Family businesses in Rwanda ‘need to improve their financial records’

Fusion Capital is a business financing and private equity firm, with a focus on the East African market, which expanded to Rwanda three years ago. According to Aline Benihirwe, operations and compliance manager of Fusion Capital, one of the main reasons the company turns down financing for many entrepreneurs and businesses in Rwanda is because those businesses do not have financial records.

“You can’t find the accounts, you can’t find records so you have to bet on your imagination and your projections [as a private equity firm],” she explained.

Benihirwe added that many family-owned and run businesses in Rwanda specifically do not keep adequate records of their finances.

This is often because family members do not think it is necessary to keep records for their father or husband, for example. However, the lack of financials can cause these businesses to be denied access to funding by firms such as Fusion Capital, explained Benihirwe.

Agriculture companies in Rwanda (such as coffee producers) are very often family owned, according to Benihirwe, and she advises these companies to start keeping adequate records.

An improving business environment for entrepreneurs

In an interview with How we made it in Africa, Benihirwe highlighted that business registration in Rwanda has become quick and simple, and entrepreneurs are offered assistance in the process by the Rwanda Development Board (RDB).

“Really it is quick, anyone can do it. It’s not like other East African countries where you have to pass by a legal firm… You can go to RDB and there are teams there that will help you. They have their own lawyers; they have their own specialists. So registration is very quick.”

The recent 2014 global Doing Business report revealed that Rwanda had shot up 22 spaces in the rankings since last year, now in 32nd place in the world in terms of overall ease of doing business. As a result, the East African country overtook South Africa as the second easiest business environment in Africa (after Mauritius).

Benihirwe added that she has seen the country’s business environment improve in recent years, alongside an increase in the number of foreign investors in Rwanda.

“Business in Rwanda is really growing; people are smarter than before. I [have been] in the business sector from 2007… so I can be a witness from where we have come from to where we are.”

She added that Rwanda now has the chance to attract more international investors into the country, and highlighted that this would play a large role in the development of the economy and the opportunities for the local population. “And when we have investors we grow,” concluded Benihirwe.

Fusion Capital in Rwanda has a specific interest in the capital Kigali’s real estate market, mainly in mixed commercial and retail developments, and the firm’s minimum requirement for funding is US$1m.