2.00 -5.30p.m

1.    Hon. Dr. James Ndahiro, EALA, Rwanda

2.    Hon. Harrison George Mwakyembe, Minister of  Information, Arts, Culture and Sports Tanzania

3.    Stephen Gugu, Co-founder Viktoria Venture, Kenya

1.    Daniel  Maginga, Investment Executive, GroFin, Tanzania

2.    George Gachara, MD, Heva Fund

The session began with a powerpoint presentation made by  Daniel  Maginga: Investment Executive, Grofin, Tanzania

The presentation focused on: From Financing and Investment Point of view, what (impact) investors look at in overall entrepreneurship where they want to put their fund.

MAIN POINTS:

·         What impact investment is:

·         Impact investments are investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return.

Background

·          The Small and Medium Enterprises (SME) Challenge:  As many as 70-90% of all SMEs fail in their first three years of existence  because of lack of financial success, business skills and enabling environment.

·         Bottom line: Initial investment readiness & challenges for smaller SMEs and start-ups are significantly higher than for larger SMEs

·         Grofin Tanzania is part of a network  of SME fund management in Africa and Middle East.

Grofin supports SMEs that provide indirect job opportunities (e.g. training, skills development) and/or environmental services (e.g. water, waste, energy, ecotourism)

Requirements:

The entrepreneur should have:

–      Significant own investment in the business;

–      Ability to manage a business;

–      Willingness to work with GroFin as a value adding financier & share management information regularly;

–      Growth ambition & demonstrate integrity as well as professionalism in their dealings.

Collateral requirements:

–      Though GroFin has no minimum requirement, we do expect entrepreneurs to (partly) secure the loan if collateral is available.

–      Value of collateral is important in the overall risk assessment.

–      Personal guarantees of the entrepreneur(s) are required.

·         Business Support Grofin offer to entrepreneurs in the following areas:

·         Pre-finance support (Develop investment ready SMEs, Provide access to appropriate finance)

·         Post-Finance Business Support (Reduce failure rate

·         by supporting entrepreneurs, Develop and grow sustainable SMEs that deliver impact)

Case Studies

·         Madam Catherine: Rwanda Textile Importers and Traders Limited. (over 9300 customers and 24 jobs created):

Since 2004, Madam Catherine Mukangwabije has been making her mark as an entrepreneur with her business Rwanda Textile, an importer and distributer of curtains, carpets, sofas and other textile products from Dubai and China. In 2013, she first approached GroFin for finance to support the growth of the business as she operates through 3 shops. Such was the continued growth that she approached GroFin again in 2016 for further financing to manage the working capital requirements of the business growth. She has also begun to grow the furniture manufacturing side of the business, generating a higher margin profit stream and supporting local manufacturers.

Aniella Ventures Nigeria Fashion – shoes and clothing.

Mrs Anita Egho, a Business Administration graduate from Delta State University, has always had a passion for fashion, which ultimately led to her to open her own business. The business which grew from a small shop selling drinks to an established outlet known for sale of top quality shoes, handbags and purse, is demonstrating potentials for further growth as both final consumers and retailer market segments continue to increase. Anita is fully involved in the day-to-day management of the business and her skills, passion, experience and lessons learnt in the course of managing the business are critical attributes that help her keep the business sustainable

KEY ACTION POINTS:

What entrepreneurs need to have to qualify for the fund

·         A business they can manage

·         Significant loan investment

·         Social network

·         We must maintain sustainability of these creative industries.

·         There are a lot of opportunities going forward as a lot more impact investors are coming in so we welcome to support you.

After this presentation, the moderator, Ms. Maria Sarungi Tsehai, Director of Productions at Compass Communications Ltd, welcomed the panellists to a conversation on Government Policy and Private Capital for Impact Investment for the Creative Industries in East Africa.

Hon. Harrison George Mwakyembe: Minister of Information, Arts, Culture and Sports Tanzania:

The government is the process of collecting views from the public to draft the Tanzania Arts Policy.  This is an opportunity to integrate issues of East Africa regional integration and science and technology in the policy.

We have agreed with the Minister of Trade and Industry and Investment that together review the Copyrights and Neighbouring Rights ACT No. 7 1999, so as to strengthen the mandate of the Copyright Society of Tanzania ( COSOTA)

The government of Tanzania is in the process of  creating an Arts and Creative Industry Fund

The government alone can come up with solutions for the creative economy, so is expecting support from private sectors and creative stakeholders.

George Gachara, Managing Director, Heva Fund (Kenya)

The role of public policy is to create a path to market and then people like Heva can come and take first risk or second risk, or partial risk in an environment where public infrastructure allows business to flourish.

 When will the process of cultural policy reform  for East Africa happen?

Hon Dr. James Ndahiro: East African Legislative Assembly ( EALA), Rwanda:

The process of cultural policy for East Africa is already on-going and it should begin from the government which should invest in the creative industry, as it is their obligation and since there is always a return both to government and society in both tangible and intangible way.

The East Africa community has undertaken a commitment to ensure that they have mapped the culture and creative industry in the region. This provides them with an opportunity for investors and also determining whether they have sufficient returns. However, the government priority should be social mobility of its citizen.

What needs to be done in order for this  EAC Creative and Cultural Industries Bill, 2015 to be enacted?

Hon Dr. James Ndahiro: East African Legislative Assembly ( EALA), Rwanda:

·         The heads of state of EAC need to review the EAC Creative and Cultural Industries Bill, 2015, in consultation with their EAC ministers, before it is enacted and then domesticated at country level. So the bill is still at the parliamentary process. Of course we have the right as citizens to demand through our cultural ministries for its enactment and even demand explanation if it is not enacted, but at the moment we can just wait and leave the process to end.

We have seen in our discussions that some of the impact funds are foreign holds. So is Victoria ventures in Kenya also a foreign hold?

Stephen Gugu: Co-founder Viktoria Venture, Kenya

·         Viktoria Ventures is a group of angel investors, not a fund. It is local investors coming together to make investment into early stage industries. We start with micro investments of minimum investment of five thousand dollars and then build up from that point. It started in 2014 and the idea was to make sure that we have our own cash, because there is a certain perception that we will be looking at our businesses from which will prove much more productive.

Heva fund, how do you balance investment and the creativity aspect which you as a fund want to make as your strength especially that you are looking at an industry that is unconventional?

George Gachara, Managing Director, Heva Fund (Kenya):

·         We have very clear policies; ethics of business, perspective of business, expectation of the fund from the business from which we have crafted our product. Our perspective goes into all of the processes from evaluation to the horizon of the business.

·         We established a fund in 2013 but between 2013 and 2015 we invested over a hundred thousand US Dollars in research and travelled all over East Africa speaking to creatives and trying to underhand creative value chains, creative process, how does value work, so for us creatives are not a strange crowd, they are the crowd we made the fund for. Therefore our fund has the understanding of the creative process.

·         Every fund needs to have an internal critique in terms of its value system, its relationship to the business. Its relationship to value, its relationship to risk etc. What we are talking about is true partnerships and not politicizing the nationality of money. So I wouldn’t say that foreign funds are a problem, it’s the ideology behind some of the funds that have been established.

Does Heva fund also fund startups?

George Gachara, Managing Director, Heva Fund (Kenya):

·         Yes but we do not give seed financing. What we find as our entry point is we get businesses that have already tested the market, have already tested their product.

Do you at Grofin give initial funding for bringing creatives’ businesses off the ground? And help us differentiate the kinds of funding creatives should expect.

Daniel  Maginga: Investment Executive, Grofin, Tanzania:

·         In my personal view seed capital has to come specifically from providers of seed capital because there is a different stages ecosystem in the investment: there are people who provide seed capital,  NGO investors who invest in other businesses, there are people whom we look on exactly what is required to finance on specifically on their idea. Therefore I think it is a great initiative for the government of Tanzania to start that special arts and creative industry bill where I think the seed capital should come from.

·         Sometimes the creatives are afraid to approach investors because of the return investment issue. There are investors who are willing to give money only on the impact without expectation of financial return. However, we cannot deny the issue of return investment as I believe this is an industry with creatives; genuine business men and women who are looking to make money. So if money can be made using capital from investment then it can be done, because there are those who have done it.

Stephen Gugu:

·         I believe if you are an entrepreneur you should be able to go to the market and at least get something done through your own sweat, you must show that you have the tenacity to interact with the market. You need to have a certain market interaction before you come for investment.

George Garacha:

·         It is the question of what happens to a person who is at pre revenue stage. Well the first risk has to be taken by the entrepreneur before someone else does especially as far as market interaction is concerned. However, there are ways to make sure that that happens around policy work supporting our own government.

·         Even without investing in seed financing there are several things that can help young upcoming artists to start to cut their teeth. Drawing an example for us at Heva, we focus on copyrights, fair business practices, payment of royalties, and registration, conduct, a better operating environment etc. So there a lot of public subsidies that can go into programs that wouldn’t necessarily involve direct grants into creative production but go into helping the business process easier for entrepreneurs.

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Hon. Minister Harrison George Mwakyembe

·         The government is expecting to come up with a token budget on the next financial year to move the process.

·         There is a company from Kenya that gave me 50 million shillings to support a sports initiative and they gave me the idea to speak at the national lottery and say that 0.5% of whatever they get to come to this fund.

Daniel Maginga:

·         The government should finalize the legal process of establishing the fund to be able to attract philanthropists and fund managers like PWC.

·         The government can work with organizations like CDEA with creative incubators that can support with business development of creatives , then the government can provide funding to the creative entrepreneurs.

Stephen Gugu

·         Providing matching funds raised by  local investors that reduces the risk of investing in creative enterprises.

o   This creates some sort of a guarantee by ensuring the local entrepreneurs put in their cash, and the investor matches that. By doing that you double the amount of money that is going to the entrepreneur. This also becomes a learning curve for the in terms of how to invest in the creative space having reduced their risk.

·         Another idea is the government starting a fund and having a corporate add cash into the fund, so that there is shared risk.

Robert Mwampembwa from Audience additional Point: I would like people to start considering local government as a big financier in the arts. We can get money through legislation, through policy formulation at local government level.

Ø  Financial failure

Ø  Business knowledge and skills

Ø  Training

Ø  Operating and enabling environment.

·         Investor obstacles

Ø  More focus on the return of loan than the creative process

Ø  Very little understanding of the creative sector value chain or its businesses

·         Political, social, environmental , economic and technological obstacles

Ø  Policies

Ø  Capital

Ø  Mobility and migration

Ø  Market

Ø  Industrial construction

Ø  Product lifecycle

Ø  communication

Ø  Broadcasting (on competing with mainstream content)

Ø  Costumer Perspective of product, content and/ or creation

·         Creative entrepreneur women businesses

·         Content production and development for digital channels

·         Music Performance and entertainment

·         Create a curriculum for the financial sector on the creative economy product

“Impact investment is long term, you have to go through the journey”

–       Daniel Maginga: Investment Executive, Grofin, Tanzania

“The difference between impact investment and other kinds of investments is the principle that impact investment is about business support (from where you start to where you end) and not merely money lending.”

–       Daniel Maginga: Investment Executive, Grofin, Tanzania

“There is a framework guiding how to do business in this arts and creative industry bill”

–       Hon. Dr James Ndahiro: East African Legislative Assembly ( EALA), Rwanda

–       Daniel Maginga: Investment Executive, Grofin, Tanzania

‘When an engine is run without oil it will break’

–       Hon Dr. James Ndahiro: East African Legislative Assembly ( EALA), Rwanda

Remark from N.J Merinyo to a point made by Hon. Minister Mwakyembe on Tanzania Cultural trust Fund – I would like to remind you to look at Tanzania Cultural Fund; how did it started, how did it progressed, and how it failed? I think we have got a very good lesson to learn from there and I hope this time when we establish this fund (Arts and Creative Industries Fund), we strategize very well on how it is organized; who will manage it, and how the creative industry is going to benefit from it.

Comment and action Point from Robert Mwampembwa  – I think Tanzania in terms of this fund (arts and culture industry fund) should work on a model which as a country or as East Africa works for East Africa.

Comment and Action Point from Daniel–Public-private partnership  is a good idea, especially for the creative industries and I think there is a lot of good ideas coming on both sides. I think the issue is not only on part of funding but also some issue on destination, I think  upcoming stakeholders meeting that is coming up can discuss on this.

Honourable minister closing remarks –  (based on Robert’s remark) I will have to pursue this matter with you in detail, of course this is the second time you are telling me we have a model that already worked in Tanzania  The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) an  Investment Blueprint  for the agriculture sector… I think we can work from that. The issue of local governments participating in this area, you are quite right but we will need a right set of measures to be taken .You see MPS in Tanzania just like in Kenya, we have what is called CDF – Constituency Development Fund of course we get a lot of money …we just need the right set of measures to part of this money got to arts and creativity

Could you discuss opportunities for individual investors?

Answer by Hon. Dr. James Ndahiro:

·         Through Crowd funding as it is done in Asia

·         Getting creative ourselves on funding for our ideas

Answer by George Gachara:

There are many opportunities but I actually encourage if you are an artist and you have some extra money, you know people with capital, you can set up a fund like Heva. There has to be an environment here in Tanzania that allows people to have a certain kind of money to either invest individually as angel investors. So I would encourage Tanzanians who are making money, mobilize money because there is money in this ecosystem and I have proven so within the Kenyan ecosystem.

Question 2 a) by  Musa Sango: Radio Producer and a Visual Artist

I think professionalism can be a challenge for most of artists, would you give us the strategies thoughts on how we are going to push the National Arts Council of Tanzania/BASATA to push this agenda instead of just being a censorship institution?

Question 2(b by Kibacha: Musician, and one of the pioneers of Tanzanian Hip-Hop music, and Bongo flava from a group called Kwanza Unit

At the moment as artists our biggest cry is the copyright law of Tanzania and I’m just asking what initiatives are there to improve the copyright law. As any artist knows, musicians live on publishing and performance rights so what does the government plan to do to make sure that one day we’ll survive on only our performance rights, publishing rights, producer rights because at the moment no artist is benefitting from it?

Questions to Hon. Minister Harrison George Mwakyembe:

Answer to both questions: Let me assure you on the issue of BASATA and COSOTA, give me a month or two I will definitely call you for a public hearing to give your views on revising the law, before it is taken into parliament for amendment.

Question 3 by  Doreen Sinare, CEO, Copyright Society of Tanzania (COSOTA) to  Hon. Dr James Ndahiro:

From the perspective of East Africa legislation, have we set a minimum standard  for copyright for the East African regional market?

Answer: Copyright management is provided for and I think at the regional level there is a bureau on intellectual property registration and copyright. There is a regional policy to protect our intellectual property.