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Giving entrepreneurs a chance to maximize social impact

By Sebidde Kiryowa, Geoffrey Mutegeki

Added 26th November 2016 11:08 AM

“I started with 100kgs of honey, 200 labels, 20 boxes and 350 containers all worth sh1m in 2008. The biggest asset I needed was my experience in honey production,”

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Brian Mugisha (C) at an exhibition in Kampala

“I started with 100kgs of honey, 200 labels, 20 boxes and 350 containers all worth sh1m in 2008. The biggest asset I needed was my experience in honey production,”

Do you have a business which provides a solution to an environmental or social problem and would like to maximize your social impact?  Do you have specific challenges in business and need advice on how to fuel your growth? Whether you need investment readiness support or growth financing for your business, Yunus Social Business (YSB) Uganda are the people you need to talk to write Sebidde Kiryowa and Geoffrey Mutegeki.

In April 2008, Brian Mugisha, a former programme manager with “Hives save Lives” – a local NGO that majors in encouraging apiary among Ugandan farmers, set out to buy and process honey from farmers on his own.

“I started with 100kgs of honey, 200 labels, 20 boxes and 350 containers all worth sh1m in 2008. The biggest asset I needed was my experience in honey production,” he said recently.

Mugisha started out by converting his two bed-roomed house in Bukoto, a city suburb into his work environment. The kitchen served as the store and the garage as the main honey processing area; a move that saw him save some money in rent charges. Together with Vincent Ochan, they formed Golden Bees Limited.

Mugisha acquired the services of an experienced middle man with contacts of over 500 honey bee keepers in the West Nile region, Nakasongola and areas in Western Uganda. 

“Uganda has two honey seasons; one in Northern Uganda and the other in Southern Uganda due to the movement of the sun along the equator which divides the country. From February to March, we bought raw honey from the West Nile region and from July to August we bought from Bushenyi and Kisoro,” Mugisha said in an earlier interview. 

Mugisha would sieve out wax, ash and other impurities, place the honey in a ‘strainer’- a fine metallic sieve with a collection point to improve the honeys’ purity and value it before it is carefully packing it in clear small bottles complete with labels. 

“Our breakthrough came in 2008 when Mr. Matono the then managing director of Hotloaf Uganda gave us an order for a carton of honey. The order was so big for us then,” Mugisha says.

Fast forward to June 2016, the company received $170,000 (sh598m) from YSB to scale up their operations by purchasing honey processing machinery, increasing honey inventory and initiating its wax export process.

The company was part of nine promising social businesses that received funding to scale up their operations after completing a three-month accelerator training and business refining to operate social businesses in the health, renewable energy, apiculture, and agribusiness sectors. The graduates also received mentoring from local and international partners.

The training, run by YSB and the USAID programme targeted social businesses impacting communities in Uganda. Under the partnership, the most promising 20 social businesses with combined potential to create more than 2,200 full-time quality jobs and networks of 1,800 suppliers and distributors along their value chains, received investment funds ranging from $200,000 - 350,000 (shs722m - Shs1.26b) each.

Progress

Today, with that support from YSB, Golden Bees Limited provides a livelihood for over 2000 bee farmers in Uganda for whom it provides guaranteed market.  Each farmer receives at least $300 (sh1,080,000m) in household income annually.

The company, through the accelerator programme, was able to identify areas within its operation that needed a lot of improvement in order to accommodate its growth such as financial management, management information tracking and human resource management, all for which it is still getting support from YSB.

Like Mugisha, many entrepreneurs have benefitted from YSB’s their accelerator and financing programmes.

What is Yunus Social Business

Yunus Social Business Foundation Uganda Ltd is a non-profit venture fund housed founded by Noble Peace Prize Laureate Professor Yunus Muhammed, Saskia Bruysten and Sophie Eisenmann and led in Uganda by Eriab Kiiza.

“It was set up in Uganda in 2014 as an entity that works on the side of the disadvantaged to bring about meaningful impact in their lives through offering non-financial support to enable entrepreneurs to become investment ready, grow and maximize their social success as well providing growth capital for social businesses,” says Carolyne Kirabo, YSB investment manager.

“While there is a lot of investor interest in Uganda and East Africa, we find that the challenges of poor governance and poor financial management hinder local businesses receiving investment capital. We want to close that gap through our investment readiness programs and social design labs,’’. 

As for the financial support, YSB provides capital financing of between $100,000 and $500,000 at an interest rate of 10-12% a year.

 raining bee keepers Training bee keepers

 


“We give entrepreneurs a grace period of one to two years on principle effectively allowing them a year or two to pay only the interest accruing to the money and not the principle,” , says Edirisa Sembatya, YSB communication & partnerships officer.

YSB is also active in Haiti, India, Colombia, Albania, Brazil and Tunisia.

Immediate impact in Uganda

Only last week, YSB in coordination with USAID equipped about 50 social entrepreneurs with practical tools and knowledge to implement in both planning and execution of their business models to achieve scalability and financial sustainability. The one day design lab took place at Kati Kati restaurant in Kampala.

T
he successful entrepreneurs will attend the first East African Social Business Conference in Uganda on December 6 at which Prof. Yunus will be a key speaker.

General Impact

Last year, YSB, in partnership with USAID, launched the implementation of a three-year programme with the overall objective to promote economic security in Uganda through supporting small and medium social businesses to generate sustainable quality jobs, income opportunities, and access to good nutrition and related services for the Ugandan people.

Under the partnership, 1,500 social entrepreneurs are to receive training, coaching and mentoring; 135 will be assisted to scale their businesses through improvement of their business models, conducting testing and accessing linkages to markets.

The program has a clear focus to ensure 40% of social businesses supported are women-led while 30% of direct employment opportunities and 50% of supplier/ distributor opportunities are targeted for the youth.

In April 2016, YSB launched its 2016 Social Business Accelerator with the first cohort of 13 social businesses.

What is a social business?

Social Business” means a business that focusses fully on solving a social problem in a financially sustainable way, either by providing essential products or services to the poor, or by ensuring improved income opportunities for the poor.

Unlike a charity, a social business generates profit and aims to be financially self-sustaining. Removing the need for fundraising allows social businesses to re-invest profits back into generating sustainable social impact.

A social business is either created by the disadvantaged population it serves or serves them as its primary customers.

Who qualifies?

“Generally, in choosing to work with a business, they consider four  key areas; the competence and coachability of the entrepreneur and team; the viability of the business model; the social impact potential including the relevance of the problem being tackled and financial viability,” Kirabo says.

To participate, entrepreneurs are required to submit a concept explaining their business ventures or ideas to YSB.

Key to include on the concept is if their business venture or idea creates social impact, has plans to reach financial sustainability and the plans to scale in the next three years.

Challenges

Sembatya says many businesses in Uganda are not investment ready and they do not know the type of financing suitable for their stage in growth which makes working with them difficult.

He says social businesses and entrepreneurs, unlike their commercial counterparts, are faced with a challenge of limited good talent to work within their organizations.

Plans

“We are planning to expand to other East African countries,” Sembatya says.

He says YSB wants to increase the number of investment-ready businesses they work with from seven to about 10 annually so as to spread the social impact.

“We invite corporates, foundations, development agencies and individuals with a keen interest in social economic development to join our corporate social action so as to widen our capital base and scale the level social impact in Uganda.

Products

Entrepreneurial services


Months long and very structured accelerator program for selecting and training high-potential entrepreneurs.

* Business planning advice

* Mentoring  support

* Market access

* Product  and market testing

* Access to local and international  experts

* Leadership trainings

Financing

Financing as well as active portfolio management and support  for most promising  social businesses.

* Due Diligence

* Debt and equity

* Soft loans and grace periods according to business needs

* Financial and social monitoring  and reporting

* 6-8 year ongoing support

 

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