These loans have been
well utilized and she is servicing the second one on
schedule. Her shop has grown and she now employs five
people up from two. We understand that she has put up a
building in which she will do maize milling with another
entrepreneur.
From 1994 onwards, LEEM became a beneficiary of the
UGT project activities and participated in training courses,
extension services and student attachments In December
1996 through the UGT credit scheme, LEEM was extended
a loan facility of Uganda shillings 4,000,000/= (about US
$4,000) which enhanced the company to bid for bigger
contracts and expand its capital base. Having paid off the
first loan well, the company accessed another loan of
6,000,000/= and most recently one of 10,000,000/= which
have all been serviced on schedule.
Mr. William Kyokuhaire, Biomas Fired Grain Dryer
Mr. Kyokuhaire, a Masindi Gatsby Club member wanted to
take advantage of a recent business opportunity whereby
Ugandan business people want to export maize to Southern
Since the disbursement of the loan, LEEM has registered
remarkable growth. This has not only made LEEM increase
its share of the market of electronic and electrical machines
but also to employ an Electrical Engineer and about 15
technicians.
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Volume 7, No 2 2003 - Inter Trust Newsletter
VIEW
K E N POINT
Y A
JUA KALI FORUM
Product Development & Design Improvement
By Susan Lusega
Market Information Co-ordinator, KGT.
Through the Community Aid UK, and in collaboration with
Traidcraft Exchange UK, the KGT's Business Development
Services (BDS) Centre developed a 'Technical Inputs'
project, highlighted in the flowchart below;
1. Product Development - Storyboard Production &
Digital Imaging
The BDS initiated the project by making storyboards and
forwarding the same to the co-operative for sample
production. A Digital Imaging exercise followed where
samples made from the storyboards were forwarded to
Traidcraft for a 'market-led' feedback on the salad bowls.
2. Feedback, Training & Sample Production
Traidcraft Exchange engaged a Consultant who gave
feedback on the digital images. A second exercise 'Technical
Inputs' involved the Consultant coming up with new
'market-led designs. The consultant spent 3 days with the
carvers on a 'Design Development and Improvement
Training.' The Consultant, a skilled and experienced
Industrial Designer has been involved in designing products
for IKEA with several major outlets in Europe) as well as
other outlets in the European Market.
The carvers at work during the Design Development
& Improvement Training
3. Local Buyer Matchmaking
These salad bowls and spoons are made from the Jacaranda
tree - the Jacaranda tree is a 'good wood' tree. The salad
bowls and spoons are among a range of other good woods
products that have been handcrafted by carvers working
with the Machakos District Co-operative Union. The
craftsmen model each form using simple hand tools. No
machinery is used in transforming a tree-trunk into these
functional products.
To the Market
The bowls will be displayed for a Buyer Matchmaking
Event where local buyers will be invited to discuss business
with several intermediaries representing over 10,000 carvers
and give feedback on these new products.
Volume 7, No 2 2003 - Inter Trust Newsletter
21
JUA KALI FORUM
T
A N Z A N I A
President's Choice - My Story
By Suzie Laizer
I got training on food processing, vegetables and fruits from
SIDO/UNIDO WED Program, from September to
December 1998.
I had to add some more products such as Vinegar, Orange
marmalade, and Garlic paste. In the year 2002, I succeeded
to repay my loan of Tshs.5 million.
In January 1999, I obtained the Business License and
register my business as "PRESIDENT'S CHOICE AND
BEVERAGE CO."
I received a large order from the Shoprite Supermarkets in
Dar es Salaam and Arusha, just to find that my capital was
not enough. I decided to go to TGT again whereby they
welcomed me with a friendly hand and helped me to get a
loan of Tshs.10 million. I really thank TGT for enabling me
to do business with the Shoprite as without TGT I would
have failed. I now get orders frequent from Shoprite and get
paid in 30 days.
I started food processing in one room with only two
assistants.
We began processing
Mango pickle, Peanut
butter, Tomato sauce and
Fruit juices of various
kinds. I sent the products
to the National Chemist
for checkup and they got
certified.
I had to struggle to get the
market as my products
were not known to many
customers.
At first I got a big loss due
to expiry dates of the
products, also I met some
Suzie Laizer in front of her unfaithful shop owners
products in Shoprite
whereby I lost the whole
Supermarket in Dar-escapital I had at that time.
Salaam.
Thanks to my husband who encouraged me and provided
me with fresh capital to restart the production. I bought raw
materials and packaging materials and put some more effort
on selling.
Problems I face
My problem now is not the market but the production and
capital which can help me to meet the growing demand and
satisfy my customers.
In solving this problem, I have employed more assistants
and laborers to reach a total number of 26 employees. What
I need now is to add more small machinery and exposure to
the SME industries in India, Malaysia, and Philippines and
be enabled to standardize my products. I am ready to
contribute to the training trip if I get a sponsor for the
exposure and hopefully TGT will support me in this
endeavor too.
In the year 2000, due to TGT and SIDO sponsored trade
fairs my products gained popularity and I started to get
orders from Arusha and Dar
es Salaam and I got the bigger
premises for my business and
registered it with the Health
Office.
In the year 2001, I got a loan
from TGT/TAFOPA Credit
Scheme. The loan helped me
a lot and I even managed to
buy raw materials and
packaging materials from
Nairobi.
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Assorted President’s Choice Products on Shoprite
Supermarket’s shelves in Dar-es-Salaam.
Volume 7, No 2 2003 - Inter Trust Newsletter