Tomorrow, 16 September 2014 is the official launch of GroFin in Zambia. The initiative was first conceptualized in 2012 prior to the participation of CEO and founder Jurie Willemse and the GroFin Leadership Team in the Zambia International Business Advisory Council.
The decision to enter Zambia was based on several strategic factors, such as its growing economy, solid and improving business environment, and a strong team of local professionals. According to Ernst & Young, Zambia is one of Africa’s top 5 performers for 2012-2017 growth projections. Growth in real GDP has hovered around 7% over the past three years. This growth is partially driven by the expansion in copper production, and corresponding international trade and development partnerships. At the same time, this resource-led growth is bolstered by expansion in agriculture, construction, manufacturing, transport, and finance sectors.
Zambia’s thriving minerals sector is already fueling development in complementary sectors but economic diversification is stalled by a relatively inadequate financial sector. Over 60% of Zambians are completely unbanked, i.e. excluded from banking services. And unlike countries like Kenya or South Africa, Zambia’s venture capital and private equity are nearly non-existent. The underdeveloped financial sector is particularly burdensome for small and growing businesses. According to the World Bank, less than 16% of Zambian small- and medium- sized enterprises had access to credit from a formal financial institution, compared to an average of 23% in the region. While 21% of bank lending in Zambia is destined for this class of business, GroFin’s finance and support are wholly dedicated to the specific needs of these business owners.
Since establishing an office in Zambia, GroFin has already provided business support and finance to local entrepreneurs. These enterprises range from poultry farms to hotels to industrial equipment suppliers. In the medium and long term, GroFin aims to help Zambia build strong supply chains in the extractive industry and beyond. With the new Small and Growing Business Fund, GroFin aims to allocate up to 40% of their portfolio to companies providing vital goods and services. This means helping Zambian business owners to improve food security, provide better health care and educate more youth, building more human capital and a more productive work force. All of these outcomes will feed into the organization’s goal of advancing inclusive growth and improving living conditions in Zambia.