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USAID Hub supports increased agricultural investments in East Africa through GroFin grant

Published on August 16, 2018

The Hub, through the grant issued to GroFin, has thus far facilitated the closure $3.3 million in new private sector investment in East Africa. The goal of the grant was to increase investments in the agribusiness sector in East Africa by screening agribusiness and offering tailor-made technical assistance to get them investment ready.

The grant to GroFin is part of the Hub’s work to attract new investment in the perennially under-served areas of agriculture and agri-business. Agriculture is a major contributor to GDP growth and employment in East Africa. By supporting investment in the agriculture sector, the Hub is contributing the region’s economic development and food security.

GroFin solves the access to finance challenge for missing middle companies by funding companies that are either startup level, have inadequate collateral and/or need more flexible repayment terms. GroFin’s business support is geared towards making potential clients investment-ready. It accomplishes this by supporting business plan development, revising financial scenarios and ensuring compliance with existing local requirements. The Hub interviewed clients who had this to say:

“GroFin provided funding based on our business plan and growth strategy and not based on the collateral that we had,” said Betty Wandabula, director of Dejolisa, a Ugandan poultry business. Dejolisa had commercial funding from the bank, but the bank was not willing to provide additional expansion capital when Dejolisa could not meet its 120% collateral coverage requirement. GroFin refinanced the facility and provided the additional expansion capital for collateral coverage of about 60%. This allowed the company to construct additional poultry houses and purchase a truck, which increased Dejolisa’s chickens, eggs, and employees.

GroFin’s monitoring and technical advice was appreciated among clients. Mediatrice Uwingabire, Yak Fair Trade’s director, accredited the system with helping the company instill financial discipline. “We value the technical support even more than the funding,” she said.

“I wasn’t able to get funding from commercial banks. I am happy I met GroFin because they are funding us to get packaging machines. Our current packaging has been the greatest challenge in us growing our business,” said Isabelle Uzamukunda, Agasaro Organics’ managing director. Agasaro, a Rwandan agro-processing company, had raised funding from family and friends when the company could not acquire funding from a bank because of its startup nature. With the Hub’s-facilitated funding, Agasaro can move forward with its processing and packaging plans.

“GroFin gave us flexible payment terms, they are helping us hire experts and their lending terms do not change or have hidden costs unlike commercial banks,” said Abuhbaker B. Luzinda, Bestever Paper’s director. Bestever Paper received initial startup funding from GroFin. After two years of implementing and growing, when commercial banks finally recognized the company as a viable investment opportunity, Bestever Paper chose to once again receive financing from GroFin because it valued GroFin’s technical support, which the banks didn’t offer.

As these cases demonstrate, the Hub’s grant to GroFin is contributing to access to financing, food security, employment, strengthened value chains and intraregional trade.

New on our Knowledge Center: Global Economic Prospects June 2018

Published on August 16, 2018

GEP_JUNE_2018.JPGThe Global Economic Prospects June 2018 is a report by the World Bank Group. It asserts that the global economy seems to be leaving the legacy of the global financial crisis of the past decade behind. About half the world’s countries are experiencing an increase in growth. All the consensus forecasts for 2018 and 2019 reflect optimism. Yet, while current growth appears robust, potential growth will be lower. Underlying factors such as demographics (declining labor supply in many, large countries) and the legacy of low investment growth in the past contribute to this limited potential growth. These risks mean that actual growth may be even lower. 

This edition of Global Economic Prospects includes sections on the role of the largest emerging markets in global commodity markets and the implications of high corporate debt for financial stability and investment.

USAID Hub aims to increase exports through Tanzania Chamber of Commerce Industry and Agriculture grant

Published on August 16, 2018

The Hub issued a grant to the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) to promote the capacity of Tanzanian exporters and SMEs to increase the volume and value of exports to East African countries and the U.S under AGOA. The grant will contribute to exports to the U.S. under AGOA by increasing Tanzania exporters and SMEs’ awareness of existing opportunities under AGOA and linking them with potential buyers in the U.S.

“TCCIA partnership with the Hub is valuable as it will provide capacity to Tanzanian exporters and SMEs for production of commodities that meet the international standards and promote exports to AGOA, EAC and other international markets," said Mr. Gotfrid Muganda, Executive Director, TCCIA HQ.

Although Tanzania’s exports have experienced an upward trend over the last decade, the country has not optimized its export potential at the international and intra-regional level. For instance, exports to the U.S. under AGOA increased by 46% over the 2015/2016 period with total AGOA exports (including GSP) standing at $37,476,000. While the growth may look impressive, the value of Tanzania’s AGOA exports falls far below those of regional partners, such as Kenya (Tanzania’s AGOA/GSP exports were valued at less than 10% of Kenya’s exports).

To accelerate Tanzania’s export growth under AGOA as outlined in the National AGOA Strategy 2016, continuous technical support across priority sectors is required. This includes improving access to information on AGOA opportunities and export trends, which will boost Tanzanian exporters’ competitiveness. However, the availability of reliable data on firm-level exports remains a challenge in both the public and private sector. Investments in improving data management systems for exporters are therefore needed to expand and diversify export opportunities.

Despite recognizing the importance of accurate export data, TCCIA has experienced difficulties keeping export data records due to lack of staff capacity. TCCIA has a limited number of staff and appropriate equipment for data recording and maintenance.

The Hub’s grant to TCCIA will support the creation of an automated system that captures relevant export data. It will serve as a one-stop information center on exports to guide exporters and other stakeholders in their daily operations and help to create new enterprises in export sectors. Export-related information can identify new markets, the products/services needed in the market and the value of those exports, Moreover, this data will guide the private sector in the formulation of various dialogue and advocacy campaigns for the removal of unfavorable policies, regulations, laws and procedures that inhibit trade.

 

USAID works with EAGC to improve cross-border trade in staple foods in East Africa

Published on August 16, 2018

1507305789-2580.jpgOn August 14, the Hub signed a grant with the Eastern Africa Grain Council (EAGC) to facilitate the review and revision of existing East African Community (EAC) standards for sorghum grains, finger millet, green grams, composite flour and soy flour. This grant will also support the development of an EAC Guideline for sampling and testing aflatoxin levels. The adoption of the revised standards and guidelines are expected to reduce trade failures and ease the movement of grains from surplus to deficit regions in the EAC.

In 2016, the Hub partnered with the EAGC and the EAC Secretariat on the revision of the nine staple grain standards (wheat flour, maize flour, milled maize, dry beans, wheat grains, millet flour, sorghum flour, milled rice and dry soybean). This process was completed in December 2017 with the gazettement of the nine revised standards under EAC Legal Notice Number EAC/149/2017. Two sampling and testing standards and guidelines were also developed as part of the previous grant. 

Despite attempts to improve the enabling environment for cross-border trade, challenges persist, making continued efforts to improve grain standards and food safety testing protocols necessary. One area ripe for improvement is the sampling and testing process for aflatoxin levels in staple grains. Inefficient aflatoxin testing delays border crossing times and increases transaction costs. Harmonizing aflatoxin sampling and testing protocols in the EAC will simplify the issuance of Certificates of Conformity (CoC) requirements and make it easier to trade staple grains across the EAC.

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Save the Date: NY Now and Sourcing at MAGIC

Published on August 09, 2018

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From August 12 – 15, the Hub will support six East African apparel, fashion accessories and footwear companies to exhibit at Sourcing at MAGIC at the Las Vegas Convention Center in the U.S. The show provides an opportunity for the companies, drawn from Kenya, Tanzania, Ethiopia and Rwanda, to share their merchandise and generate exposure for their products. By engaging with interested buyers, the companies can create valuable linkages and discover what they need to move their businesses forward.

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At the same time, the Hub will also support seven Eastern African home décor and fashion accessories companies to exhibit at NY Now Market at the Javits Center in New York. NY Now is a global sourcing platform that attracts over 2,300 overseas exhibitors offering handmade and artisan production resources and product collections and over 20,000 import buyers representing large and volume retail stores. NY Now brings together buyers and exhibitors with the aim to create linkages that can support export demands in gift, home and lifestyle markets. The show is divided into three categories: Home, Lifestyle and Handmade. The Hub will participate in the handmade sector, where it will showcase products ranging from leather handbags to soapstone crafts and handwoven home accessories.

Hub participates in the Kenya-Mauritius Business Forum and Trade Exhibition

Published on August 09, 2018

On August 1, 2018, the Hub participated in the Kenya-Mauritius Business Forum and Trade Exhibition held in Nairobi, Kenya, under the theme “An Economic Corridor Promoting Intra-African Trade and Investment.” The event was part of a three-day first session Joint Commission for Cooperation (JCC) between Mauritius and Kenya and was organized by the Economic Development Board of Mauritius and Kenya Investment Authority (KenInvest).

The forum provided a platform for both countries to showcase available trade and investment opportunities for businesses and investors from either country and to discuss the issues faced in pursuit of those opportunities, along with possible mitigations.

“Kenya and Mauritius need to enhance joint ventures in manufacturing, training as well as services’ exchange to boost global competitiveness via manufacturing of products for the export market,” said Mauritius Foreign Affairs Under Secretary, Her Excellency Dwarka Canabady. She observed that commissioning daily flights between the two countries had boosted business-to-business (B2B) executive interactions, setting the stage for higher trade volumes between the two countries.

Mauritius has been a popular destination for Kenya’s investors. Most multinational companies in Kenya have subsidiaries registered in Port Louis due to its favorable tax regime with a corporate tax of 15 percent and export tax of three percent. It also allows 100 percent foreign ownership and has no capital gains tax, among other incentives.

During the event, KenInvest Chairperson Ann Kirima urged for closer cooperation, especially on value-addition ventures, saying that the Big 4 development agenda had created new openings for Mauritian companies to invest in Kenya. “Wealth management services as well as trust and succession handling services are well developed in Mauritius and that is an area that Kenya can heavily borrow enabling local families to thrive after founders’ demise,” she said.

The day concluded with a B2B session for the visiting Mauritian delegation and Kenyan businesses. The B2B session focused on unlocking potential joint ventures and strategic alliances. Eighty B2B meetings were held between the Mauritian and Kenyan operators, and their resulting linkages will form the basis for the development of a special economic corridor between the two countries. Several positive leads for the Mauritian participants to expand their market reach to Kenya have been already registered.

New on our Knowledge Center: Integrated National Export Development and Promotion Strategy

Published on August 09, 2018

NEDPS.JPGAn export-led growth strategy is premised on the now acknowledged role of exports in national economic growth and development. The experiences of Taiwan and South Korea in the 1960's and 1970's, Malaysia, Thailand, and Singapore in the 1970's, China in the 1980's, and eventually India in the 1990’s, provide strong evidence that exports can play a leading role in supporting rapid economic growth, boosting the emergence of a modern manufacturing sector, providing employment, and reducing poverty. This experience, especially demonstrated by the quest of Bangladesh for export diversification, provides international benchmarking for Kenya’s National Export Development and Promotion Strategy (NEDPS).

Photo Story: Empowering Women Cross-Border Traders

Published on August 09, 2018

IMG_6533.JPGThe Rusumo One-Stop Border Post serves women cross-border traders from both Rwanda and Tanzania in East Africa. Through a USAID Hub grant, the Agribusiness Focused Partnership Organization (AGRIFOP) is empowering these women cross-border traders through a series of trainings under the Cross-Border Women Traders’ Capacity Building Project. AGRIFOP is providing training on cross-border trade requirements, procedures, documentation and regulations, grain quality standards and warehouse management. The women are excited about the learning outcomes!

" I learned the benefit of joining trading groups and associations as this makes access to finance easier. For example, if a client needs products in bulk and you don’t have enough stock, you can visit a fellow member of the group to assist in sustaining the order,” said Mukarutesi Annasiatha, cross-border grain trader in Rusumo, Rwanda.

Here is their story...

USAID Hub supports improved seed quality to boost Tanzania’s grain trade

Published on August 02, 2018

37881991_2076044479133577_2928684778339172352_n.jpgThe USAID Hub recently supported the Tanzania Official Seed Certification Institute (TOSCI) to convene a workshop to develop draft distinctness, uniformity and stability (DUS) test guidelines for priority crops (maize, sorghum, rice and common beans). This follows an extensive field-level survey carried out by TOSCI across Tanzania to collect data to be used to develop the DUS test guidelines for these priority crops. The activity is in response to the general standards set out by the International Union for the Protection of New Varieties of Plants (UPOV). This partnership is aimed at supporting Tanzania to align with international seed systems and schemes such as UPOV and will contribute to improved seed quality being made available to producers.  

Increased seed trade serves as an enabling factor for increased production and trade of staple foods. In East Africa, disparate seed legislation and regulations across the region have been identified as major barriers to the local breeding, production, distribution and sales of improved seed varieties, and key barriers to farmer productivity. This has also resulted in the slow growth of local seed companies and the East African seed industry as a whole. The harmonization or alignment of seed policy and regulations is therefore imperative in the region.

Previously, the USAID Hub has supported TOSCI to attain International Seed Trade Association (ISTA) accreditation. Tanzania’s compliance with ISTA will enhance availability of quality seed in the country and boost grain trade with the EAC and other countries.

The Hub’s support serves as a complement to the approved nine revised East Africa Community (EAC) Grain Standards after a record-quick revision, approval and gazetting process led by USAID Hub-grantee Eastern Africa Grain Council. Grain quality inconsistencies among EAC countries have been a major constraint on formal regional trade. The revised standards will improve the flow of quality grain commodities from surplus to deficit regions and, in turn, boost the EAC’s economic growth, resilience and integration.

Women cross-border traders at the Rusumo border gain from USAID and AGRIFOP program

Published on August 02, 2018

IMG_6543.JPGAt the end of July 2018, USAID Hub partnered with the Agribusiness Focused Partnership Organization (AGRIFOP) to conduct a capacity-building session for 50 cross-border women traders along the Rusumo border of Rwanda and Tanzania. The training, conducted at the Rusumo One Stop Border Post, covered topics on cross-border trade requirements, procedures, documentation and regulations, East African Community grain quality standards, financial literacy and business management.

Participants were delighted to engage with border officials, food and safety officers and representatives from the revenue authorities who explained the process of formal cross-border trade and answered their questions. They also learned about warehouse receipt systems that can enable their association receive financing from banks with their stored grains as collateral.

“We were sensitized on structured trading and how it helps one to easily access markets. I also learned the benefit of joining trading groups and associations as this makes access to finance easier. For example, if a client needs products in bulk and you don’t have enough stock you can visit a fellow member of the group to assist in sustaining the order,” said Mukarutesi Annasiatha, cross-border grain trader in Rusumo, Rwanda.

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