Today, XSML, the fund manager active in Central & East Africa, announced its first investment in Uganda in KARE Distribution (KARE), a distributor and wholesaler of essential consumer goods based in Uganda.
As a distributor, KARE helps locally manufactured brands to sell their products as detergent, soap, vegetable cooking oil and water to low-income households. ARF financing will be used to open a new supermarket in a populous neighborhood in Kampala, which currently has no outlets.
The African Rivers Fund (ARF) targets growing, well-managed small and medium-sized enterprises (SMEs) in the Central & East African region covering Democratic Republic of Congo (DRC), Uganda and Republic of Congo as well as – over time – Burundi. The fund is named after the two most powerful rivers in Africa, the Congo and Nile Rivers, which embody the potential of the Central & East African region.
Jarl Heijstee, Managing Partner at XSML says: “KARE Distribution is pioneering a wholesale model with added distribution capabilities that enables them to deliver basic consumer goods to the low-income population via small retail outlets, schools and hospitals in and around Kampala. Their distribution model enables these small shops and supermarkets to reduce their costs and have up to date stock levels.”
Geoffrey Karegyeya: “With the financing from XSML we are able make this long term investment and integrate forwards by operating our own supermarket. In addition XSML is helping us with their network in DRC to open up the Congolese market so we can distribute our goods in East-Congo.”
XSML believes that sustainable economic development in fast growing markets as the DRC and Uganda can be achieved by encouraging local entrepreneurship. Currently, many opportunities in these countries remain unexploited due to the lack of risk capital and support. By stimulating entrepreneurship, jobs and income are created. The African Rivers Fund continues CASF’s strategy with investments in between USD 100,000 and USD 5 million. Between the two funds XSML has provided technical assistance to some 28 companies to help them improve their operations and skills. Evidence of further impact can be found in various fields, with over 500 jobs created since 2011, over 4,000 additional pupils spread over three private schools and the addition of some 40 hospital beds, an operating theatre and maternity rooms in a clinic in Kinshasa, improving healthcare standards.
Although international investors show an increasing interest in emerging markets, the demand for finance from small and medium sized enterprises (SMEs) remains largely untapped.
XSML, eXtra Small Medium Large, founded in 2008, bridges this gap by investing in small businesses to help them grow into medium and large enterprises. We manage two funds with a focus on frontier markets in Central and East Africa: the Central Africa SME Fund and the African Rivers Fund. Our local teams of 15 investment and operating professionals have experience in emerging and frontier markets in private equity, corporate and development banking and corporate restructuring with offices in Kinshasa (DRC), Kampala (Uganda) and Bangui (CAR).
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