Duncan OnyangoAcumen Fund is a non-profit that raises charitable donations to make long-term debt or equity investments in early-stage companies. Duncan Onyango, the director for East Africa, spoke to Julius Businge about their plans for Uganda.
What exactly is Acumen Fund?
We are a social venture capital fund. We invest in companies that serve the needs of poor people. We are now targeting six sectors namely agriculture, health, renewable energy, water and sanitation, education, and the housing sector.
We are in Uganda because we believe the country has very exciting social and economic indicators. The country is attracting many investors, it is growing at the same time embracing the growing trend of information technology and we plan to be here for a long time.
You say you have been in Uganda but on a small scale. What tangible things have you done so far?
We have already done two major investments in Uganda. We have invested $5million in Gulu Agricultural Development Company (GADC), which is the only commercial cotton ginnery in Gulu District. This company sources both organic and conventionally-produced cotton from over 55,000 smallholder farmers.
Our investment in this company has focused on providing market access to these smallholder farmers, which they are very happy about. We have also got approval to invest in a hospital in Kampala and we are looking forward to investing $ 2million to help it expand and acquire more skilled personnel and extend services to more people.
So we are now meeting businesses and are open to any that needs our help. There is no target number; we have enough money to invest in companies that will meet the terms and conditions.
So how does a company or individual qualify to benefit from the Fund and what are the conditions?
We are looking for companies which are formal or those that can easily formalise. They should be having a good business plan with a good model of growth, a company that aims to employ many people and help them fight poverty, a company with good ideas that can help spur growth and become profitable year after year, companies with good and skilled managers, among others.
Once we get into contact with such a company then we can be able to invest in that company a minimum of $250, 000 or a maximum of $2.5million and hold between 17-20% shares in that company for the long term.
Our aim is not to make money out of it but to pump in money, open up new markets, develop new business models and help companies to grow. These companies should be able to employ more people and fight poverty.
So where else has the Fund helped and what's your experience?
In East Africa we are in Tanzania, Kenya, Rwanda and Uganda. Since 2007, we have invested over $30million and soon we will enter Ethiopia where we recently received approval to offer our services.
To be specific; in Kenya we invested in a seed company which has been able to supply affordable and high yielding seeds to over 300, 000 farmers, we have also invested in a company that provides micro finance services to people at affordable rates among others.
In general, we have impacted positively on lives of over 100 million people across the globe and we want by 2015, to have reached in 15 regions across the world.
But you seem to be targeting formal businesses and leaving out informal ones which are actually many in Uganda?
That is partly true but we are an open organization and we can help any individual or business to formalize. This is the way to go. As longer as a company is ready to transform lives of the poor and include majority of Ugandans, we will come in with technical, leadership training, financial and other support. We hold fellowships and those that participate become the ambassadors of the Fund.
So what differentiates you from other Funds?
There are many things that are makes us unique. We do not give up on any business. Once we invest in you we will stand with you for the long term and as a must you will grow. Social enterprise Funds like this one are very difficult to get.
We risk our money and we are happy most businesses have not let us down. In East Africa only two businesses have let us down but we were able to recover our money when they closed business. But the rest are flourishing.
Even if we decided to leave, we want to leave you in a better position to attract other commercial businesses like banks to your enterprise and others. You should be looked at as a company having the potential to live for a long time.
What is your assessment of the business environment in East Africa?
These economies are politically and economically stable and they are supportive to businesses. Recently inflationary pressures and political violence have been big issues but these have improved and business is normal. We pray that this situation continues so that more investors bring in cash and impact positively on the lives of the poor.
Where do you want to see Acumen in 3-5 years in Uganda?
The journey in Uganda started already and this is a continuation. I want to see Acumen as an investor of choice for many businesses in Uganda and the one that is committed to providing services to the poor, I want to see more regional fellowships running in the region and more Ugandans participating and to be seen as an impact investor not only in Uganda but also in the rest of the countries where we are going.