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In the bag: Recycling keeps EcoPlastic going despite COVID-19

“I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country”

Habamungu Wenceslas – Entrepreneur behind EcoPlastics

EcoPlastic, a recycling business in Rwanda, collects 88 tons of plastic waste every year and turns it into new plastic bags, tubing, and sheeting. Habamungu Wenceslas, the entrepreneur behind EcoPlastics, recognised the business opportunity when Rwanda passed a law banning the use and importation of plastic bags. “I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country,” he says.

Habamungu approached GroFin for financing in 2017 to purchase new equipment to expand EcoPlastic’s production capacity. By the end of 2019, he had managed to grow the business’s sales by over 400% compared to its early years of trading in 2010 and 2011. But when COVID-19 struck earlier this year, EcoPlastic was forced to close completely for two weeks and the impact of the pandemic on its customers suddenly saw the business’s sales plummet.

“Our main customers were also forced to close. Some – like hotels, restaurants, and the airport – are still closed for the moment.”

Habamungu says COVID-19 has also made it more difficult and costly to import raw materials.

“Trucks have to stay on the border for several days due to compliance checks and this has increased transport costs by 10%. Luckily, part of my business does not require imported raw materials so production could continue – although at a lower level.”

As part of our efforts to support our SME clients, GroFin developed a specially designed Resilience Tool Kit to guide them in protecting their revenue and reducing their expenses. We assisted Habamungu in conducting a rigorous cashflow stress test to gauge the expected impact of the pandemic on four aspects of his business: demand, supply chain, staff, and finances. We also provided him with a COVID-19 ESG Framework to better protect his staff and customers from infection.

Habamungu says GroFin has not only provided him with moral support during this difficult time but also helped his business to remain profitable. For example, GroFin advised him to shift some production teams to work at night when electricity costs are lower and to focus on acquiring more local plastic waste as raw material rather than relying on imports.

“Instead of losing confidence, we continued to focus on marketing strategies and how we can expand our collection areas. It made me realise that even if we are in difficult times, we will resume and grow the company.”

EcoPlastic directly employs 54 people and supports another 35 who collects plastic waste for recycling. Despite the setbacks caused by COVID-19, Habamungu chose to retain all his employees and continued to pay their full salaries.

Nzeyimana Fidele has been working as an accountant at EcoPlastic for more than two years. He supports his spouse, two young children and a domestic worker. Nzeyimana says the pandemic has already cost some members of his extended family their jobs.

“We are forced to make some contribution to support them as our family and this comes as food prices are increasing due to supplies issues caused by COVID-19.”

Nzeyimana Fidele, Accountant for EcoPlastic

He says he feels very lucky to have been able to keep his job at EcoPlastic despite the crisis.

“It made me happy. I cannot explain the joy that I feel. There is hope.”

GroFin helps Saboba survive COVID-19 lockdown in Jordan

When the first cases of COVID-19 were detected there in mid-March-2020, Jordan’s government quickly responded by imposing one of the strictest lockdowns in the world. Jordanians were completely confined to their homes for several days and later only allowed to venture out to purchase food and essential items.

Although restrictions were later gradually eased, the impact on Jordan’s economy was severe and small businesses bore the brunt of it. Al-Mutamayeza for Frozen Food Trading, which trades under the name Saboba, is a Jordanian wholesaler distributing high-quality frozen and processed meat and poultry products. The Nomou Jordan Fund has provided Saboba with three rounds of funding from 2014 to 2017. ​

Saboba had to cease production during the period of strict lockdown and could only resume its operations at the end of May. Although its food products could still be sold, the restrictions and their impact on the economy caused a drop of more than 60% in Saboba’s sales and a delay in payments from many of its customers. The lockdown also took effect right at the time Saboba planned to install a new production line and its newly imported equipment was left stuck in customs. ​

​While nearly all activity in the country had ground to a halt, GroFin Jordan reached out to key decision-makers to arrange the release of equipment that were shipped to Saboba’s supplier (partially owned by Saboba’s shareholders) in order to avoid severe delays in setting up the new production line. And further to its business support offering, GroFin Jordan also introduced the client to logistics service providers to help move and install the machinery and assisted the business in obtaining the necessary permits to resume production.

“We managed to get our new machinery, could meet demand, and maintain the brand’s reputation. The company was under the threat of closure. The support offered by GroFin Jordan meant we survived and are back in business”

Raed Mustafa Saboba, owner of the business

Saboba employs 15 people. Salah Ali Hasan Qatam has been working in Saboba’s warehouse since 2008. He supports his wife and five children, aged 13 to 24.

“I am very proud to have this job as it enables me to define my future and that of my family. Working here allows me to save some money for my children. I also hope that I will be able to buy a house instead of paying rent.”

Salah Ali Hasan Qatam, Saboba employee

GroFin helps GIA Bridals respond to COVID-19 crisis with new clothing line

COVID-19 has forced couples around the world to postpone or change their wedding plans. The virus has not only left many couples in tears – wedding vendors are just as heartbroken.

In Nigeria, the popularity of large and lavish weddings has created a million-dollar industry serviced by many small businesses. With Nigerians forced to put their wedding plans on hold due to COVID-19, many of these businesses – and the jobs they create – are now in jeopardy.

GIA Bridals, a GroFin client located in Port Harcourt, makes and rents bespoke wedding gowns to brides. The Aspire Small Business Fund (ASBF) invested in GIA Bridals in 2014 and 2017, providing the business with working capital and enabling the entrepreneur to lease and equip a larger space. Since ASBF’s investment, the business posted consistent increases in its sales and revenue.

But this year, GIA was forced to remain closed for three months during the COVID-19 lockdown in Nigeria and the business did not make any sales. Although GIA resumed operations in July, business is still slow. GIA’s owner, Ngozi Brisibe, says it would be devasting to her and her staff if her business was forced to close for good.

“We all depend on the business as our only source of livelihood.”

Ngozi Brisibe, Owner – GIA Bridals

GIA Bridals employs 11 people – 10 of whom are women. Chioma Patrick does the beadwork on GIA’s wedding gowns and has been working there for five years, supporting her mother. “This job has made it possible for me to earn my own money and I am not depending on or begging anyone to provide my basic needs. It makes me feel great and gives me confidence,” she says.

GroFin shared a customised Business Resilience Tool Kit – rolled out across the group to help clients respond to the pandemic – to help Ngozi analyse the impact on her business and especially its cashflow. “GroFin’s staff was consistently calling to find out how we were doing and providing advice on what can be done,” she says.

Ngozi’s biggest concern was whether she will be able to sustain the business until economic activity is fully restored.

“We suggested that she pivots her business away from only focusing on wedding dresses by using existing equipment for other products”

Charles Chikezie, GroFin Senior Industry Expert

Ngozi has responded by launching MyLadyUrban, a new line of women’s clothing. She says the new brand seeks to represent women as “both feminine and powerful” and will allow GIA to clothe its clients before, during, and after their weddings. “Although things seemed bad now, there’s hope for us with this new line of business,” Ngozi concludes.

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Stop panicking, and start transforming instead

Applying the five lean manufacturing principles.

Measures to curb the spread of COVID-19 has not only directly impacted the ability of businesses to operate, but has infected them with something even more deadly: uncertainty.

Small and medium-sized businesses are the most vulnerable segment to uncertainty, and manufacturing has been one of the worst-affected industries. Although it can be difficult to stay positive during uncertain times, those business that hope to survive must look beyond the current crisis and focus on those things that do remain in their control. “SMEs should use this time to build more efficient and effective organisations. One way to do this is to apply the five lean manufacturing principles,” says Marten Stavast, Senior Industry Expert in Manufacturing at GroFin, an impact-driven SME financier. He reminds manufacturers of these principles:

1. Define value

Any entrepreneur will agree that the customer always comes first. Lean manufacturing takes this idea beyond customer relations to also put the customer first in the production process. The true value of any product or service is defined by what your customers are willing to pay for it. Your product may seem valuable to you because of the time and resources that went into creating, but its value is determined from the point of view of the customer.

Lean manufacturing begins by determining the needs of the customer. Interviews, surveys, demographic information, and web analytics are some of the tools you can use to determine what your customers want and at what price they can afford it.

2. Map your value stream

Once you know what your customers want and value, you can map your value stream. Use your customer’s value as a starting point and identify all the activities that help to create this value. The goal is to ensure that every activity in your production process adds value to your customer and can be delivered at the price point they want. If an activity does not add value to your customer, it is a waste. If you cut out any unnecessary processes that do not add value, you can reduce production cost while ensuring your customers still get what they want.

3. Create flow

Now that only necessary and value-adding activities remain in your value stream, you should ensure that each step flows smoothly to the next. Interruption and delays in production are no different to waste. A delay is more than just a bottleneck when one production step waits on another – it is any step that takes longer than it has to. You can improve the flow of value-adding activities by breaking down every step of the process and reconfiguring it as efficiently as possible, levelling out the workload, and training your employees to be multi-skilled and adaptive.

4. Establish pull

Stock sitting on your shelves or raw materials piled up in your warehouse is one of the biggest forms of waste in any production system and often places a big drag on cashflow for smaller businesses. This is even more true in the current environment.

A pull-based production system means that you only produce products based on the needs of your customers and only at the time and the quantities needed. Strive to limit your inventory and work in process items to only the materials needed for a smooth workflow. This approach requires ensuring some flexibility in your production process and the current environment, it might just give you the edge as a small business.

Stock sitting on your shelves or raw materials piled up in your warehouse is one of the biggest forms of waste in any production system, and often places a big drag on cashflow for smaller businesses.

5. Pursue perfection

The final step in implementing lean manufacturing is by far the most important. Lean thinking should not be a once-off exercise that you complete now, while times are tough. It should become part of the culture of your company in such a way that every employee strives toward perfection and constantly getting better at meeting customer needs and reducing waste. This will not only set your business apart during times when customers are themselves under financial pressure but also when things improve.

Mend your nets

When this pandemic and the uncertainty it brings have passed, those business owners who spent this time wisely will have built businesses that can remain competitive by increasing the value they deliver to customers. There is a saying that goes “when fishermen cannot go to sea, they mend their nets.” Now is the time for business owners to do this same by using their time to transform their businesses, not just to survive the current storm, but also to look to the future.

This article was first published in the August/September 2020 issue of Your Business Magazine.

GroFin supports SMEs through COVID-19 crisis

The COVID-19 pandemic is having a severe impact on economic activity and small businesses are bearing the brunt of this crisis in both developed and developing countries.

GroFin finances small businesses in some of the world’s most vulnerable economies. We are hard at work to increase the resilience of these communities as they deal with the fallout of the outbreak.

Our model has always centred on providing entrepreneurs with continuous support and advice. We realise that it is even more crucial than ever before during an unprecedented crisis like this. As such, we have taken several measures to continue assisting our clients despite the challenges presented by the virus and are responding as follows:

Ensuring we can continue servicing SMEs

The health and safety of GroFin’s staff and clients are our highest priority. We ensured a safe working environment for staff across our markets by implementing Environmental, Social, and Governance (ESG) measures to limit the possibility of infection. The majority of GroFin staff is working from home and we plan to extend this to all staff within the next week. All our core business platforms are available remotely so that we can continue operating and engaging with our clients using digital platforms.

Advising SMEs on measures against the spread of COVID-19

We have also focused on helping our clients to minimise contagion risk to their own employees and customers. GroFin’s Impact team developed a COVID-19 Environmental, Social, and Governance (ESG) framework, drawing on international best practise on this lifesaving issue. This ESG framework has been shared with our clients and the GroFin Investment team is providing them with support and advice to implement the measures it recommends.

Providing support to our clients

Unlike commercial lenders, we decided not to take a portfolio approach to assess the impact of the outbreak on our investees. In line with our focus on providing entrepreneurs with continuous support, we developed a toolkit to assess the disruption and impact on key business elements of each SME in our portfolio.

We believe this will allow GroFin to use our expertise to provide appropriate advice to each entrepreneur, while also giving us a view on the viability of each business during and after disruptions to their operations. The outcomes of this assessment will determine our actions to be taken per client. Where available, we will also link our investees to local relief options like government support.

As an organisation working with SMEs in some of the most challenging markets, we have always been amazed and inspired by the resilience, determination and ingenuity of the entrepreneurs who are our clients. They will need all these qualities to overcome this crisis but can rest assured that GroFin will be there to support them throughout it.

Brienne van der Walt

Chief Executive Officer, GroFin