XSML, the fund manager active in Central & East Africa, announced its second investment in Uganda in Qualicoff, an exporter of Ugandan coffee beans. Qualicoff exports high quality green beans to specialty roasters in Europe and the UAE.
Qualicoff buys coffee from small holders using a network of small local merchants and ensures quality by cleaning, sorting and bagging this green coffee for export. ARF financing has been in the form of a long term working capital loan. This will enable Qualicoff to significantly increase export volumes. Coffee is grown in various regions in Uganda and is the country’s largest export product, as well as the biggest contributor to employment and foreign currency reserves. While the coffee export market is dominated by the larger commodity trading houses, smaller Ugandan exporters struggle to compete as they have limited access to finance.
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: “Qualicoff is an experienced exporter of high quality green coffee from Uganda to mainly Europe and the UAE. Our financing will help to achieve a step-change in the company’s growth as it can now triple export volumes. Smaller coffee exporters have only access to short term finance limiting their export volumes and their ability to compete effectively with the larger coffee export houses. With our financing of Qualicoff we hope to break this mould.”
Andrew Ssettimba: “With the financing from XSML we are able to increase our volumes significantly and achieve the first step of our goal of operating our own coffee processing facility. Through this long-term financing we are able to purchase coffee from more than one thousand small holders through our network of local coffee merchants.”
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 US$100,000 and US$5mn. 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. All three investors in CASF (IFC, FMO and Lundin) were joined by Bio, CDC, DGGF, and Proparco for ARF.
Qualicoff is a coffee trading company based in Kampala, Uganda, which has been operating since 2010 and exports Robusta green beans to Europe and the United Arab Emirates. The company is owned and managed by Andrew Ssettimba and family and currently employs some 11 staff. Qualicoff is one of a wide range of coffee traders in Uganda, who in total exported some 288,000 tonnes of coffee in 2016 or about 4% of global coffee exports. After Ethiopia, Uganda is the second largest coffee exporter in Africa and the eight largest in the world.
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. XSML manages 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 14 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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