GroFin Small and Growing Business (SGB) Fund
About the GroFin and Growing Business (SGB) Fund
The GroFin Small and Growing Businesses (SGB) Fund was set up in 2014 to serve as a commercially orientated vehicle to provide development assistance, as well as start-up and early stage growth-capital needed to develop sustainable small and growing businesses.
The Fund exclusively invests in Africa, in some of the most challenging business environments globally. The businesses it funds generally operate in areas with a high rate of poverty, and often employ people living in poverty or provide vital products and services to them.
Investors & Funders
Performance of the GroFin SGB Fund
The SGB Fund continues to deliver long-term impact in its 11 countries of operation.
Over the last five years the Fund has grown at an average annual rate of 50%, ending with an investment portfolio of slightly over US$ 107 million at the end of 2019.
The last two years have proven to be one of slow expansion compared to the rapid disbursements and Fund growth that happened from 2015 to 2017. During 2018 the outcome of fundraising efforts slowed down which in turn manifested in a sharp slowdown in disbursements, something the Fund only recovered from in the 2nd half of 2019. Towards the end of 2018 and especially in 2019, the financial strain experienced by some the Fund’s earlier clients became visible in both increasing impairment numbers and reducing returns.
The impact and development success of the Fund is undeniable, easily exceeding investor expectations. Since inception, the Fund has financed and supported 217 SGBs, provided business support to 1,998 SGBs and sustained 15,917 direct jobs. The ripple effect through the communities these SGBs operate in ismuch larger, with close to 240,000 livelihoods sustained.
Realisations have improved dramatically over the year, moving up from 20.5% of Fund-to-date disbursements at the end of 2018 to 48% at the end of 2019. Maintaining a focus on realisations remains a key Fund objective going forward.
Towards the end of 2019 we reviewed the entire strategy of the SGB Fund at country level to arrive at optimal risk and return outcomes for investors.
Nigeria, Ghana, Zambia, Egypt, South Africa, Kenya, Tanzania, Rwanda, Uganda, Senegal, and Ivory Coast
These country-level strategies favour the future allocation of capital to countries with higher interest rate environments relative to others, less volatile currency movements than others, and sectors and deal terms that historically proved to provide better returns. The 2020 SGB Fund strategy was adopted by all investors at the end of November. The COVID-19 outbreak has brought a delay to the implementation of this strategy since our 2020 focus has pivoted to job protection, by assisting our existing performing clients to get through the economic downturn. This might be in the form of moratoriums or additional financing, which for 2020 will limit the optimal allocation of capital as intended by the new strategy.
We have been making continuous improvements to our credit granting framework and our business support offering to reduce credit risk to the Fund. Among others, we have appointed a Business Support Executive who brings deep turnaround, credit, and support experience to the Fund.
The financing of women-owned businesses is becoming an important sub-segment in Fund, even though the percentage of women-owned and managed businesses have only increased marginally since inception to 42% currently. Towards the end of 2019 we appointed a specialist gender-consultant firm, MEDA, to assist us in developing specific strategies, toolkits, and business support processes to better serve the needs of women in business.