The Fanisi Venture Capital Fund invests private equity and venture capital in businesses that have substantial growth potential. Norfund was instrumental in establishing Fanisi, investing both in the management company and the fund. Haltons Pharmacy is a Fanisi investee company and provides quality medicines and medical advice in Kenya through a national network of outlets.
Limited access to capital is one of the key obstacles to growth in Cambodia. Norfund has supported the expansion of the microfinance institution Hattha Kaksekar Limited, thereby contributing to increased access to finance, financial literacy and job creation. In 2016 the institution was ready for investment from an experienced shareholder in the banking sector, and Norfund sold our shares.
Energy constraints are impeding South Africa’s economic growth. The new Bio2Watt biogas plant produces electricity from organic waste, and is helping to reduce both the nations electricity deficit and the amount of landfill waste. Norfund provided project development financing, a third of the equity capital required and played an instrumental role in structuring the deal.
The climate in East Africa is well-suited to flower production, and the potential for growth in the sector is high. Norfund’s investment in Marginpar enabled the acquisition and development of several underperforming farms in Kenya and Ethiopia which have secured decent jobs.
Lack of access to capital is a major barrier for micro and small entrepreneurs in Myanmar to develop their businesses. Although the demand for capital is high, the microfinance industry is underdeveloped.
In Myanmar, only 26 percent of adults have an account at a formal financial institution. Banks seldom lend to micro and small companies (MSMEs), and although microfinance companies were legalised in 2011, the number of microfinance institutions is low. Informal lenders are thereby still the main source of financing for most entrepreneurs.
of the adult population in Myanmar have a bank account at a formal institution
Lack of access to capital is also a main reason why microfinance
institutions have limited ability to give loans and expand in Myanmar. In 2013, Norfund was the first international lender to a Myanmar-based microfinance operator. The loan was invested in Proximity Design, a social enterprise that had supported rural farmers and families in Myanmar since 2004.
In 2018, Norfund made several new commitments in Myanmar’s microfinance sector.
Norfund and two international partners, succeeded in creating a new, innovative funding agreement for a microfinance institution named Myanmar Finance International Limited (MFIL).
What is unique with this agreement is that it opens up for one of Myanmar’s largest banks, Yoma Bank, to give loans to MFIL due to that Norfund and partners are providing the security the bank requires. With this agreement, MFIL will be able to double its loans portfolio and reach more than 100,000 micro entrepreneurs in Myanmar.
“We are excited by the opportunity to work with Yoma
Bank to further increase our outreach to continue to grow
our business”
Mr. Po Yort, Managing Director of MFIL
A follow-on equity investment to another microfinance institution, Advans MFI Myanmar, was closed in 2018. Advans MFI Myanmar is an experienced actor with focus on rural financing. Norfund’s equity investment will enable the company to attract additional funding to grow its loan book.
live in rural areas in Myanmar
Our goal is to serve clients who have insufficient
access to formal banking services, with the ultimate
aim of contributing to private-sector led economic
and social progress in Myanmar.”
Jana Kadian, CEO of Advans Myanmar
Norfund made an investment in 2018 in the Myanmar Opportunities Fund II, an investment fund targeting SMEs in Myanmar.
This year Norfund introduced an internship program. Four enthusiastic graduates get to experience how it is to work in a development finance institution. In the following weeks the interns will give a quick look into how life is in Norfund. Following is their first letter.
We are now eight weeks into our internship at Norfund and what a journey it’s been so far! From attending exciting conferences to travelling to Kenya and Nigeria this internship has showed us what Norfund is all about.
During our first week we were warmly greeted by the Norfund team, and it didn’t take long until we understood what a great place Norfund is. We got right down to business with a great introduction to how Norfund operates and what a Development Finance Institution does. We quickly recognized the passion for development in Norfund.
Filled up with new knowledge, we set off for Beitostølen for some team building after work on Friday. It was a great way to get to know our colleagues better and we quickly understood that Norfund does not joke around when it comes to hiking.
With sore legs from our hike we jumped right into Norfund week the following Monday. This was an amazing week, full of activities and interesting sessions. We got to meet all our colleagues from the regional offices in Africa, Central America and Asia and learn from their valuable experience.
With Norfund’s new strategy there was a lot of useful discussions on how to collaborate to achieve our goals and it was valuable to understand how difficult it is to invest in some of Norfund’s regions. It is safe to say that we were blown away by the competency in the organization.
In addition to this, the Norfund Conference was a highlight of the week providing a great introduction to the valuable work Norfund does. Lectures from some of our portfolio companies, together with the Minister for development demonstrated the imperative importance of Norfund’s investments with regards to job creation. The theme of this year’s conference was Moving Money – Improving lives, which we found very fitting to Norfund’s role.
It’s safe to say that we were proud to have an employer with 304,000 jobs in its portfolio.
After a hectic start we started diving into the different projects we had been assigned. We all work on different projects, but work together on a country analysis of Senegal, which is one of Norfund’s new core countries. Did you know that 60% of the population in Senegal is under 24 years old? Or that Switzerland is Senegal’s second largest export destination?
Going forward we will be busy working with our respective projects but will provide updates from some exciting projects.
Kenya is one of the biggest flower exporters in the world. The industry employs around 100,000 people directly, and 2 million people indirectly. One of the most successful and profitable flower businesses is Kariki Ltd Kenya. They are specialising in the production and marketing of selected summer flowers. Marginpar BV is a successful Dutch flower import agent. They hold exclusive rights to import of a number of summer flower varieties from growers – such as Kariki – in Kenya, Ethiopia, Tanzania and Zimbabwe.
To strengthen its position, Kariki Ltd wanted to acquire two underperforming producers of summer flowers in Kenya and Ethiopia. To increase the company’s access to international markets and improve efficiency of their distribution, they also wanted a closer integration with their distribution partner Marginpar BV. In 2018, Norfund allocated USD 8.5 million in equity through Kariki Ltd for them to acquire the two East African flower producers Carzan Flowers Kenya and Marginpar Ethiopia, as well as the Dutch import agent Marginpar BV.
“Kariki’s high productivity and positive development is a result of the implementation of the Japanese leadership model Kaizen,” says CEO Richard Fernandes.
This has resulted in a new consortium, known as the Marginpar Group, which will facilitate a common strategy of sustainable growth and innovation. Norfund will provide expertise in business development and focus on the company’s development and monitoring of corporate governance and environmental and social issues.
The Kaizen model stresses the importance of delegating responsibility to the workers – the ‘value adders’. Following the acquisitions in 2018, the kaizen management model was also introduced to the new assets in the Marginpar Group, now comprising more than 2,800 permanent staff in Kenya and Ethiopia. “We grow people, our people grow flowers” is their new common motto and it has already contributed to increases in productivity.
We believe that implementing the Kaizen model in Ethiopia will empower and strengthen Marginpar’s employees. This will give higher productivity and better financial results for Marginpar, and better working conditions and satisfaction for their workers. With co-funding from Norfund’s Business Support, the Kaizen Institute will be contracted to implement the Kaizen model on all Marginpar farms in Ethiopia during 2020.
My name is Eline. I started my internship in the Scalable Enterprises investment department in Norfund in August. Our focus is on investments in agribusiness and manufacturing companies that have potential for growth and job creation. Now I will present one of the projects I have been working on.
I am writing a case study about Marginpar, a summer flower producer with farms in Kenya and Ethiopia. In 2018, Norfund invested USD 8.5m as equity to finance the acquisition of several distressed farms. In addition to providing capital, Norfund has assisted in strengthening corporate governance and enhancing environmental and social performance in Marginpar. To get information for this case study, I got the opportunity to travel to Kenya to visit two of the farms.
Norfund has a regional office in Nairobi, which I got to visit during this trip. We work closely with the regional offices, so it was very nice to spend some time together outside of Skype and mail.
The farms I visited are located in Nanyuki and Rongai in Kenya. It was very inspiring to see the farms’ operations, and how the employees at all levels are involved in continuously improving the way they work.
On my way back home, I spent a day in Amsterdam where I got to meet the marketing and distribution part of the company. I also visited the flower auction in Aalsmeer, which is the world’s largest, where part of the flowers from Kenya are distributed. This is kind of cool if you are into logistics ?
After the week of getting to know the company, I returned to the Oslo office. I will use the information I got about Marginpar to write a case study that presents Norfund’s role in the company and the development effects of the investment. It was very interesting to visit one of Norfund’s investments, and it was motivating to see in practice how Norfund contributes to development.
It is safe to say that the past few months of working in Norfund have been very educational and fun. It has been very valuable to learn about the challenges and risks of investing in Norfund’s geographies and sectors. The experience and competencies of the people working here are truly impressive.
Associated Foods Zimbabwe Ltd (AFZ) is Zimbabwe’s leading producer of peanut butter, jams, nut spreads, and canned tomatoes and fruit. After successfully installing a new state-of-the-art production line, the company is now eyeing the export market in addition to serving the domestic market.
AFZ was established on 1 January 2016, as a result of a merger between Zimbabwe’s leading producers of jams and peanut butter – Honeywood Enterprises Ltd and Spread Valley Ltd. Norfund’s 17 million NOK investment contributed to partly-finance the merger and provided capital expenditure to facilitate improvements, such as the installation of a new peanut butter production line. In addition, Norfund’s investment also provided working capital.
”The new state-of-the-art production line is
all computerised, with human hands only at the
packing stage. More importantly, the quality of our
products has vastly improved. It is now world class,”
Simba Nyabadza, Director and majority shareholder at AFZ
By combining the manufacturing strengths of Honeywood Enterprises, and the sales, marketing and distribution skills of Spread Valley, the new company is now benefiting from economies of scale and is adding value for stakeholders, including its customers. The company is now also able to developing products for export.
AFZ plans to expand its local raw material sourcing via outgrower schemes. This will result in increased employment throughout the agribusiness value chain in Zimbabwe.
Improved productivity and product quality will increase the consumption of local produce and thereby reduce dependence on imported goods. This is especially important as most African countries struggle to build their foreign currency reserves, and must therefore promote processing and consumption of quality local goods, while limiting imported goods.
Vertical Agro Limited is one of the oldest horticulture exporters with presence in Kenya, Tanzania and Ethiopia. The three key business areas: primary production of fruit and vegetables, packaging and marketing. The main operations are in Tanzania through Serengeti fresh and in Kenya through Sunripe. Vertical Agro produces 6500 tonnes of fruits and vegetables annually and is the largest exporter of organic vegetables in Kenya. Norfund was the first external investor in this local family business and in 2014 Norfund committed to a convertible loan facility of 41 MNOK to allow Vertical Agro expand its product range and improve yields and productivity.
Through its wholesale and marketing company in the United Kingdom, Vertical Agro also sells ready-to-eat and ready-to-cook products in several European countries.
‘We were the first company that started exporting
Zia Ali, CEO of Serengeti Fresh
vegetables from this part of Tanzania’
The agriculture and food industry is a priority area for Norfund’s investments in Sub-Saharan Africa. To spread investment risk and contribute to developing the full agricultural value chain, Norfund has decided to include a wider scope of the agriculture value chain in the portfolio.
Norfund’s investment in Vertical Agro contributes to creating local jobs and providing market access to smallholder farmers in East Africa. Through its export earnings and tax payments, Vertical Agro is contributing both to the regional and local economies.
Serengeti Fresh provides increased income for local farmers, and generates jobs in packaging and logistics for more than 100 local people.