RWANDA NGURIZA NSHORE ANNUAL REPORT FY 2020

October 1, 2019 – September 30, 2020 Project Period of Performance: April 2018 - 2023

This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The content discussed is the sole responsibility of DAI and does not necessarily reflect the views of USAID or the US Government.

Program Title: Rwanda Nguriza Nshore Sponsoring USAID Office: USAID Rwanda Contract Number: 72069618C00001 Contractor: DAI Global, LLC Contracting Officer Rep.: Fina Kayisanabo Activity Manager: Nadine Manzi, interim acting Chief of Party Date of Publication: October 30, 2020 Author: The Nguriza Nshore Team

This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The content discussed is the sole responsibility of DAI and does not necessarily reflect the views of USAID or the US Government

CONTENT

EXECUTIVE SUMMARY ...... 1 Activity Objectives ...... 3 Component I: Expand the Capacity of FIs and NBFIs to Finance SMEs and Agribusinesses ...... 4 Component 2: Increase private and commercial investment into SMEs and agribusinesses ...... 6 Component 3: Strengthen the policy environment for SMEs and agribusinesses to increase their performance and profitability ...... 7 COVID-19: MARKET SYSTEM CHALLENGES AND INSIGHTS ...... 8 The Impact of Covid-19 on the Financial Services Sector ...... 9 Impact of COVID-19 on the private capital ecosystem...... 10 Impact of COVID-19 on Nguriza Nshore SME partners ...... 11 COMPONENT I: EXPAND CAPACITY OF FIs AND NBFIs TO FINANCE SMEs AND AGRIBUSINESSES ...... 13 FY 2020 Achievements ...... 13 Highlights and Successes ...... 14 Responding to COVID-19 impact on Component 1 ...... 16 Lessons Learned and Opportunities Identified ...... 24 Challenges and Mitigating Measures ...... 25 COMPONENT 2: INCREASE PRIVATE CAPITAL INVESTMENT FOR SMEs AND AGRIBUSINESSES ...... 27 FY 2020 Achievements ...... 27 Highlights and Successes ...... 28 Responding to COVID-19 impact on Component ...... 37 Lessons Learned and Opportunities Identified ...... 48 Challenges and Mitigating Measures ...... 50 COMPONENT 3: STRENGTHEN THE POLICY ENVIRONMENT FOR SMEs AND AGRIBUSINESSES TO INCREASE PERFORMANCE AND PROFITABILITY ...... 53 FY 2020 Achievements ...... 53 Highlights and Successes ...... 53 Responding to COVID-19 impact on Component 3 ...... 58 Lessons Learned and Opportunities Identified ...... 59 Challenges and Mitigating Measures ...... 61 CROSS CUTTING THEMES ...... 62 Market Systems Development ...... 62 Gender ...... 63 Youth...... 64 Persons with Disabilities ...... 65 Cross Cutting Themes COVID-19 Updates ...... 65 Lessons Learned and Opportunities Identified ...... 65

Challenges and Mitigating Measures ...... 66 MONITORING, EVALUATION & LEARNING ...... 66 Highlights and Successes ...... 66 Finalized a Suite of Nguriza Nshore Performance Monitoring Tool ...... 67 Monitoring, Evaluation & Learning (MEL) COVID-19 Updates ...... 70 Lessons Learned and Opportunities Identified ...... 71 COLLABORATING, LEARNING, AND ADAPTING ...... 71 COLLABORATING ...... 71 LEARNING ...... 73 ADAPTING ...... 79 Collaborating, Learning & Adapting (CLA) COVID-19 Updates ...... 80 COMMUNICATIONS ...... 80 Highlights and Successes ...... 80 Communications COVID-19 Updates ...... 85 Lessons Learned and Opportunities ...... 85 ENVIRONMENTAL COMPLIANCE ...... 86 CONSORTIUM OVERVIEW AND STRATEGIC PARTNERSHIPS ...... 91 OPERATIONS AND ADMINISTRATIVE ACTIVITIES ...... 91 Development of Key Deliverables for USAID ...... 91 Grants Management ...... 92 Staffing ...... 92 Financial Summary ...... 92 Operations and Administrative Activities COVID-19 Updates ...... 92 ANNEXES ...... 93 Annex 1: Success Stories ...... 93 Annex 2: Rwanda Nguriza Nshore Performance Indicators FY 2020 ...... 95 Annex 3: Rwanda Nguriza Nshore Performance Indicators Disaggregations ...... 96 Annex 4: Infographic Summary of COVID-19 FIs Survey ...... 99 Annex 5: Infographic Summary of COVID-19 SME Survey ...... 102 Annex 6: SACCOs and MFIs Trained in Partnership with AMIR ...... 105 Annex 7: Change Wheel Baseline ...... 107 Annex 8: Nguriza Nshore Partner Selection ...... 108 Annex 9: Nguriza Nshore Market Systems Theory of Change ...... 109 Annex 10: COVID-19 Challenges, Insights, Adaptations And New Opportunities ...... 113

ABBREVIATIONS AND ACRONYMS

ABR AB Bank Rwanda ACA Angel Capital Association AfDB African Development Bank AGRF African Green Revolution Forum AMIR Association of Microfinance Institutions in Rwanda ARED Africa Renewable Energy Distributor BV Baseline Value BDF Business Development Fund BK Bank of Kigali BNR National Bank of Rwanda BPN Business Partners Network BPR Bank Populaire du Rwanda BRD Development Bank of Rwanda BSP Business Service Provider CEO Chief Executive Officer CFO Chief Finance Officer CLA Collaborative, Learning and Adapting COO Chief Operating Officer DCA Development Credit Authority DFC US International Development Finance Cooperation DIS Development Information Solution DQA Data Quality Assessment EDP Entrepreneurship Development Policy ENAS Entreprise Nkubili Alfred and Sons EOI Expression of Interest ERF Economic Recovery Fund EVI EcoVentures International FAGACE Fonds Africain de Garantie et de Coopération Economique FI Financial Institution FtF Feed the Future FtFMS Feed the Future Management System FY Fiscal Year GoR Government of Rwanda GT Bank Guarantee Trust Bank ICT Information and Computer Technology IFC International Finance Corporation

IM Investment Memorandum IMF International Monetary Fund ISIC International Standard Industrial Classification of All Economic Activities KCB Kenya Commercial Bank MEL Monitoring, Evaluation and Learning MFI Microfinance Institutions MFIT Microfinance Investment Trust MINECOFIN Ministry of Finance and Economic Planning MINICOM Ministry of Trade and Finance MOU Memorandum of Understanding MSME Micro, Small, and Medium Enterprise NBFI Non-bank Financial Institutions NDA Non-disclosure Agreement NGO Non-governmental Organization OCA Open Capital Advisers PE Private Equity PLC Public Limited Company PPD Public Private Dialogue PSDYE Private Sector Development of Youth Employment PSF Private Sector Federation PWD Persons With Disabilities RBA Rwanda Bankers Association RCWE Rwanda Chamber of Women Entrepreneurs RDB Rwanda Development Board RIM Réseau Interdiocésain de Microfinance RFL Rwanda Finance Limited RFP Request for Proposals RSSB Rwanda Social Security Board RYAF Rwanda Youth Agribusiness Forum SACCO Savings and Credit Cooperatives SBFIC Savings Banks Foundation for International Cooperation SEZ Special Economic Zone SME Small and Medium Enterprise SOW Statement of Work SWG Sector Working Group TAs Transaction Advisors UN United Nations USAID United States Agency for International Development

USD US Dollars USG US Government WAR Water Access Rwanda WLN Women’s Lending Network ZOI Zones of Influence

EXECUTIVE SUMMARY

Nguriza Nshore is pleased to submit the Activity’s Fiscal Year 2020 (FY 2020) Annual Report for the Feed the Future (FtF) Rwanda Nguriza Nshore Activity covering the period October 1, 2019 to September 30, 2020.

The Nguriza Nshore (Lend So I May Invest) Activity, herein referred to as Nguriza Nshore or “the Activity,” is a five-year project, ending on April 23, 2023, and implemented by DAI. The purpose of Nguriza Nshore is to foster rural economic growth by facilitating the emergence of a dynamic small and medium enterprise (SME) and agribusiness sector. By alleviating constraints to investment and increasing access to finance, Nguriza Nshore will accelerate the creation and growth of off-farm SMEs as an entry point for widespread economic growth and social development, increasing productive employment for rural populations, creating opportunities for entrepreneurs and reducing poverty throughout the country. Nguriza Nshore seeks to increase rural employment by expanding investment in off-farm SMEs throughout Rwanda. Nguriza Nshore’s geographic focus prioritizes the 13 districts of the new FtF zones of influence (ZOI). However, to leverage economies of scale in urban/peri-urban locations and expedite finance/investment, Nguriza Nshore pursues opportunities outside of these priority districts to create a successful track record to pull in new financiers and investors.

Since 2019, Nguriza Nshore has taken a market systems approach to Activity implementation. In other words, the Activity is more focused than before on interventions that change incentives and behaviors of market actors in a way that makes businesses and their financiers committed and capable of reaching excluded populations. Nguriza Nshore works with and through other actors— private and public, formal and informal—to create and strengthen market linkages among and between financial sector actors, SMEs and the government. This includes direct support to actors, delivering support through other organizations, and industry or government initiatives designed to create a more functional marketplace. Working through other actors leads to sustainable results by making the financial market system more incentivized, informed and responsive to agribusiness and SMEs. However, Nguriza Nshore does continue to work directly with individual FIs and SMEs that have demonstated the ability to help the Activity reach its targets, prove a concept and have systemic impact. The Activity has designed an inclusive process for the identification and selection process (depicted in the graphic below) and a suite of support activities from which to choose to move projects from a concept to a closed deal.

The work includes a significant amount of structured engagement and co-creation. Throughout the report, there is an effort to demonstrate the interconnectedness between different activities that have not only helped the Activity reach and exceed its targets, but are also changing the way stakeholders work with each other and work together, as in the case of the Enterpreneurship Development Policy (EDP) and the Economic Recovery Fund (ERF).

The Rwandan market experienced a significant shock in FY 2020 as a result of the COVID-19 pandemic, the subsequent lockdowns and their impact on the Government of Rwanda, the financial sectors, SMEs and their customers. The Activity has adapted its own work to FIs and SMEs more resilient, giving them the tools to adapt, pivot and evolve so that they are capable of surving the crisis. The report includes a section on the impacts of the pandemic on the market system, with greater detail on its impact by component in the relevant sections. In each section, we highlight the ways in which the Activity has adapted to this shock and the new opportunities arising from the crisis, some of which the Activity has already begun to pursue.

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The graphic below depicts Nguriza Nshore’s inclusive process:

Figure 1: Nguriza Nshore’s Selection Process

In the section below, the report summarized the result of the project as tracked through its indicators. Overall, Nguriza Nshore has largely exceeded its targets for FY 2020. It has also exceeded several targets set for the life of the Activity and is on track to meet or exceed all others. In the following sections, the report provides greater detail on the three components of Nguriza Nshore, its activites and partners as well as a deeper discussion on how it achieved these results. This includes important sections on: Communications; Monitoring, Evaluation and Learning (MEL); and Collaboration, Learning and Adaptation (CLA). While these activities are often considered support functions to a USAID project, these activities are playing a greater role in directly supporting Nguriza Nshore’s partners. Nguriza Nshore is using its expertise in these areas to provide technical training and assistance to partners to improve their MEL, CLA and communciations within their own organizations.

2 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov EVALUATION OF ACTIVITY AREAS

Nguriza Nshore activities are centered on three interconnected components (Figure 2). Achievements are summarized by component below.

Figure 2: Rwanda Nguriza Nshore Results Framework

During the reporting period and despite the challenges faced due to the COVID-19 pandemic, Nguriza Nshore made significant progress toward achieving contractual results. Progress was made possible by building new and nurturing existing relationships with key market actors in the banking and investments sectors, SMEs, and the Government of Rwanda (GoR) ministries and agencies.

Activity Objectives

As shown in the table below, in FY 2020, Nguriza Nshore exceeded its goals putting it on target to exceed its life of Activity targets for the three Activity objective-level indicators.

Table 1: Activity Objectives Targets Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target

Q1 – Q4 FY20 % FY18-FY20 % Value 1. EG.3.2-27 Value of agriculture-related financing accessed as a - - 589% - 149% - result of USG assistance [IM-Level]

2. Number of jobs created with USG 14,645 6,558 223% 16,572 55% 30,000 assistance (Custom)

3 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target

3. EG.3.1-14 Value of new USG commitments and private sector investment leveraged by - - 120% - 32% - the USG to support food security and nutrition [IM-Level]

In FY 2020, a total of three SMEs, one large firm, one government institution (MINICOM) and 658 microenterprises received financing. To date, Nguriza Nshore has already exceeded its life of activity target for EG.3.2-27 with a total of $22.4 million facilitated. The varied way in which this target was exceeded, capitalizing on the Activity’s work with banks, microfinance institutions (MFS), Savings and Credit Cooperatives (SACCOs), direct support of SMEs, leveraging existing guarantee mechanisms, and facilitating loans that were dependent on previous policy work implemented by Nguriza Nshore highlights how working across the market system yields results.

Nguriza Nshore also leveraged private sector investment and US Government commitment under indicator EG.3.1-14, meeting and exceeding its FY 2020 target. In Q1 of this fiscal year, Nguriza Nshore contracted two new transaction advisors (TAs), Market Intelligence Africa (MIA) and NISK Capital, both with strong SME pipelines, already undergoing due diligence. This quickened the investment close process, and AC Group, one SME under the new TAs has already closed deals with three more SMEs with the new TAs in serious discussions with investors that should result in investment close in FY 2021.

Nguriza Nshore also facilitated the creation of 14,645 economy-wide jobs during FY 2020. In total, the investments and financing Nguriza Nshore facilitated created 4,159 permanent jobs and 10,486 temporary jobs in the Rwandan economy. Meeting the annual and life of activity jobs target, a number derived from the employment multiplier micromodel produced by the Activity during FY 2020, is dependent on overachieving both the finance and investment targets. Because Nguriza Nshore overachieved on both EG.3.2-27 and EG.3.1-14 during this fiscal year, the Activity, met and exceeded its FY 2020 jobs target. The Activity anticipates the jobs number will increase as it facilitates more private sector investment in FY 2021 as a result of overachieving finance and investment targets.

Component I: Expand the Capacity of FIs and NBFIs to Finance SMEs and Agribusinesses

Nguriza Nshore exceeded its targets on Component 1 in FY2020, putting it on track to exceed its life of activity targets by 2023.

Table 2: Component 1 Targets

Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target

Q1 – Q4 FY20 % FY18-FY20 % Value

1.1 Value of loans leveraged using de- - - 173% - 67% - risking tools (Custom)

4 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target

1.2 Number of financial and non-financial institutions receiving USG assistance that 72 68 106% 105 53% 198 extended loans and other financial products to SMEs (Custom)

In FY 2020, Nguriza Nshore leveraged loans using de-risking tools toward custom indicator 1.1. This leverage resulted from a range of different support provided to lending and borrowing partners, such as assisting Cogebanque develop and implement its strategy, assisting Zamura and Goshen to structure a financing arrangement for poultry famers and support to AC group—business planning, financial modeling and pitch preparation—to secure investment. The loans were extended to 479 microenterprises and four SMEs. The guarantees came from four different institutions—FAGACE, BDF, Fonds de Solidarité Africain (FSA), and a guarantee by the agribusiness, Zamura, to the NBFI Goshen to de-risk loans to Zamura’s farmers. During FY 2020, Nguriza Nshore supported two FIs to devise SME strategies, which included new de-risking tools as a way to expand SME lending. One partner, Cogebanque, is now implementing its strategy and has de-risked loans in agribusiness and transport of goods in both rural and urban as a result of the new strategy. Furthermore, the Activity supported SMEs to access de-risked loans from other financial and non-bank financial institutions (NBFIs). To date, Nguriza Nshore has achieved 67% of the life of activity target for Indicator 1.1.

Nguriza Nshore provided assistance (training on Corporate Governance, Business Continuity Plan, Product design, lending procedures and recovery measures) to 72 financial institutions including one non-bank financial institution (NBFI), one microfinance institution (MFI), and 70 Savings and Credit Cooperatives (SACCOs) that extended loans to SMEs, per the definition of indicator 1.2. These institutions have confirmed that they have financed SMEs after receiving assistance from Nguriza Nshore. The Activity achieved its annual target for the number of financial institutions assisted and has achieved 53% of the total life of activity target.

The Activity strengthened relationships with key actors in the financial services market system including: Rwanda Bankers Association (RBA), Association of Microfinance Institutions in Rwanda (AMIR), Business Development Fund (BDF), and Ministry of Finance and Economic Planning (MINECOFIN). These relationships proved particularly important in informing Nguriza Nshore’s response to the COVID-19 pandemic. For instance, Nguriza Nshore leveraged its strong partnership with AMIR to propose an outline for ERF mechanisms for MFIs and SACCOs which was taken into consideration in the fund design. Nguriza Nshore utilized strong relationships with RBA and AMIR to conduct a COVID-19 FI survey to better understand the impact of the pandemic on FIs. This learning will continue to help Nguriza Nshore, the GoR and other partners to tailor technical assistance to FIs and NBFIs in FY 2021. Nguriza Nshore further partnered with AMIR to hold virtual capacity building trainings with 79 MFIs and SACCOs in FY 2020. This training included a section on business continuity planning to help their members cope with the crisis.

Despite the lockdowns, Nguriza Nshore continued to provide technical assistance to individual FIs including: AB Bank, Afreximbank, Development Bank of Rwanda (BRD), Cogebanque, AMIFA, Réseau InterDiocésain de Microfinance (RIM), Umutanguha Finance, and GroFin. Notably, Nguriza Nshore assisted Cogebanque to leverage the SME strategy the Activity helped it design to access guarantee funds from two institutions: BDF and Fonds Africain de Garantie et de Coopération Économique (FAGACE). With these funds, Cogebanque was able to disburse de-risked loans to SMEs during FY 2020. Nguriza Nshore also began assisting RIM to develop an agribusiness finance strategy and laid the groundwork for supporting Umutanguha Finance to develop an SME finance

5 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov strategy in FY 2021. Additionally, partnerships established with Zamura Feeds and Goshen Finance and BeneFactors in FY 2019 produced additional lending to SMEs.

Component 2: Increase private and commercial investment into SMEs and agribusinesses

Nguriza Nshore exceeded its targets on Component 2 in FY 2020, putting it on track to exceed its life of activity targets by 2023.

Table 3: Component 2 Targets Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target Q1 – Q4 FY20 % FY18-FY20 % Value

2.1 EG.3.2-26 Value of annual sales of firms and producers - - 103% - 58% - receiving USG assistance [IM-Level]

2.2 Percentage of firms receiving direct support by the Activity that +9% report being able to 60% 52.5% 114% 60% 55% deviation recruit more labor as a result of investment (Custom) 2.3 Number of firms receiving USG-funded technical assistance for 152 150 101% 270 54% 500 improving business performance (Custom)

Nguriza Nshore exceeded its FY 2020 target for EG.3.2-26. In total, the value of annual sales was sourced from 5 small enterprises, 2 medium enterprises that are supported by the Activity.

In FY 2020, Nguriza Nshore surveyed SMEs which it has supported in order to report toward Indicator 2.2. In total, 15 firms were surveyed and 60% of those firms reported being able to recruit more labor as a result of investment facilitated by Nguriza Nshore. This figure represents current and planned recruitment and is an indicator of owner confidence in the business. This exceeds the annual target of 52.5%. Given the Covid-19 pandemic, exceeding this target was unexpected. Nguriza Nshore suspects that this is due to the Nguriza Nshore supported firms overall that did an excellent job of pivoting operations to preserve revenue and manage expenses. Several also managed to close deals during the period with the help of Nguriza Nshore transaction and technical advisors.

During the reporting period, Nguriza Nshore supported numerous Rwandan SMEs through its four- stage engagement process described in the Component 2 Section, with an aim to attract local and foreign investment. In FY 2020, Nguriza Nshore identified and selected 21 new SMEs for its investment readiness support. These SMEs, together with 13 SMEs selected in previous years, received support including financial modeling, preparation of investment documents such as pitch decks and investment memoranda, pitch training, social impact measurement systems design, and communications support among others.

In FY 2020, 14 Nguriza Nshore supported SMEs closed investment deals. These SMEs include Hollanda FairFoods, GET IT, BeneFactors, Water Access Rwanda, Kigali Farms, easyHATCH, IMARB Group Ltd, Jali Finance, Masaka Creamery, and five additional agribusiness SMEs in partnership with

6 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov HortInvest. Of the 14 SMEs, some were selected in FY 2020 and others were selected in previous years. In addition, soft capital was disbursed to 3,369 Rwandan MSMEs through Inkomoko Entrepreneur Development as a result of EDP approval.

In FY 2020, Nguriza Nshore provided technical assistance to a total of 152 new SMEs, the technical assistance includes investment readiness and workshops on business growth financing that benefited a large number of SMEs (women and youth owned businesses). These companies were sourced by the Activity through various means and methods (further described in the Component 2 section of this report) including word of mouth, applications through the Activity website, walk-ins to the office and digital connections generated on social media and through email. Nguriza Nshore hosted three SME workshops, one in Q1 and two in Q2 of FY 2020. The SME workshops brought together 158 women-led, and 24 youth-led businesses. The Activity also participated in the African Green Revolution Forum (AGRF), where it sourced SMEs, of which three qualified for investment readiness support. Throughout the reporting period, Nguriza Nshore improved upon its ability to build, leverage and sustain networks as a means to source SMEs which will continue into Nguriza Nshore’s FY 2021 approach.

Additionally, Nguriza Nshore built partnerships with investors and between SMEs and investors to increase Rwanda’s visibility as an investment destination. This included establishing new relationships with the World Business Angels Investment Forum (WBAF) and AGRF while strengthening existing relationships with Sankalp Africa, the Angel Capital Association (ACA), and European Venture Philanthropy Association (EVPA) Through these partnerships, Nguriza Nshore supported SMEs to participate in deal making events. For instance, the Activity sponsored ten SMEs to attend Sankalp Africa Summit 2020 where ten Rwandan SMEs had an opportunity to pitch to investors at the Rwanda’s Rising Stars session, an event focused on investment opportunities in Rwanda. Furthermore, Nguriza Nshore pitched nine SMEs at the ACA Webinar in Q3, generating interest from investors. Nguriza Nshore through BiD Network also supported one SME to participate and pitch at the EVPA annual event, which resulted in a follow up visit by an investor.

Component 3: Strengthen the policy environment for SMEs and agribusinesses to increase their performance and profitability

Nguriza Nshore exceeded its target for Component 3 in FY 2020, putting it on track to exceed its life of activity targets by 2023.

Table 4: Component 3 Targets Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target Q1 – Q4 FY20 % FY18-FY20 % Value 3.1 EG.3.1-d Milestones in improved institutional architecture for food 19 16 119% 39 72% 54 security policy achieved with USG support [Multi-Level]

Nguriza Nshore achieved 19 policy milestones, exceeding the EG.3.1-d indicator by 19% and contributing towards the successful EDP design and development process that included extensive nation-wide data collection, interactive policy formulation and drafting, a public private dialogue, and approval of the EDP by the Rwandan Cabinet. A total of 15 national, three sub-national and one international milestone were achieved. The Activity completed one “predictability of the policy framework” milestone, eight “policy development and coordination” milestones, four “inclusivity and stakeholder consultation” milestones, one “evidence-based analysis” milestone and five “policy

7 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov implementation” milestones. Each stage of the inclusive policy design process received increasing support from the GoR, generating improved momentum and garnering ongoing endorsement and buy-in—leading to a high number of milestones achieved during the reporting period.

During FY 2020, Nguriza Nshore built strong partnerships with influential actors in the entrepreneurship ecosystem including MINECOFIN, MINICOM, Rwanda Finance Limited (RFL) and BDF. Through these partnerships, Nguriza Nshore received requests from MINICOM and MINECOFIN to support the GoR COVID-19 Economic Recovery Fund. Following this request, Nguriza Nshore started supporting BDF with implementation of the $5 Million ERF received from the GoR for the BDF partial guarantee fund for micro-businesses and SACCO refinancing. The Activity also supported the GoR in its COVID-19 response by drafting ministerial directives for business opening guidelines for post-lockdown reopening. Additionally, in FY3 Nguriza Nshore began work with RFL to support Rwanda become a financial hub for the East and Central Africa region.

While some activities with the GoR were postponed due to COVID 19, Cabinet passed the Entrepreneurship Development Policy (EDP), created by Nguriza Nshore with MINICOM. Passage of the policy unlocked a $15 million loan from the African Development Bank (AfDB) to support the implementation of EDP. Furthermore, in response to the passing of the EDP, Inkomoko approached MINICOM offereing to directly support the implementation of the—because Nguriza Nshore included Inkomoko in the design and quality control of the EDP pre-approval. This SME Relief Fund, financed by Mastercard Foundation, is directly linked to Nguriza Nshore’s work in supporting MINICOM to implement the EDP through Inkomoko’s linkage to and financing of entrepreneurs and MSMEs.

During the reporting period, Nguriza Nshore built the capacity of the GoR to conduct regular public-private stakeholder dialogue sessions. The dialogue sessions, such as the Northern Province Public Private Dialogue (PPD), facilitated the GoR to engage constituents and encouraged ownership of policies and regulations at all levels of Rwandan society. Additionally, these dialogues supported the GoR to have a sustainability mindset when planning for policy formulation and implementation.

COVID-19: MARKET SYSTEM CHALLENGES AND INSIGHTS

Rwanda registered its first case of the Coronavirus disease 2019 (COVID-19) on March 14, 2020. The GoR took rapid action to prevent spread of the disease and closed all schools and places of worship, banned all public events and group gatherings and encouraged employees to work from home. The airport was closed on March 20, 2020 excluding cargo flights and cross-border trade. The airport and borders remained closed for normal and non-essential operations until August 1, 2020. Strict stay-at-home measures and limitations on movements were enforced beginning in late March for six weeks with all businesses and workplaces closed except for those in essential sectors. The country began to slowly re-open in early May with many measures and guidelines in place such as social distancing, mask wearing, hand washing and continued restrictions on group gatherings.

As COVID-19 gripped Rwanda and the world, it became clear that the pandemic will have major economic implications for the country and particularly for SMEs – comprising nearly 98% of total businesses in Rwanda and accounting for 41% of private sector employment. The impact also rippled through and impacted the financial services sector and the business enabling environment. Insights into the impact COVID-19 had on these sectors is shared below in updates for each component.

Nguriza Nshore closed its project office the week of March 16, 2020 and all personnel began working from home with a gradual and closely supervised re-opening anticipated in FY 2021. Despite the challenges associated with rapidly adapting to remote work and working virtually through Zoom and Microsoft Teams, Nguriza Nshore continued to conduct its activities, maintaining momentum,

8 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov adapting to challenges and new opportunities required to support partners during the ongoing and evolving crisis.

This section provides a snapshot of how COVID-19 affected Nguriza Nshore and its partners as well as the sectors the Activity operates in. For more detailed information on the challenges, adaptations and new opportunities resulting from the pandemic, refer to the standard sections of the report below. These are also included as separate Annex.

The Impact of Covid-19 on the Financial Services Sector

The financial services sector in Rwanda has been significantly impacted by COVID-19. Below is a summary of the major impacts Nguriza Nshore experienced on its operations and partnerships.

Liquidity and cashflow challenges are widespread. FIs and NBFIs across Rwanda faced liquidity challenges, particularly during the early months of COVID-19 – cash withdrawals from clients were greater than both deposits and loan repayments (generally for most FIs/NBFIs). In addition, COVID- 19 fostered negative impacts on expected cash flows for most clients and businesses, affecting their ability to pay existing loans and apply/receive new financing to mitigate consequences from the pandemic.

Deterioration of loan portfolios. Numerous clients, particularly in non-essential services sectors hardest hit by COVID-19, were unable to service their monthly loan payments of interest and principle to FIs. This problem further contributed to liquidity issues in FIs.

Restructuring of loan portfolios. In the months since COVID-19 struck Rwanda, most FIs focused on restructuring their current loans to mitigate the pandemic knock-on effects and maintain business continuity and survival. Their mitigation and survival efforts required substantial “pivoting” in both immediate planning and implementation.

9 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Clients at risk of bankruptcy. Some businesses, particularly in the tourism, hospitality, conferencing and transport sectors – and their supply chains – are at risk of collapsing or declaring bankruptcy which creates major existential risks for FIs and their operations.

Highlight Box 1: Results From COVID-19 FI Survey

In June 2020, Nguriza Nshore conducted a brief survey with 11 banks and 4 MFI partners to better understand COVID-19 impacts on the financial services sector. For further details, please refer to Annex 4. Key findings include: • 90% of banks and 50% of MFIs indicated COVID-19 had a moderate overall impact with 10% of banks and 50% of MFIs reporting high impact • The greatest high-level challenges were: credit defaults, drop in credit demand, loss of interest income and revenues from fees • 8 banks and I MFI closed at least 1 branch location • Of 5 FIs working through agents, 2 banks eliminated agency outlets • 1 bank and 2 MFIs eliminated employees with 1 bank reporting lay-offs or furloughing employees in the short-term with the plan to rehire after the lockdown ends • All FIs reported creating and implementing coping mechanisms with 100% providing loan repayments forbearances (postponements); 9 banks and 2 MFIs designed flexible payment terms (rescheduling), and 5 banks and 2 MFIs offered emergency loans or new, additional credit lines • At the time of the survey, only 9 banks were receiving financial or technical assistance from the Government of Rwanda or other development partner with the majority of support provided in emergency funding or lines of credit; none of the MFIs reported receiving support at the time of the survey • The biggest gaps in support that FIs face include: tax reductions or exemptions, interest holidays or reductions, postponed loan payments, loan extensions and training on coping strategies

FIs/NBFIs face revenue challenges. FIs/NBFIs experienced significant revenue reversals from profitability to losses. This new reality affects their ability to maintain and pay staff as well as to invest in product development, innovation, geographic expansion and overall business growth.

Nguriza Nshore FI partners were negatively impacted by COVID-19. See Highlight Box 1, for a snapshot COVID-19 had on FIs/NBFIs based from firsthand evidence received through a survey Nguriza Nshore conducted with four MFIs and 11 of 16 banks in partnership with the RBA. An infographic report can be found under Annex 4.

Impact of COVID-19 on the private capital ecosystem

The private capital ecosystem was significantly impacted by COVID-19. Major impact areas experienced by Nguriza Nshore and its partners are outlined below.

Delayed deal closing experienced Africa-wide. A general slowdown was witnessed across the Africa region as COVID-19 created considerable uncertainty both for investors and companies.

Investors and Private Equity (PE) firms are focused on supporting current portfolio companies rather than entering new transactions. Private capital investors have double-downed on their current portfolio of companies as a risk mitigation measure. Preserving their current portfolio is a means to minimize losses, ensuring those SMEs survive, which helps maintain the confidence of the investors. Should investors suffer losses, PE firms would find it much harder to attract them to Rwanda in the future. Therefore, PE firms have worked with firms within their existing SME portfolio to assist them in the

10 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov crisis, modify their operations while at the same time providing regular updates to investors on the performance of the SMEs in their portfolio.

PE firms currently fundraising are re-evaluating their timelines. PE firms’ ability to operate depends on their ability to build a pipeline and attracted investors (i.e. limited partners) to fund that pipeline. The crisis made both efforts difficult because (1) identifying quality companies is more difficult given restrictions and uncertainty (2) the number of quality companies has declined due to the crisis and (3) limited partners are cautious given the uncertainty and risk. The ongoing ambiguity created by COVID-19 has led to new funds placed on hold or delayed. Without growth capital or investment to sustain operations until the pandemic recedes, businesses face bleak prospects.

Investors and PE firms are expecting delayed exits. Investors are also expecting delayed exits from current investments into companies. These investors (generally) only realize profit when they can exit and sell the companies they’ve invested. That exit point will likely be delayed given the poor performance of companies during the crisis, leaving less revolving capital for new investments.

Due diligence is on hold due risks of COVID-19 exposure during travel. Investors, in most cases, conduct due diligence in person before they invest in a new company. With most countries experiencing a second wave of the COVID-19 pandemic, in person due diligence has become practically impossible since March 2020. Many deals are therefore on hold, including many businesses curated by Nguriza Nshore until travel becomes safer and due diligence can be completed.

Questions investors ask during due diligence have changed. Prior to COVID-19, due diligence primarily focused on growth and revenue projections. Now, due diligence is skewing toward business resilience, ability to access credit, cash flow and contingency planning. To meet new investor demands, companies must now generate new information such as business continuity and disaster recovery plans.

Businesses subject to restrictions on travel and those that rely on international supply chains are most severely impacted. To date, businesses most negatively affected by COVID-19 have high social contact between employees and clients and companies impacted by travel restrictions such as restaurants, hotels, tourism, bars, etc. Businesses reliant on extensive international supply chains for inputs and component assembly parts have also been significantly impacted. Activity partners such as Home Inn, easyHatch, and Kigali farms are among those facing challenges.

Businesses in essential sectors are expected to see growth. Some businesses are beginning to flourish and gain traction with investors. For example, businesses in healthcare, IT solutions, transport (door-to- door direct to consumer), e-learning and fintech are experiencing growth and investor interest. These sectors that are more resilient or countercyclical could present interesting opportunities for investors. These sectors also offer part of the solution to other businesses to cope during the pandemic by helping them to shift to on-line marketing, sales and directly delivery and enabling remote work for employees.

Impact of COVID-19 on Nguriza Nshore SME partners

Nguriza Nshore SME partners were greatly affected by COVID-19. For a snapshot of COVID-19 on SMEs see Highlight Box 2 based on the survey Nguriza Nshore conducted with 18 SME partners supported by the Activity in April 2020. Out of the 18 respondents, 13 businesses were considered essential by the GoR during the lock down. For a more complete breakdown of the pandemic’s impact, refer to the infographic SME summary in Annex 5.

11 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

Highlight Box 2: Results From COVID-19 SME Survey

In April 2020, Nguriza Nshore conducted a brief survey with 18 SME partners that are supported by the Activity to better understand the impact of the COVID-19 pandemic on business, revenue, employees and expected future investments. Key findings are summarized below: • 72% of businesses surveyed are considered essential and could remain open during the lock down • 61% of businesses reported that COVID-19 will have a moderate impact on their business with 33% reporting it will have high impact in the next 6 months • 61% of businesses reported that the pandemic will result in layoffs or a reduction in employees • 100% of businesses expect the pandemic to affect their revenue in the next 6 months • 78% of businesses have put in place coping mechanisms – the most common are deferred loan payments with other mechanisms including pivoting business models, reducing salaries and laying-off employees • 44% of businesses expect the pandemic to delay planned investments next year, 2021, with 39% unsure of the effect on investments • The most highly impacted areas across all companies include: revenue, working capital, sales, investment and ability to service debts

Each of the remaining sections of the report details the impact of the Covid-19 pandemic on that set of activities: activities that were placed on hold or delayed; activities that were modified and new opportunities identified. For convenience, Annex 10 includes all the changes made due to Covid-19 in a single section.

12 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

COMPONENT I: EXPAND CAPACITY OF FIs AND NBFIs TO FINANCE SMEs AND AGRIBUSINESSES

Nguriza Nshore’s approach to Component I is to:

• Evolve the financial services competitive landscape by moving banks and NBFIs toward client-oriented growth. This requires a shift in the design of products away from products that are best suited for the FIs themselves towards products designed and customized for SME clients. Nguriza Nshore will support FIs to understand client needs and help customize products for them. As part of this process, Nguriza Nshore will design de- risking mechanisms to reach SMEs. • Focus on top-down change (i.e. corporate to SME) resulting from client-oriented growth and competitive pressures by supporting banks to constantly seek new and emerging market segments, including bottom-of-the-pyramid market segments. Most banks are focused on corporate clientele and not SMEs. Nguriza Nshore will help banks separate these two functions into separate departments so banks have SME appropriate policies, procedures and de-risking mechanisms. • Encourage banks to compete for bottom-of-the-pyramid market segments via a full range of tailored products targeting SME, microenterprises and entrepreneurs. • Amplify bottom-up change resulting from customer-oriented growth strategies and competitive pressures by supporting NBFIs (e.g. SACCOs, MFIs) to expand their service offers, tailor products, and evolve as their customers evolve from microenterprises to larger, growth-oriented SMEs.

FY 2020 Achievements

Table 5: Component 1 Targets

Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target

Q1 – Q4 FY20 % FY18-FY20 % Value

1.1 Value of loans leveraged using de- - - 173% - 67% - risking tools (Custom)

1.2 Number of financial and non-financial institutions receiving USG assistance that 72 68 106% 105 53% 198 extended loans and other financial products to SMEs (Custom)

In addition, Component 1 activities contributed to two Activity-level indicators:

• EG.3.2-27 Value of agriculture-related financing accessed as a result of USG assistance [IM- Level]

13 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov • Number of jobs created with USG assistance (Custom)

The Activity also accomplished the following: • Helped secure guarantees for SME lending for Activity partners through de-risking mechanisms.

Highlights and Successes

Relationship building with key financial system actors

Throughout the year, Nguriza Nshore continued to strengthen relationships built in FY 2019. These trusted relationships are key in allowing Nguriza Nshore to better understand the realities of bank and non-bank FIs, particularly in the wake of the COVID-19 pandemic, and to adapt Activity support accordingly. These relationships helped the Activity to gather insights that led to the request from MINICOM for advice on the design of the ERF (detailed under Component 3). Relationships with key financial system actors are detailed below.

Rwanda Bankers Association (RBA). Nguriza Nshore signed an MOU with RBA in Q1 of FY 2020 and since has collaborated with the association in a multitude of areas. First, Nguriza Nshore supported RBA to develop modalities for the SME of the Year Award, although the design and planning process was put on hold for this due to COVID-19. Per the MOU, RBA requested technical assistance in hiring two consultants – a research specialist and communications specialist. Despite delays due to Covid-19, Activity support resumed in Q4 of FY 2020 and is anticipated to be completed in FY 2021. Lastly, throughout the year, Nguriza Nshore worked with RBA to gather information about the banking sector and RBA participated in the COVID-19 FI survey design, coordinated the data collection and participated in the dissemination of the findings, further detailed below.

Association of Microfinance Institutions in Rwanda (AMIR). Throughout FY 2020, Nguriza Nshore continued to work with AMIR to support its 343-member MFIs and SACCOs. In Q1 of FY 2020, Nguriza Nshore supported AMIR to review the strategy for and the legal requirements to create the Microfinance Investment Trust Fund (MITF) proposed by AMIR for its membership. Nguriza Nshore assisted AMIR in raising awareness of the MITF in 20 districts of Rwanda and in Q2, Nguriza Nshore supported AMIR to examine the viability of the MITF. In addition, Nguriza Nshore supported AMIR to hold virtual capacity building trainings with 40 MFIs and SACCOs in Q3 and an additional 39 MFIs and SACCOs in Q4, as described in depth below. Finally, Nguriza Nshore partnered with AMIR to better understand the realities of the microfinance sector during the COVID-19 lockdown, further detailed below, which helped Nguriza Nshore propose an outline for the ERF mechanisms for MFIs and SACCOs and informed the adaptation of the content of the MFIs and SACCOs training.

Business Development Fund (BDF). Following the request by MINICOM in FY 2019 to postpone BDF’s technical assistance until the EDP is passed by the cabinet, Nguriza Nshore reopened conversations with BDF in Q2 of FY 2020 in the wake of Covid-19. The Activity responded to a technical assistance request from MINICOM and BDF to advise on best practices and provide suggestions on how BDF could respond, which evolved into a second request to help the fund implement its mandate of managing the MSME window of the ERF. The kick-off meeting with the CEO took place in Q4 of FY 2020 confirmed the areas of support, which includes technical assistance to the BDF team assigned to manage the fund, improved communications to facilitate resource mobilization for the recovery fund, support to develop an M&E framework and support in providing advisory services to SMEs benefiting from the fund. Nguriza Nshore submitted and received approval from BDF management and MINICOM on the workplan, scope of work and key deliverables. Work commenced in October 2020.

14 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Increasing MFIs capacity to lend Partnership building and co-creation with financial to SMEs institutions

Throughout this year, Nguriza Nguriza Nshore follows a linear engagement process to Nshore partnered with AMIR create partnerships with FIs followed by Rwanda to support its 343- go/no go decisions. This process has enabled it to grow member MFIs and SACCOs, with the number of FIs its supports in a way that builds on FIs skills to increase their lending own interests and goals that match those of the Activity, capacity to SMEs. Over the course consistent with the systems approach. of the year, Nguriza Nshore supported AMIR to train 156 • Hold initial meetings to explain Activity goals and participants from 79 MFIs and technical assistance offerings (go/no go) SACCOs from across the country. • Sign a non-disclosure agreement (NDA) to The trainings were focused in three protect client information (go/no go) key areas namely: corporate • Co-create technical assistance that aligns with governance for MFIs and SACCOs, Nguriza Nshore’s goals and partner needs business continuity planning, and • (go/no go) credit management including sub- • Design a technical assistance scope of work; topics such as product prepare a request for proposal; competitively development, loan analysis, and • source and contract a consultant or consulting recovery measures – selected by firm to undertake the assignment (no/no go) AMIR in consultation with its members. Nguriza Nshore will • Deliver and complete the technical assistance continue working with AMIR to assignment (go/no go) increase MFIs’ capacity in various • Assist the partner to amplify results of the areas, contributing to increased technical assistance where required (go/no go) SME lending in FY 2021.

Expanding De-Risking Mechanisms and Tools

Nguriza Nshore expanded the use of de-risking mechanisms in the following ways:

Expanding de-risking through loan guarantees. Nguriza Nshore’s partnership with Cogebanque to develop an SME strategy enabled the bank to access guarantee funds from two institutions namely, BDF and FAGACE. With these funds, Cogebanque was able to disburse $1.6 million in de-risked loans to SMEs during FY 2020.

Furthermore, Nguriza Nshore provided technical support to an SME, AC Group, which enabled the company to access a loan from BRD, de-risked through a Fonds de Solidarité Africain (FSA) guarantee, further outlined in detail under Component 2. Nguriza Nshore will continue partnering with FIs in FY 2021, to develop SME strategies which include de-risking mechanisms, while orienting SMEs to institutions where they can benefit from de-risked financial products.

De-risking between an MFI and an agribusiness. In FY 2019, Nguriza Nshore entered into a tripartite partnership between with Zamura Feeds and Goshen Finance. The agreement facilitated the transfer of lending to farmers to Goshen secured by a guarantee from Zamura. Prior to this agreement, Zamura Feeds directly financed its farmers to purchase hatchlings and other essential inputs from its limited balance sheet. Zamura’s low capital base restricted the number of farmers the company could finance which and limited its ability to invest in growth. It also presented significant risk to Zamura which is not set up to do lending, manage repayments risks or defaults. With the mechanism in place, Goshen Finance Goshen Finance provided 654 individual loans to Zamura Feeds’ farmers.

15 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Due to COVID-19, no additional loans were extended to farmers in Q3 and Q4 due to several challenges. First, from April 2020, Zamura Feeds was not able to supply farmers with day-old-chicks due to its inability to import them during the lockdown period. The GoR prohibition on businesses selling live commodities, including day-old-chicks, due to health concerns made the sale of day-old- chicks to farmers impossible. Second, poultry demand was greatly reduced as Zamura, which usually buys back poultry from farmers, lost almost its entire market with hotels and restaurants closed during the lockdown. This resulted in major losses for Zamura despite having invested in additional cold storage. Zamura Feeds lack of purchasing also impacted farmer, many of whom suffered significant income loss during the period. As a result, Goshen selected to not disburse loans to farmers starting in April 2020. The tripartite agreement expired at the end FY 2020.

Nguriza Nshore started discussions with another FI, KCB Bank, to take on future lending under the same de-risking mechanism. KCB Bank was chosen because it has an existing program with Mastercard Foundation, which supports smallholder farmers in term of trainings. This will enable the Activity to continue supporting smallholder farmers to receive both loans and financial literacy training from KCB throughout FY 2021.

Increasing de-risking through invoice financing. Nguriza Nshore continued its strong partnership, with BeneFactors, an invoice factoring company, throughout FY 2020. BeneFactors offers non-collateralized invoice financing product that other FIs in Rwanda do not, providing vital short-term working capital to SMEs. Unlike highly capitalized and liquid Rwanda commercial banks, BeneFactors is cash constrained and unable to finance its growing pipeline of SMEs internally from retained earnings. To address this, Nguriza Nshore provided a grant to BeneFactors in FY 2019 necessary to attract other financing to fund its factoring portfolio. During FY 2020, BeneFactors leveraged the grant, and additional loans from Bank of Africa Rwanda, as well as private investments all secured from the grant, to revolve reflows resulting in new factoring.

Supporting Financial Institutions to Develop an SME Strategy

Throughout the year, Nguriza Nshore provided support to various FIs to develop SME Strategies as outlined below:

Cogebanque. Nguriza Nshore completed Cogebanque’s SME Strategy in Q1 of FY 2020. Key elements of the strategy include lending process re-design, market research, new product development support, and implementation support (i.e. activity and change management). The strategy’s implementation has started to yield results. With a strategy, policies and procedures in place, Cogebanque was able to access de-risking mechanisms (noted above). With those secured, it disbursed loans to two SMEs. Additionally, Cogebanque relied on the work done with Nguriza Nshore to fulfill the requirements to secure funds from the AfDB and $15 million guarantee facility from Development Finance Corporation (DFC).

RIM. Following RIM’s request for technical assistance in developing an agribusiness finance strategy, Nguriza Nshore developed a Statement of Work (SOW) and sourced a Business Service Provider (BSP) to develop the strategy. The strategy will include appropriate financial products appropriate for agribusinesses, tools to re-engineer the lending process, and ways to market and increase awareness of the new financial products. RIM is poised to expand its agribusiness portfolio and better manage its risks in FY 2021. Responding to COVID-19 impact on Component 1

In the wake of the pandemic, Nguriza Nshore conducted a survey with 11 banks and 4 MFIs to understand the impact of the shutdowns on their operations. The survey took place in Q3 of FY 2020, and explored the effects on the financial institutions’ lending, client behavior, revenue, employment and resulting coping mechanisms to manage the crisis. These key findings are detailed in

16 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov the COVID-19 section and are helping Nguriza Nshore tailor the technical assistance to FIs and NBFIs in the coming fiscal year.

Additionally, the Activity supported AMIR to carry out an assessment of COVID-19’s impact on its member MFI and SACCOs in Q3 of FY 2020 with 77 institutions. It investigated the strategies deployed to minimize the adverse impact of COVID-19 on clients and financial institutions, as well as the current and likely future negative effects caused by the disruption. Key findings of the assessment helped Nguriza Nshore to adapt the technical assistance it offers to MFIs and SACCOs, including adapting the most recent training of 79 AMIR members. The adapted training includes relevant topics such as how to develop a business continuity plan in response to COVID-19 as well as lending and recovery measures, both critical to MFIs and SACCOs sustainability. More details related to findings can be found under the COVID-19 section.

Component 1 activities placed on hold or delayed due to COVID-19

Several Component 1 activities and events were placed on hold or delayed indefinitely. As noted above, no new loans were disbursed to farmers during Q3 and Q4 of FY 2020 under the tripartite agreement between Zamura Feeds, Goshen Finance, and Nguriza Nshore due to supply challenges and a diminished demand from hotels and restaurants resulting from the lockdown. Further, the due diligence process for SMEs seeking finance from Afreximbank was delayed as a result of travel restrictions and the Afreximbank SME Event scheduled for September 2020 was postponed to the following year. During Q3 and Q4 of FY 2020, other institutions, such as Atlantic Microfinance for Africa Rwanda and GroFin asked to temporally suspend their requests for technical assistance from Nguriza Nshore so they could re-focus on managing their current portfolios and since they are no longer able to expand or introduce new products.

Collecting timely data from partners necessary for Ngurize Nshore’s MELP and USAID reports presented new and unforeseen challenges, particularly during the initial lockdown period. For example, Nguriza Nshore was unable to meet with Cogebanque in person to dialogue with bank personnel and have the interaction needed with the key staff tasked with collecting and reporting on lending information needed to fulfill Nguriza Nshore’s data collection needs. Cogebanque pivoted to focus on maintaining operations and adapting to the crisis, especially during the lockdown period, which slowed their progress under the new SME strategy.

Component 1 activities modified due to COVID-19

Nguriza Nshore pivoted by moving activities to a virtual setting. In Q3 and Q4 of FY 2020, Nguriza Nshore, in partnership with AMIR, conducted two virtual trainings for MFIs and SACCOs rather than in-person training as planned. AMIR facilitated the training, using local consultants and they leveraged larger, more advanced MFIs and SACCOs to share their experiences. The first virtual trainings were a first-ever virtual training experience for most of the 77 participants with 90% reporting the training will help them better perform. AMIR and Nguriza Nshore also adapted training content to address common challenges faced by MFIs and SACCOs by including new topics to the agenda such as business continuity and credit management in times of crisis.

In addition, Nguriza Nshore shifted to greater use of online meetings with FIs during the lockdown that helped maintain the momentum of activities underway, including the planned technical assistance for Réseau Interdiocésain de Microfinance and Umutanguha Finance Company. Nguriza Nshore found it was often less complicated to secure meetings with high-level decision makers and key managers at institutions virtually rather than scheduling in-person meetings as done in the past.

New Component 1 new opportunities from COVID-19

17 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Several new opportunities arose – for instance, AB Bank submitted a new concept note on June 22 on assisting the bank to strengthen its capacities/capabilities in the areas of financial risk management and to expand its digital banking options because customers could not physically visit branches. Nguriza Nshore started working on the request in Q4 of FY 2020 and will release an RFP in FY 2021. Additionally, RBA and Nguriza Nshore worked together to conduct a survey of banks and MFIs to enquire about emerging challenges and potential areas of partnership which led to discussions with new potential partners including Bank of Kigali and I&M Bank. Finally, Nguriza Nshore observed that FIs/NBFIs are now more open to innovation as a means to ensure business viability or as a competitive advantage within the industry, creating the opportunity for Nguriza Nshore to provide technical assistance to create new ways of doing business and leverage technology.

18 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Table 6: Financial Institutions Nguriza Nshore Worked with in FY 2020

Financial Initial Meeting NDA Concept Note / MOU “Co- Technical Assistance Monitoring and Institution Creation” Amplifying Results Name Banks AB Bank FY 2019 NA Q1- AB Bank changed its FY 2019 Q4 – Nguriza Nshore request for assistance from started developing a SOW agribusiness to SME finance. Nguriza to support AB Bank with a Nshore engaged in discussions with business restart structure the bank about the new request. framework post COVID- 19. Q3 - AB Bank submitted a new concept note to address challenges the bank has faced due to COVID- 19. The concept note supports the bank to strengthen its capabilities in the areas of financial risk management and digital finance innovations. Afreximbank Q2 NA Q2 - Nguriza Nshore began Q3 - Nguriza Nshore partnership discussions with supported Sina Gerald Afreximbank, a regional bank based Enterprise and ENAS to in Cairo that finances large SMEs in improve their applications Rwanda. The Activity referred two to Afreximbank for SMEs, Sina Gerald Enterprise and working capital loans and Etablissement Nkubili Alfed and Sons supported them through (ENAS) seeking working capital and Phase1of the application investment loans, to the bank in Q2. process.

Q4 – Afreximbank issued and approved final term sheets for one SME, SINA Gerald Enterprise. The due diligence is scheduled for Q1 or Q2 of FY 2021. BRD Q1 NA Q1 – BRD submitted a concept note to develop an agribusiness strategy necessary for board approval to

19 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov capitalize a fund for agribusiness lending.

Q4 – BRD is undergoing internal restructuring, which has put partnership discussions on hold, Cogebanque FY 2019 FY 2019 Q1 – Nguriza Nshore Q4 – Cogebanque has finalized Cogebanque SME started the strategy. implementation of the SME strategy that Q2 - Nguriza Nshore Nguriza Nshore helped released an RFP for a BSP the bank develop. As a embedded in Cogebanque result, Cogebanque to support SME lending by already started operationalizing the new disbursing de-risked strategy over a one-year loans to SME. period.

Q4 – Nguriza Nshore finalized the evaluation and selection of an embedded advisor.

MFIs AMIFA Q2 NA Q2 - AMIFA Rwanda submitted a concept note requesting technical assistance for product development and to create digital financial services in rural areas.

Q4 – Nguriza Nshore signed an MOU with AMIFA Rwanda.

RIM FY 2019 NA Q2 – Following an initial meeting Q1: Nguriza Nshore held in FY 2019, Nguriza Nshore provided credit signed an MOU with RIM. management training to RIM through AMIR.

20 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Q3 - Nguriza Nshore developed a SOW and released an RFP to contract a BSP to develop an agribusiness finance strategy for RIM.

Q4 – Nguriza Nshore evaluated and selected a BSP to work with RIM. The selected BSP, AZIMUT Inclusive Finance, also started the assignment in Q4. SACCOs NA NA Q3 & Q4 – Nguriza through AMIR Nshore partnered with AMIR to provide a virtual training to 79 MFIs and SACCOs, with an aim to build their capacity in corporate governance, business continuity plans and product design. Umutanguha Q1 NA Q1- Umutanguha submitted a Q3 - Nguriza Nshore concept note for technical assistance developed and finalized a to develop an SME finance strategy. detailed scope of work (SOW) with Umutanguha Q2 - Umutanguha signed an MOU outlining to support the with Nguriza Nshore. development of an SME finance strategy for the MFI.

Q4 – Due to COVID-19, the technical support process delayed. Nguriza Nshore will issue an RFP and contract a BSP to develop the strategy in Q1of FY 2021.

21 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Zamura Feeds & FY 2019 NA Q1 & Q2 - The Goshen tripartite agreement between Zamura, Goshen and Nguriza Nshore led to new loans provided to 336 farmers during Q1, and new loans to 318 farmers during Q2.

Q3 - No loans disbursed to smallholder farmers due to COVID-19 related challenges.

Q4 – Due to COVID- 19 challenges, no loans were disbursed. The agreement ended at the end of the fiscal year. Nguriza Nshore started discussions with a partner other than Goshen to continue working with Zamura Feeds, KCB Bank.

Others Benefactors FY 2019 NA Q1, Q2, Q3 & Q4: BeneFactors leveraged a grant from Nguriza Nshore in FY 2019 and additional funding from the Bank of Africa.

Grofin Q1 NA Q1 - GroFin contacted Nguriza Nshore for potential partnership to

22 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov develop an agribusiness finance strategy.

Q2 - Nguriza Nshore strengthened the partnership with GroFin by supporting Agasaro Organics, a Nguriza Nshore partner SME, to negotiate and receive a loan.

Q3 - GroFin Rwanda selected to put its technical assistance request on hold due to COVID-19. GroFin was forced to focus on supporting and restructuring its current loan portfolio rather than expanding as many of its current SMEs at risk of collapsing in sectors hard hit by the crisis. Legacy Clinics FY 2019 NA Q1, Q2, Q3 & Q4- Tracking status of syndicated loan through Cogebanque and Kenya Commercial Bank (Rwanda)

23 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Lessons Learned and Opportunities Identified

FIs need a business continuity plan. Following the lockdown and its subsequent COVID-19 related measures, Nguriza Nshore received requests for technical assistance in business continuity plans from several institutions such as AB Bank and SACCOs (through AMIR), which lacked them. Nguriza will continue to respond to this need for assistance, providing trainings on business continuity plans to FIs as well as offer tailored support in designing such plans.

Opportunity to collaborate on technical assistance provided to FIs. Nguriza Nshore provided support to AMIR to conduct a training for its member MFIs and SACCOs, which was delivered virtually due to COVID-19 restrictions. Hinga Weze, another USAID activity, learned of the virtual training and opted to support AMIR’s MFIs and SACCOs in digital systems and agribusiness strategies, to complement the content of the training. Nguriza Nshore will continue to look for opportunities to collaborate with other development partners when conducting trainings in order to provide more comprehensive and coordinated support.

FIs which are investing in technology are likely to make more profits. Movement and other related restrictions due to COVID-19 have increased FIs desire to adapt and invest in technology. FIs/NBFIs are learning that they must develop digital platforms to remain relevant and competitive post COVID-19. For example, AB Bank revised its technical assistance request in Q3 to include digitization of its services. Nguriza Nshore will incorporate digitization in its technical assistance for FIs/NBFIs in the coming year.

Online platforms may be a good option for conducting trainings even beyond COVID- 19. AMIR was initially hesitant when Nguriza Nshore suggested hosting the MFI and SACCO training virtually during Q3 of FY 2020 as opposed to in-person as planned. Many AMIR staff were unfamiliar with online platforms like Zoom and many SACCOs participants do not own computers. However, Nguriza Nshore and AMIR piloted a limited test virtual training with good results. Nguriza Nshore offered airtime bundles so participants could participate on their smartphones should they lack access to a computer or WIFI. Despite some technical glitches, the training was successful with 90% of participants reporting in the satisfaction survey and that what they learned will help them perform better in their jobs. Based on this successful pilot training, Nguriza Nshore and AMIR elected to conduct another virtual training in Q4. Virtual trainings are a much lower-cost option than in-person trainings, so this method could serve as a viable, low-cost option for AMIR to continue for sustainability purposes.

New FIs/NBFIs sourced from the COVID-19 FI Survey. Nguriza Nshore conducted a survey with FIs/NBFIs to better understand how they were impacted by COVID-19. 11 of 16 banks and four MFIs responded. The survey also helped build or relaunch discussions with FIs/NBFIs the Activity does not currently support. This proactive approach has worked well and promised to reignite discussions on support with additional FIs.

FIs/NBFIs are more open to new products and innovations. During COVID-19, FIs/NBFIs rapidly adapted their institutions to survive the crisis since FIs, even larger, more bureaucratic institutions which had been slow to adapt and innovate. For example, some banks created emergency loans for GoR employees who were not paid in April and for businesses operating in the essential services sector. While designed for COVID-19, many of these products will remain on the market post-COVID. Openness to change and innovation presents an opportunity for Nguriza Nshore as more FIs/NBFIs will be need technical assistance to create new products and innovate.

Connecting Nguriza Nshore SMEs to financial institutions. Nguriza Nshore is learning how to support SMEs so they can obtain finance from institutions like GroFin. In Q2, the Activity helped Agasaro Organics negotiate an additional loan with GroFin by helping with financial modeling and demonstrating how the company will increase cash flow and profitability from the loan. It became

24 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov clear that SMEs with solid businesses are often unable to access finance because they don’t have the experience and skills required to negotiate with bankers and targeted small-scale support can overcome this constraint. The Activity plans to consistently include this topic in future SME workshops.

The agriculture market system requires more agribusiness and FI partnerships. The Zamura and Goshen innovation has significant replication potential for other commodities and/or other value chains. For example, Nguriza Nshore started working with easyHATCH, another agribusiness in the poultry sector that works directly with smallholder farmers, with Goshen for other value chains, and new FIs. Zamura farmers have successfully serviced their Goshen loans, which are very short-term (3 months), but lending was then halted due to the lack of sales of chicks. That being said, Goshen is more willing to expand its lending into the poultry sector with the resumption of chick sales and is working through other established agribusinesses. Nguriza Nshore is similarly working to create a new tripartite agreement with Zamura Feeds and KCB and will seek out new arrangements with other partners.

SACCOs are well placed to finance agribusiness and expand into SME lending. SACCOs are generally well capitalized but face challenges intermediating funds (e.g. client deposits) into loans because they lack know-how—i.e. understanding Rwanda Central Bank (BNR) regulations and the financing needs of microentrepreneurs and farmers. Nguriza Nshore is exploiting this opportunity throughout the country by providing specialized consulting, technical assistance and training to SACCOs through AMIR.

During early partnership engagement, identify technical assistance provided by other donor projects. Some Nguriza Nshore partners have received or are also receiving technical assistance from other sources. At times, the advice provide by others competes with, duplicates and/or is contrary to the advice offered by Nguriza Nshore. It is important for the Activity to gather all relevant information at the onset of a partnership to ensure that any other technical assistance is complementary and that the Activity, the partner and the other technical assistance provider have open and transparent communication.

Crowding-in. The assistance to Cogebanque was designed in hopes of crowding in other FIs after a first mover enters the market and establishes proof-of-concept and a viable business model. This appears to be the case as Nguriza Nshore has already witnessed other FIs seeking the Activity’s support after Cogebanque established a foothold and began lending to the SME market in both rural and urban areas.

Challenges and Mitigating Measures

MFIs and SACCOs without digital systems saw a decrease in income. Due to the lockdown and movement restrictions, MFIs and SACCOs customers could not do banking operations in-person, which presented a major challenge as most of these institutions still use paper- based transactions. Consequently, these institutions saw a decline in income, as most of these customers chose to move to banks and mobile money providers which offered digital accounts and transfers without fees. Nguriza Nshore intends to mitigate this challenge by providing support to MFIs and SACCOs to design digital system strategies, through their umbrella organization, AMIR.

ERF requirements are difficult for FIs and SMEs to meet. Following GoR establishment of the ERF, FIs and SMEs are experiencing challenges in accessing the fund due to requirements that the latter are not meeting. The ERF has some unique conditions, namely a tax clearnance certificate from the Rwanda Revenue Authority verifying tax payments were up to date before the on-set of the Covid-19 pandemic. However, many SMEs were not able to pay their taxes for 2019, due in April, because of the on-set of restrictions prior to the tax due date. In addition, mismatches in recorded revenue used in the banks’ analysis and the tax submissions can be grounds for

25 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov disqualification. For instance, Munyax Eco, an SME supported by Nguriza Nshore, could not access the $70,000 fund using the ERF due to its requirements, even though the company’s FI, Cogebanque, had cleared it to be a recipient of the fund. Nguriza Nshore intends to mitigate this risk by working with RBA to review these requirements reinforced at BNR level, since RBA sits at the ERF steering committee.

Low digital literacy and familiarity with online platforms presents a challenge for virtual trainings. Of the 64 participants in the initial AMIR virtual training who completed the satisfaction survey, 87% had never attended an online training and 81% did not have a Skype account prior to the training. While the AMIR virtual training was successful, participant’s familiarity with online platforms such as Skype, Zoom, or WebEx and generally low digital literacy skills presents a challenge to expanding virtual trainings. Responding the first training’s experience, Nguriza Nshore held discussions with AMIR to help identify a better and more self-intuitive platform alternative to the one used; AMIR opted to use Zoom. As a result, the second training’s delivery was a smoother experience for both the trainers and trainees. Nguriza Nshore will continue choosing more self- intuitive platforms for future virtual events.

Data collection is slow-going. It has taken longer than expected for Nguriza Nshore to collect data on initial Cogebanque lending after completion of the bank’s SME strategy. This is primarily due to high staff turnover at the bank, which is common in the financial sector. To mitigate this challenge, the Activity has begun cultivating relationships inside the bank with multiple actors rather than rely on the initial primary relationship to ensure that data collection can continue smoothly despite employee turnover. This is part of what has allowed Nguriza Nshore to collect data on the two SMEs Cogebanque has lent to as a result of the SME strategy developed with Activity support.

Managing risk aversion. Smallholder farmers benefitting from the Zamura Feeds, Goshen Finance, and Nguriza Nshore tripartite partnership were more risk averse than anticipated. To mitigate this challenge, Nguriza Nshore now encourages Goshen to provide financial literacy training for smallholder farmers seeking loans. Also, as Nguriza Nshore markets this innovation to other agriculture value chains, access to finance will become more widespread throughout rural communities

High level of bureaucracy in banks hinders data collection. For Nguriza Nshore to report on its performance indicators – specifically, the “finance indicator” that significantly affects the “number of jobs created indicator” – the Activity had to collect data from financial institutions. Collecting data from banks has been challenging due to their layered bureaucracies and high rates of employee turnover. To mitigate this challenge, Nguriza Nshore continued to build stronger relationships with bank personnel, including data management employees and, at the same time, the Activity ensured data was requested from banks far in advance of reporting deadlines to USAID to provide enough time for Nguriza Nshore’s data analysis and reporting.

Internet connectivity remains a challenge in remote areas. MFI and SACCO participants in the virtual events held with AMIR faced connectivity challenges which caused many disruptions for participants joining from rural areas in the training. Nguriza Nshore is addressing this challenge by: i) choosing lighter technologies for virtual events, which do not require a high bandwidth to operate and; ii) where applicable, pre-record sessions that would take place in remote areas and show videos during virtual events.

Significant gender gap in managerial positions at SACCOs and MFIs. Nguriza Nshore observed a significant gender gap in managerial positions at SACCOs and MFIs during the virtual trainings organized in Q4 of FY 2020. At these trainings, only 32% were women, a trend that spreads across FIs. This is a challenge beyond Nguriza Nshore’s scope, which the Activity can only address by partnering with umbrella organizations, RBA and MFIs.

26 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov COMPONENT 2: INCREASE PRIVATE CAPITAL INVESTMENT FOR SMEs AND AGRIBUSINESSES

Nguriza Nshore’s approach to Component 2 to is to:

• Shift the competitive landscape to favor agribusinesses and related SMEs that commit to client value-add-oriented growth strategies, including businesses that focus on mass markets/bottom- of-the-pyramid market segments. In other words, Nguriza Nshore will focus a large part of its efforts to identify and support SMEs that offer products and services to ordinary Rwandan citizens since they account for most of the population—70% of the population are engaged in subsistence agriculture—and represent the largest growth opportunities. • The Activity’s efforts will also focus on companies that offer employment opportunities for ordinary citizens and economically disadvantaged populations (women, youth and persons with disabilities) as their businesses grow. These prospects are best represented in agriculture and agriculture value chains where most of the population works and present the greatest opportunity to improve the lives, livelihoods and resiliency for people who need it most. • Focus on increasing access to private capital for larger start-up and growth SMEs to provide a more appropriate form of investment than banks and MFIs can offer and in doing deepen the financial market system. • Encourage the emergence of tailored risk mitigating finance/investment products, including revenue sharing models and social impact investment. Nguriza Nshore will explore opportunities to support companies that require MEL assistance to help firms provide social impact investors the grassroots-level information they require. • Facilitate the emergence of more robust exit options, including links to existing regional exchanges, private placement services/match-makers and mergers/acquisitions, since investors consider these exit options important to mitigate risk.

FY 2020 Achievements

Table 7: Component 2 Targets Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target Q1 – Q4 FY20 % FY18-FY20 % Value

2.1 EG.3.2-26 Value of annual sales of firms and producers - - 103% - 58% - receiving USG assistance [IM-Level]

2.2 Percentage of firms receiving direct support by the Activity that report being able to 60% 52.5% 114% 60% 109% 55% recruit more labor as a result of investment (Custom) 2.3 Number of firms receiving USG-funded technical assistance for 152 150 101% 270 54% 500 improving business performance (Custom)

27 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Component 2 activities also contributed to the following Activity-level indicators:

• EG.3.1-14 Value of new USG commitments and private sector investment leveraged by the USG to support food security and nutrition [IM-Level] • Number of jobs created with USG assistance (Custom)

Highlights and Successes

Summary of SMEs supported by Nguriza Nshore

During FY 2020, Nguriza Nshore partnered with Rwandan SMEs to attract both local and foreign investment through a four-stage process, namely: (i) sourcing; (ii) screening and selection; (iii) investment readiness support and deal making; and (iv) deal closure. Given that the SMEs that Nguriza Nshore sources are at different stages in their capital raising efforts and that the investment readiness support needs to be customized to meet investor demands, not all SMEs go through each of the 4 stages in a linear process. Rather, Nguriza Nshore structures support on the necessary stages, e.g. deal closure only, or a broader range of investment readiness support. The breakdown of support in FY 2020 is as follows:

• 256 new SMEs were sourced and screened • 21 new SMEs were selected based on the Nguriza Nshore criteria • 50 SMEs received investment readiness support • 14 SMEs closed an investment

Nguriza Nshore follows a standard process from partner sourcing and selection to deal making and policy implementation. This process has been established based on DAI experience we have implemented market system projects. This transparent and open process allows for the maximum participation of local market actors.

The graphic below depicts the inclusive process:

Stage 1 – Sourcing

During FY 2020, Nguriza Nshore sourced 256 SMEs through a variety of informal and formal channels. Informal sourcing included word of mouth referrals and office walk-ins. Formal sourcing included: conducting road shows; conducting workshops; networking events to link investors with SMEs;

28 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov connecting with SMEs through the Activity website, email and/or social media, phone calls; coordinating with other development projects; accepting referrals (i.e. companies the Activity supports, other USAID projects, investors, etc.); and attending partner events.

A summary of Nguriza Nshore’s sourcing methods and outcomes during FY 2020 is provided below.

Workshops. During FY 2020, Nguriza Nshore hosted three SME workshops. The first workshop, “Alternative Sources of Finance,” was organized in Q1 in partnership with the Rwanda Chamber of Women Entrepreneurs (RCWE). The workshop took place in Kigali and brought together 20 women-led SMEs, which were identified for investment readiness support. After the screening process, five SMEs fulfilled all the requirements, and were selected to receive investment readiness support and deal making.

Following this workshop, in Q2 of FY 2020, two additional workshops were organized in partnership with RCWE and Rwanda Youth in Agriculture Forum (RYAF) in the Eastern Province (Nyagatare) and Northern Province (Musanze). Both workshops aimed at raising awareness among women and youth entrepreneurs to sustainably restructure their businesses and understand the how different financiers would assess the value proposition of their businesses. During these workshops, eight women and youth- owned SMEs were identified as partners to receive investment readiness and brought into Nguriza Nshore’s pipeline in partnership with RCWE and RYAF. Four were recommended for SME finance and referred to Cogebanque; and one was connected to Umutanguha, an MFI. Due to COVID-19 social distancing measures and travel restrictions, no additional SME workshops were organized in Q3 and Q4 of FY 2020.

Networking events. During Q4, Nguriza Nshore participated at the AGRF Summit, a leading annual forum for advancing Africa’s agricultural agenda. The summit brought together over 10,000 delegates, attending both in-person and virtually, including heads of states and governments, ministers, former heads of states and governments, heads of international agencies, CEOs of global, regional and national business companies, farmers, and youth representatives. The purpose of the summit was to discuss Africa’s challenges in driving inclusive agricultural transformation, to address the new challenges caused by COVID-19, to improve the continent’s resilience, and to chart a path forward. At the summit, Nguriza Nshore held a session and presented its activities to diverse participants including investors, businesses, GoR and development partners. During the session it also presented an SME in agribusiness that it currently supports, Charis UAS. Throughout the summit, Nguriza Nshore made contact with several SMEs, three of which were then selected to receive support for investment readiness support and deal making.

Releasing RFPs. During FY 2020, Nguriza Nshore contracted two TAs, NISK Capital and Market Intelligence Africa, which had been selected in FY 2019. The two TAs sourced and selected five SMEs this year: AC Group, Umutanguha Finance PLC, Charis UAS, SINA Gerard and ENAS Ltd. The TAs provided them with technical support, following Nguriza Nshore’s four-staged engagement process, which included management/strategic consulting, business planning, financial modeling and investment memorandum/pitch deck preparation.

Partnering with business accelerators. Nguriza Nshore also started discussions with three business accelerators as a means to source and select SMEs: Business Partners Network (BPN), Inkomoko and Stewardship Agribusiness Incubator Center. Nguriza Nshore will pursue discussions with these and other accelerators in Year 4, and through RFPs, will identify additional business accelerators as BSPs.

Roadshows. Nguriza Nshore conducted one roadshow in the Northern province in Q2 of FY 2020. Three SMEs in the agribusiness sector were sourced, of which two were selected to receive support on investment readiness and deal making. Due to COVID-19 social distancing measures and travel restrictions, no other roadshows were conducted this year.

Walk-ins and referrals. SMEs walked in Nguriza Nshore offices or were referred for partnership with the Activity.18 SMEs were sourced from referrals in FY 2020. However, due to the COVID-19 lockdown and subsequent measures, Nguriza Nshore’s office was closed from March 2020 until the writing of this

29 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov report, therefore no further walk-ins were possible. None of these walk-ins have resulted in next stage support so far.

SMEs contacting Nguriza Nshore through email, call, website and social media. During FY 2020, two SMEs used the Activity’s application form on its website to apply, while five SMEs used Twitter and 19 called. Of these, no SMEs fulfilled the selection criteria and moved to the investment readiness support and deal making stage. While continuing to allow for social media contacts helps improve the outreach of the Activity, working through investment advisory firms continues to yield the best results.

Stage 2 – Screening and Selection

During FY 2020, Nguriza Nshore screened and selected 21 SMEs, 3 of the business owners are female and 7 are owned both by male and female proprietors. However, none of the 21 selected businesses is owned by youth or PWDs proprietors, as these two groups still need to be provided extra support in order to move stages as discussed in detail in the crosscutting themes section of this report. The 21 SMEs were selected because they met the Activity’s selection criteria, and were moved to the third stage, investment readiness support and deal making. Screening is done based on standardized selection criteria, namely: ● The SME must be registered to operate in Rwanda ● Linkage to agribusiness – the SME must link, directly or indirectly, to agriculture and value chains ● Stage of business growth – the SME must have an established client base and generate revenue. Ideally the SME should also have a business model and financial projections, but the majority do not ● The SME must present two years of financial statements, preferably audited ● The expected outcomes of the SME must align with Nguriza Nshore targets of increased annual sales, job creation, and business growth

Following the initial screening process, Nguriza Nshore organizes meetings with the SME to establish its needs, and interest in the support the Activity offers. In cases where the SME fails to meet the selection criteria, the Activity offers guidance on what the SME should do to meet the criteria and when needed, Nguriza Nshore refers it to other partners who offer support.

Stage 3 – Investment Readiness Support and Deal Making

Investment Readiness Support

The Activity’s investment readiness support includes consulting support, strategic advice, financial modeling, investment memorandums, pitch decks, and pitch training, all of which continued to be provided throughout FY2020. With COVID-19 having major ripple effects in FY 2020, Nguriza Nshore adapted its investment readiness support to account for the new realities faced by SMEs. New investment readiness support included business continuity plans to revive businesses, communications support to help SMEs improve their digital presence, and one-on-one mentorship with entrepreneurs. Some SMEs also received specialized consulting in finance, accounting, operations and marketing on a short-term basis to improve business performance. Additionally, there has been a growing demand for impact measurement systems, which came as a requirement from impact investors, as detailed below.

30 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

Using the expertise of business service providers, Nguriza Nshore provides SMEs with standard investment readiness support. These services include, but are not limited to: ● Business plan development support ● Financial modelling/projections ● Investment plan preparation ● Pitch deck and marketing materials ● Workshops and trainings on business pitching ● Investor mapping ● Linkages to potential investors ● Monitoring and evaluation framework design and support ● Financial, HR, communications support, etc.

For a detailed overview of the exact support provided to each SME Nguriza Nshore supported in FY 2020, please see Table 8.

Financial models. Nguriza Nshore created and updated financial models for 18 SMEs, preparing them to meet with investors.

Investment documents preparation. Nguriza Nshore developed Investment Memorandums (IMs) and pitch decks for 15 SMEs.

Pitch trainings. During FY 2020, 10 SMEs received pitch training in preparation for pitching at events such as Sankalp, ACA, AGRF, EVPA and a Nguriza Nshore hosted virtual site visit.

Business Continuity Plans. The plans help companies detail their strategies for prevention and recovery from potential disasters to address Covid-19, but also to address future business disruptions due to natural disasters or cyber-attacks. Working through the transaction advisors, Nguriza Nshore supported those companies that requested assistance in developing business continuity planning process.

Impact measurement system. With a growing number of requests related to SMEs’ impact from investors, Nguriza Nshore started supporting SMEs to develop an impact measurement system and train them to collect data related to impact as part of investment readiness support. Most SMEs in Rwanda do not track social impact. In order to attract impact investment, SMEs need to demonstrate they have the capacity, interest and intention to measure social impact. The request for technical assistance to build a measurement system for tracking social impact was one of the most common during FY2020. For resource constrained SMEs with limited to none evaluation experience, building an impact measurement system from scratch is oftentimes impossible.

In this reporting period, Nguriza Nshore provided impact measurement support to four SMEs, including GET IT, easyHATCH and Jali Finance, and BeneFactors to build social impact measurement systems. The process of designing and building a social impact measurement system for an SME generally consists of an iterative co-design process, beginning with an impact narrative that links the firm’s business model and expected impact with key indicators and data processes. Once the impact narrative is finalized, Nguriza Nshore helps partners design a data collection tool based on the metrics outlined in the impact narrative. The final stage is to train the SME on the data collection tool and process and to support the SME as they collect baseline data, as needed.

Nguriza Nshore Impact Measurement Systems

An impact measurement system is use to quantitatively and qualitatively evaluate the impact of an organization. Social impact investors have expressed strong interest in Rwandan SMEs but most if not all Nguriza Nshore supported SMEs are not equipped with the skills to provide the social impact data that the investors request. In FY2020 the Activity supported four SMEs (GET IT Ltd., BeneFactors Ltd., easyHATCH and Jali Finance) to build impact measurement systems and to conduct baseline data collection to report to impact investors.

31 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

(Photo top left): Nguriza Nshore team conducting data collection training with easyHATCH as part of the easyHATCH technical assistance. (Photo top right): Through a role play, easyHATCH staff practicing how to do data collection with farmers (Photo bottom): easyHATCH and Nguriza Nshore staff after completing data collection training

32 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Communications. During FY 2020, Nguriza Nshore supported its SME partners to develop communications materials such as one-pagers, that the companies used at deal making events. Additionally, the Activity helped SMEs to improve their digital presence by helping them set up and manage social media accounts. SMEs which received communications support in FY 2020 are Masaka Creamery, Kigali Farms, Charis UAS and Jali Finance. The communications support is further detailed in Highlight Box 3.

Highlight Box 3: Communications Support to SMEs

Charis UAS. Nguriza Nshore assisted Charis to revamp its branding by redesigning the company’s logo, strengthen its online presence by improving its website and social media channels, as well as creating blog pieces about the innovative work Charis is currently doing. In addition, the Activity helped improve Charis’ investor-oriented materials including a pitch deck, investor memorandum and business flyer. Nguriza Nshore also created an ongoing communications plan and trained Charis on how to continue the work completed by Nguriza Nshore in order to ensure sustainability

Masaka Creamery. Nguriza Nshore provided technical assistance by designing a social media strategy and building the company’s capacity to implement and adapt the strategy. Further, Nguriza Nshore connected Masaka Creamery to three delivery companies and the company is now listed on two. Nguriza Nshore also supported the company to collect strong advertisement photographs of their products to use with the delivery companies and other online platforms.

Kigali Farms. Nguriza Nshore supported Kigali Farms with a social media strategy and advised the SME how to strengthen its digital presence on home delivery companies’ websites. As a result, Kigali Farms generated social media traction, especially on Instagram.

Jali Finance. Nguriza Nshore supported Jali to open a social media account and designed the company’s social media strategy. Additionally, Nguriza Nshore featured Jali in its first SME virtual site visit, which gave the company an additional platform to engage with investors and transaction advisors.

Mentorship. Throughout the year, Nguriza Nshore provided mentorship to CEOs and business owners of the SMEs it supports. This mentorship was key in helping individuals gain additional learning such as the do’s and don’ts of investor-investee relationships.

Deal Making

Deal making is designed to facilitate investment deals and make profitable connections. During FY 2020, Nguriza Nshore and its partners attended events which fostered deal making opportunities such as Sankalp Africa 2020 and AGRF deal room and continued to expand investor networks at ACA and EVPA. Progress made towards deal making during FY 2020 is described below:

Sankalp Africa 2020. During Q2 of FY 2020, Nguriza Nshore sponsored 10 SMEs to participate at the Sankalp Africa 2020 Summit, which brought together over 2,000 delegates around social entrepreneurship and impact investment. At the summit, Nguriza Nshore held two sessions, which both aimed at putting Rwanda on the impact investment map as a destination of choice. The first was a pitching session held to showcase the 10 Rwandan SMEs and the second session featured a panel of experts who presented investment opportunities to an audience of investors and entrepreneurs. Each of the ten 10 SMEs held multiple investor meetings with the support of the project transaction advisory firms and many of these meeting yielded follow up meetings and visits to companies after the summit. More information about the summit is provided under Highlight Box 4.

33 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

Highlight Box 4: About Sankalp Africa 2020 Summit

Nguriza Nshore supported 10 Rwandan SMEs to attend the Sankalp Africa 2020 summit, the region’s leading impact investment and social entrepreneurship event. This year’s summit took place in Nairobi from February 27-28, 2020 and brought together over 2,000 social entrepreneurs and impact investors. This year was the second time Nguriza Nshore supported Rwandan SMEs to participate in the summit.

SMEs benefited immensely from participating in Sankalp. Each of the 10 companies held multiple investor meetings with the support of the Nguriza Nshore partner transaction advisors and many of these meetings led to follow-up meetings and visits to companies after the summit. In addition, the companies benefited from extensive pitch training provided by Nguriza Nshore and from world class communications materials developed by the Activity. The entrepreneurs were also prepared with fundamental “how to engage investor skills” since, for many, it was their first-time meeting with and marketing their businesses to sophisticated investors.

The summit also served as a platform to anchor Rwanda on the map as a destination of choice for impact investment. Working toward this objective, Nguriza Nshore sponsored a pitching session that showcased 10 Rwandan SMEs and another session featuring a panel of experts who presented investment opportunities to an audience of investors and entrepreneurs. Nguriza Nshore also maximized exposure of the Activity’s participation in Sankalp, utilizing social media and traditional media channels designed to position Rwanda as an important emerging market.

ACA. Nguriza Nshore was featured as a key presenter on an Angel Capital Association (ACA) webinar, focused on international investment opportunities in Canada, Mexico, and Rwanda. The live virtual presentation was attended by over 150 participants. The Nguriza Nshore team, in partnership with transaction advisory firm BiD Network, presented nine SMEs: Agasaro Organic, Charis UAS,

Highlight Box 5: Nguriza Nshore Featured on Angel Capital Association Webinar

On June 25, Nguriza Nshore was featured as a key presenter on an Angel Capital Association (ACA) webinar, focused on international investment opportunities in Canada, Mexico, and Rwanda. The live virtual presentation was attended by over 150 participants. Nguriza Nshore is an ACA sponsor giving the Activity access to the association’s membership and events.

The Nguriza Nshore team, in partnership with transaction advisory firm BiD Network, presented nine SMEs: Agasaro Organic, Charis UAS, easyHATCH, Imarb Group Limited, Jali Finance, Kumwe, Masaka Creamery, and Viebeg Medical. Investors on the call were engaged and asked many follow-up questions particularly about Jali Finance. A few investors have reached out to the team for more information. Nguriza Nshore is optimistic that its continued partnership with ACA will help more of the 14,000+ angel investors in ACA’s network become more aware of international investment opportunities and particularly potential investments in Rwanda, generating more SME investment with North American investors in the medium term.

34 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov easyHATCH, Imarb Group Limited, Jali Finance, Kumwe, Masaka Creamery, and Viebeg Medical. A few investors have reached out to the team for more information. Nguriza Nshore is an ACA sponsor giving the Activity access to the association’s 14,000+ angel investors who are interested in international investment opportunities and providing them exposure to opportunities in Rwanda.

Virtual Site Visit. Nguriza Nshore hosted its first virtual SME site visit, featuring on of its partners, Jali Finance. The virtual visit was out of necessity to respect COVID-19 social distancing guidelines and presented the opportunity to enable guests from different parts of the world to learn about Jali Finance, and about investment opportunities in Rwanda in general. The event brought together 27 participants joining virtually, including USAID Rwanda, investors, investment advisory firms and transaction advisors. The virtual site visit raised interest among investors and Nguriza Nshore will organize more virtual site visits in FY 2021.

World Business Angels Investment Forum (WBAF). In Q4 of FY 2020, Huseyin R Demirhisar, Founding Investor and Executive Managing Partner of our subcontractor partner BiD Network, was appointed senator at the General Assembly of the World Business Angels Investment Forum (WBAF). Nguriza Nshore and Rwanda stands to gain numerous opportunities with this appointment; Mr. Demirhisar’s appointment (i) increases Rwanda’s visibility on a global investing platform; (ii) gives him a right to nominate companies for the start-up challenge and investment, (iii) provides an opportunity to have Nguriza Nshore’s delegation and booth at the annual event; and (iv) to have speaking opportunity at the annual event and possibly other events. Aside from the possibility of showcasing Rwandan SMEs to global investors, the WBAF itself has its own fund under management, which directs investment into selected companies. Nguriza Nshore intends to leverage this platform in FY 2021 for deal making opportunities.

African Green Revolution Forum (AGRF). Nguriza Nshore participated at the AGRF Summit’s deal room, which brought together 208 businesses, 55 financial investors, 20 business development service providers and 54 anchor buyers. At the deal room, two SMEs that the Activity supports, ENAS and Charis UAS, pitched to investors. Some investors have since shown interest; Charis UAS received inquiries from seven investors, two of which are now in active discussions with the company.

European Venture Philanthropy Association (EVPA). In Q4, Nguriza Nshore supported one SME, easyHATCH, to pitch at the EVPA’s Annual Conference. During the pitch session, Themba Elias, easyHATCH’s CEO, highlighted his company’s role in addressing the protein gap among the Rwandan population and how it serves the Rwandan market by incubating fertile eggs to hatch day old chicks locally and directly supply them to over 400 farmers. Following the pitch, one investor carried out a site visit at easyHATCH’s facilities and Nguriza Nshore is supporting easyHATCH to respond to this investor’s requests post-site visit.

Stage 4 – Deal Closure

During FY 2020, 14 SMEs closed deals. 52% of the overall private investments made were by American investors. SMEs that secured investments were given post-deal closure support as described below:

SME & Deal Closed Post-Deal Closure Support easyHATCH Nguriza Nshore continued to support easyHATCH build a social impact framework. Data collection will start in Q1 of FY 2021. In addition, Nguriza

35 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Nshore continued to provide other investment readiness and deal making assistance to easyHATCH. GET IT Rwanda Ltd Nguriza Nshore continued to support During FY 2020 GET IT Rwanda Ltd gained various GET IT with social impact frameworks, investors. The investment includes a Series A investment data collection and analysis for investors from VestedWorld, an American impact investor. The as well as continued to support GET IT Vested World investment was secured due to the social with investment readiness and deal impact measurement system developed in partnership with making Nguriza Nshore. Water Access Rwanda (WAR) Nguriza Nshore continued to explore In Q1 of FY 2020 Water Access received funding from opportunities for additional investment Netpreneur Prize Initiative, a new initiative of the Jack MA readiness and deal making for WAR. Foundation which aims to empower African entrepreneurs, by winning 3rd place at the Africa Business Heroes Award event in Q1. Nguriza Nshore had produced WAR’s pitch deck and provided the company with pitch training. Hollanda FairFoods Nguriza Nshore continued to provide investment readiness and deal making support to Hollanda FairFoods.

BeneFactors Ltd Nguriza Nshore continued to provide In Q3, investment will help BeneFactors Ltd continue to investment readiness and deal making grow its capital base for factoring prior to its planned Series support to BeneFactors Ltd. A raise in 2021 (postponed from 2020 due to COVID-19). Kigali Farms Ltd Nguriza Nshore continued to provide In Q3, received funding in matching capital to support investment readiness and deal making export into the growing Kenya – Nairobi – market. support to Kigali Farms Ltd.

IMARB Group Limited Nguriza Nshore continued to provide In Q4, IMARB Group Limited received funding matching investment readiness and deal making grant to grow its agri-business enterprise. support to IMARB Group Ltd.

Jali Finance Nguriza Nshore continued to provide In Q4, Kigali Farms received funding. This investment will investment readiness and deal making help Jali Finance growth its motorcycle leasing business. support including assisting the firm in building a social impact measurement system that will help Jali Finance attract more impact investors. Jali Finance will start data collection in Q1 of FY 2021. Masaka Creamery Nguriza Nshore continued to provide In Q4, received funding in debt to support Masaka expand investment readiness and deal making its capital as it continues to grow as a business. support to Masaka Creamery including supporting the frm in building a communications and marketing strategy. Deals Closed in Partnership with HortInvest Nguriza Nshore, via Bid Network, BiD Network, a key Nguriza Nshore transaction advisor supported SOLYNTA, COOPEDUSH, partner and sub-contractor, conducted due diligence for Envirom, Nezerwa Plus Ltd, and Zean Ltd five agribusiness SMEs under the HortInvest Rwanda to conduct due-diligence which resulted in investment. In the due-diligence process, Nguriza Nshore where the reviewed each firm’s business plan and financial model, as well as gave

36 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov recommendations to each firm to influence their ability to attract future investment. In partnership with the HortInvest project, Nguriza Nshore is interested in sourcing and supporting more SMEs to be investment ready.

Responding to COVID-19 impact on Component

Component 2 activities put on hold or delayed due to COVID-19

Nguriza Nshore was unable to conduct normal sourcing activities such as workshops, networking events and roadshows due to COVID-19 travel and meeting restrictions. To mitigate this challenge, Nguriza Nshore connected with SMEs via social media and the Activity and its transaction advisors received many phone calls as opposed to walk-in visits from SMEs inquiring about investment and/or technical assistance.

Nguriza Nshore continued to work with SMEs already receiving investment readiness support and the Activity pushed forward with investor engagement and deal making. As noted above, several investor related activities such as due diligence were put on hold.

In addition, from the COVID-19 SME Survey results, nearly all SMEs in Nguriza Nshore’s investment readiness stage were impacted by COVID-19. A few examples of how Nguriza Nshore SMEs were affected include: easyHATCH – The first tranche was disbursed on January 22 with the second tranche dependent on completing construction work from the first tranche of investment. However, easyHATCH was unable to receive construction materials from abroad, the construction remains unfinished and the second tranche was not released. Nguriza Nshore continues to support easyHATCH by supporting Rabo Foundation to do on-site diligence until Rabo can conduct the onsite due diligence, now planned for Q1 FY 2021. Unfortunately, this delay has also impacted additional easyHATCH fundraising efforts supported by Nguriza Nshore, i.e. other investments were negotiated on the back of both Rabo Foundation disbursements.

Kumwe Harvest – Due to COVID-19 travel restrictions, the due diligence process by potential investors had been put on hold. Nguriza Nshore continued providing deal making support to Kumwe Harvest, and initiated conversations with a strategic investor, which will continue in FY 2021.

AC Group – AC Group was also in the final stages of closing a transaction post-Sankalp, but it was unable to close the investment because due diligence was not possible due to travel restrictions. The company has also been impacted by COVID-19 with all transportation ceasing during Rwanda’s lockdown period, further complicating planned investment and growth opportunities. Nguriza Nshore continued providing support to the SME, and helped AC Group to apply to a de-risked loan from BRD, which the company has secured

Agasaro Organics – One of the company’s major factories in Rusizi was idled, a district on lockdown from March 22 until August 2020. Moreover, the GroFin investment was placed on hold since GroFin is focusing on sustaining its current investment portfolio.

Finally, COVID-19 caused a delay in the SME baseline and follow-up surveys that Nguriza Nshore regularly collects. Nguriza Nshore collects information through surveys to populate the indicators: “EG.3.2-26 Annual Sales” and the custom indicator “2.2 Hiring Practices.” The survey was delayed by

37 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov five months, taking place in August 2020 instead of March 2020. Nguriza Nshore delayed the survey to avoid overburdening SMEs with data collection as they struggled to navigate the pandemic and government mitigation efforts. While Nguriza Nshore met its FY2020 performance targets for indicators EG. 3.2-26 and 2.2, this delay in data collection affected the response rate from SMEs. For more details, see the MEL section of this report.

Component 2 activities modified due to COVID-19

Nguriza Nshore began to adapt its sourcing methods, particularly focusing on new companies that have demonstrated resiliency during the pandemic. TAs have also reported devoting additional resources to address investor concerns and their interest in essential businesses and innovative companies. In other words, investors interests are converging on a narrower set of businesses than before.

In addition, Nguriza Nshore engaged SMEs virtually via phone or Zoom. Nguriza Nshore has been helping SMEs adapt to changed investor demands by advising them on how to create new documentation such as business continuity and disaster recovery plans. Furthermore, Nguriza Nshore supported SMEs to reengineer their financial models and business forecasts since the pandemic disrupted every aspect of planning and operations. Nguriza Nshore supported SMEs to navigate investor conversations regarding the anticipated impact of COVID-19 on their businesses, such as advising them to rely on official GoR policies and guidelines when answering questions.

Furthermore, the Angel Capital Association (ACA) 2020 Summit planned for Denver CO in May 2020 was adapted as virtual summit rather than an in-person event. Nguriza Nshore participated in the virtual summit, as well as the ACA webinar. In addition, Nguriza Nshore also supported SMEs to participate in other events which were adapted as virtual, such as the EVPA Summit and the AGRF Summit. More information about these events is provided in detail in the Component 2 section of this report.

Finally, Nguriza Nshore piloted a virtual site visit with an SME partner, Jali Finance, to allow international investors to learn about investment opportunities in Rwanda as noted above.

New Component 2 opportunities due to COVID-19

Accessing alternative financing is even more important for SMEs because of COVID-19. For instance, several SMEs contacted Nguriza Nshore after a radio show held on KISS FM in Q2 and follow-up enquiries increased in Q3 since SMEs across the board felt the impacts of COVID-19.

Nguriza Nshore also began adapting its typical technical assistance approach to SMEs. For example, Nguriza Nshore assisted Masaka Creamery and Kigali Farms to offer home-delivery (business to direct consumer) during the lockdown period and the Activity supported both companies to increase their social media footprint via online delivery platforms – an increasingly popular avenue for customers to access products after the lockdown began. Nguriza Nshore, through its communication’s team, supported both SMEs to become to become active on social media and regularly generate and post online content to attract more customers for their online delivery options and product offerings.

In addition, Nguriza Nshore supported partners like Charis UAS to promote their innovations and adaptations – i.e. providing drone services for the GoR to broadcast key messages about social distancing- to attract future investment. Furthermore, as part of the Jali Finance virtual site visit, the Activity also set up a Twitter account and developed a social media strategy for Jali Finance, to help the company improve its digital presence.

38 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Table 8: Summary of SMEs supported by Nguriza Nshore

SME Sector* 1. Sourcing 2. Screening and 3. Investment readiness 4. Deal Closure Selection support and deal making AC Group Technology Q1 Q1 Q1 – Nguriza Nshore released an RFP to Q4 – Secured a loan with provide technical assistance in BRD. The loan was de-risked investment management support. by FSA. Nguriza Nshore also supported AC Group to apply for the Sankalp 2020 Awards.

Q2 - Supported AC Group to attend the Sankalp Africa 2020 summit. The Activity also signed an MOU with the SME and selected a BSP to provide investment management training.

Q3 – Revised AC Group’s Financial models, updated its business valuation, and updated investors with new business realities.

Q4 – Supported AC Group to apply for a loan at BRD.

Agasaro Organic Food processing Y2 Q1 Q1 - Nguriza Nshore supported Agasaro Organics to apply for the Sankalp 2020 Awards. Nguriza Nshore also supported the company in debt negotiations with GroFin and facilitated an matching investment from HortInvest.

Q2 - Supported Agasaro to attend the Sankalp Africa 2020 Summit, and helped the company secure six investor meetings. The Activity also signed an MOU with Agasaro.

Q3 – Due to COVID-19, Grofin changed its loan policy and only catered for repeat clients, which affected

39 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Agasaro. Nguriza Nshore continued to support Agasaro to respond to Sankalp investor requests

Q4 – Ongoing deal making support ARED Renewable Y1 Y2 Q1 – Nguriza Nshore supported energy interactions between CEO and investors.

Q2 – ARED elected to no longer work with Nguriza Nshore Arise and Shine Food production Q4 Q4 Q4 – Nguriza Nshore reviewed Arise Ltd and Shine’s financial documentations and supported the SME to produce a one pager for investors. BeneFactors Finance Y2 Y2 Q1 – BeneFactors submitted a request for technical assistance to restructure the company as a holding or operating company (HoldCo, OpCo or other structure) necessary to secure investment from multiple sources in order to expand finance new consumer segments.

Q2 – Nguriza Nshore released an RFP and selected a BSP to provide technical assistance in restructuring the company as a holding or operating company.

Q3 - Contracted BSP to provide technical assistance; BSP began assignment.

Q4 – BSP providing technical assistance for legal support to respond to investor requests. Biopharmacia Health and Q1 Q2 – Firm selected to pause Company Ltd human services fundraising.

40 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Brioche Food and Y1 Y1 Q1 - Nguriza Nshore supported beverage Brioche to develop a proof-of-concept services grant proposal for expansion into Kenya.

Q2 – Due to COVID-19, concept note work was put on hold. Centennial Renewable Y2 Y2 Q1 & Q2 – No investor interest since energy CEO is not based in Rwanda.

Q3 – Decided to discontinue investment readiness support. Charis UAS Technology Q1 Q1 Q2 - Nguriza Nshore supported Charis to attend the Sankalp Africa 2020 Summit, and helped the company secure nine investor meetings. The Activity also helped Charis respond to requests from 5 investors the company met at Sankalp.

Q3 – Support to review financial models and business plan. Nguriza Nshore also helped Charis to respond to investor demands and provided support in communications and branding.

Q4 - Supported Charis attend the virtual AGRF 2020 conference and connected with seven new potential investors via the deal room. Chillington Manufacturing Y1 Y2 Q4 – After providing investment readiness support to Chillington in FY 2019, Nguriza Nshore started reviewing a request for technical assistance in Q4 of FY 2020 to help the company in communications and branding. easyHATCH Crop and animal Y2 Y2 Q1 – Nguriza Nshore supported production easyHATCH to develop investment readiness materials to raise $250,000 in debt finance from Rabo Foundation and

41 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov began providing social impact measurement support. The Activity also assisted easyHATCH to apply for the Sankalp 2020 Awards.

Q2 - Signed MOU with easyHATCH and supported the company to attend the Sankalp Africa 2020 Summit. Nguriza Nshore also provided assistance on social impact measurement and collection.

Q3 - Completed data collection tool programming and provided support to revise financial models.

Q4 – Supported participation and pitch at virtual EVPA Annual Event and provided impact measurement support. Effective M&N Food production Q4 Q4 Q4 - Nguriza Nshore reviewed Effective M&N financial documentations and supported the SME to produce a one pager. GET IT Ltd Wholesale trade Y1 Y2 Q1 & Q2– Nguriza Nshore supported Q1 & Q3. in horticulture GET IT with social impact frameworks, data capture and analysis for investors.

Q3 & Q4- Social impact measurement support on hold due to COVID-19 Hollanda Food production Y1 Y2 Q1 - Nguriza Nshore conducted due Q2 FairFoods diligence on Hollanda FairFoods’ request for technical assistance and supported majority buy-out transaction, which did not go forward.

Q4 – Started reviewing Hollanda’s request for technical assistance in marketing. Home Inn Hospitality Q2 Q3 Q3 – Nguriza Nshore signed a mandate and NDA with Home Inn, revised its financial statements and created a one- pager for investors.

42 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

Q4 – Investor interest has been minimal because of the on-going impact of COVID-19 on the hospitality sector. Imarb Health and Q3 Q3 Q3 - Nguriza Nshore supported Imarb Q4 human services to revise its audited financial statements and business plan. Also, the Activity began revising Imarb’s financial model and pitch deck and created the SME’s one-pager for investors. Nguriza Nshore presented Imarb during the ACA webinar, generating interest from investors.

Q4 - Supported Imarb to develop an investment memorandum, and to review its financial models due to COVID-19. Nguriza Nshore also helped Imarb respond to investor requests.

Jali Finance Finance Q2 Q2 Q2 - Nguriza Nshore signed an MOU Q4 with Jali Finance and supported the company to attend the Sankalp Africa 2020 Summit.

Q3 - Pitched Jali at the ACA webinar. The Activity also completed Jali’s social impact narrative and supported the company to respond to investor requests.

Q4 – Featured Jali in a virtual SME site visit. Additionally, Nguriza Nshore started supporting Jali to develop an impact measurement system and provided communications support. Jerika Food production Q3 Q3 Q3 – Nguriza Nshore signed a mandate and NDA with Jerika and revised its financial statements, pitch deck and financial model. The Activity also helped the company to create a one pager.

43 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov

Q4 – Support in deal making. Kigali Farms Crop and animal Y1 Y1 Q1 - Kigali Farms submitted a request Q3 production for technical assistance linked to raising capital and restructuring debt

Q2 - Nguriza Nshore released an RFP for embedded technical assistance: a Chief Operating Officer and a Marketing Communications Specialist

Q3 - Supported Kigali Farms with a social media strategy that was implemented on the company’s various social media platforms. Additionally, a Chief Operating Officer and a Marketing Communications Specialist have been selected and will begin work in Q4.

Q4 – Continued communications support. Kumwe Solutions Food processing Y2 Y2 Q1 – Based on FY2019 work, Nguriza (Kumwe Harvest and Transport Nshore developed a technical and Kumwe and logistics assistance plan for FY2020 to move the Freight) company away from grant to capital on commercial terms. Nguriza Nshore also provided investment readiness and deal making support.

Q2 - Signed an MOU with Kumwe and supported the company to attend the Sankalp Africa 2020 Summit. The Activity continued to provide technical assistance.

Q3 – Supported Kumwe to respond to investor requests.

Q4 – Ongoing deal making support Masaka Creamery Food production Y2 Y2 Q1 - Nguriza Nshore had discussions Q3 with Masaka Creamery on investment readiness support and customized

44 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov technical assistance to move from grants to capital on commercial terms. Q2 – Signed an MOU with Masaka and supported the company to attend the Sankalp Africa 2020 Summit.

Q3 – Supported Masaka Creamery on their online presence and home deliveries and completed technical assistance for financial modeling and designing version two processing facility.

Q4 – Masaka submitted a request for technical assistance in 3 areas: legal structure, branding and technical operations, which is under review by Nguriza Nshore. Mount Carmel Education Q2 Q3 Q3 - Nguriza Nshore reviewed Mount Carmel’s audited financial statements and provided input into revising them to meet investor needs. The Activity also prepared a one-pager for Mount Carmel.

Q4 – The SME is receiving low interest from investors as it was in a sector which was particularly hit by COVID- 19. Munyax Eco Renewable Y2 Y2 Q1 - Nguriza Nshore supported Q2 energy Munyax Eco to apply for the Sankalp 2020 Awards and began providing investment readiness and deal making support.

Q2 – Signed an MOU with Munyax and supported the company to attend the Sankalp Africa 2020 Summit.

Q3 - Advised Munyax to pivot their model to pursue debt financing or grants and the Activity provided technical assistance to develop the

45 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov company’s business plan and financial models. The Activity referred Munyax Eco to a grant advisor, African Grants Advisors.

Q4 – Helped Munyax revise financial documents to apply to the ERF and continued providing deal making support. MVend Technology Q2 Q2 Q2 - Nguriza Nshore signed an MOU with MVend and supported the company to attend the Sankalp Africa 2020 Summit. The Activity also helped MVend secure interest from five investor at Sankalp, and supported the company respond to investor requests.

Q3 - Started supporting the company in re-designing its business model and aligning it with current and post- COVID 19 realities.

Q4 – Supporting the company to respond to investor requests Pivot Access Technology Q1 Q1 Q2 – Pivot Access chose not to continue pursuing fundraising. Polyclinique la Health and Q2 Q2 Q4 – Nguriza Nshore connected Medicale human services Polyclinique la Medicale to DAI Capital. The SME is currently responding to requests to help identify the investment readiness support needed. Additionally, Nguriza Nshore is reviewing a request for technical assistance to design procurement and management systems, which Polyclinique la Medicale submitted. SINA Gerard Food processing Q2 Q3 Q3 - Nguriza Nshore signed a contract Entreprise and NDA with SINA Gerard Entreprise and supported SINA with financial modeling, an investment memorandum, a pitch deck and a business plan.

46 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Q4 – Supported SINA to provide all necessary information for Afreximbank’s due diligence process. Umutanguha Finance Q1 Q2 Q2 – Nguriza Nshore signed an MOU Finance Company with Umutanguha and supported the PLC company to attend Sankalp 2020.

Q3 - Developed and finalized a detailed SOW Umutanguha for the support from Nguriza Nshore to develop an SME finance strategy for the MFI.

Q4 – Supported Umutanguha to respond to investor requests. Water Access Water Y2 Y2 Q1 - Nguriza Nshore supported WAR Q1 Rwanda to prepare pitch documentation and pitch training for WAR’s investor presentation.

Q3 & Q4 – Assessing whether to pursue investment readiness support.

* These sector definitions come from the UN International Standard Industrial Classification of All Economic Activities (ISIC) which is the standard classification of sectors used in Rwanda **Q1, Q2, Q3, Q4 refer to the first, second, third, and fourth quarter of FY 2020 respectively and Y4 refers to FY 2021 *** Investment readiness materials include business assessments and financial models, pitch decks, and investment memorandums

47 | RWANDA NGURIZA NSHORE | ANNUAL REPORT: FY 2020 feedthefuture.gov Lessons Learned and Opportunities Identified

SMEs are diversifying their products to respond to new opportunities. Despite enormous economic challenges brought on by COVID-19, the pandemic also introduced opportunities such as mask manufacturing. As an example, Nguriza Nshore partner Chillington, which operates a metal foundry, decided to diversify its product lines to include masks and enable it to diversify income and offset income losses during COVID-19. The company has applied for an international certification, which will enable it to export the masks. Nguriza Nshore will offer technical support to other SMEs it partners with to create product diversification strategies.

Virtual site visits are an innovative way to engage investors. Nguriza Nshore hosted its first virtual SME site visit, which featured Jali Finance. The event gave investors the opportunity to learn about Jali Finance’s business model and social impact, ask questions related to its capital raising efforts and future plans. Investors gave positive feedback and said they would participate in other similar events. Nguriza Nshore intends to organize more virtual events and use them as a platform to attract investment.

SMEs are looking inward and adapting. With the slow down in business operations and revenues due to COVID-19, SMEs have been doing assessments of their systems and structures, to identify their strengths and weaknesses. As a result, Nguriza Nshore has been receiving requests for technical assistance aimed at strengthening SMEs’ systems. For instance, Polyclinique la Medicale requested assistance in strengthening its management system.

Innovative and adaptive SMEs are more likely to survive crises. SMEs that managed to survive the pandemic are those that recognized opportunities, even while in crisis, and innovated. For example, Benefactors which, after suffering losses the first few weeks of the lockdown, offered its factoring services to essential businesses. As a result, the company recorded May as their second-best operating month in the company’s history. Nguriza Nshore learned from this to support other SMEs to redesign their financial and business models and to shift their business focus to take advantage of new opportunities.

SMEs need a digital and/or online presence. Consumers in Rwanda typically access goods and services in person and digital/online services were not mainstream before the COVID-19 lockdown. However, with movement restrictions, businesses sought to diversify and offer their products and services to consumers online. Many SMEs learned that having an online presence and digital services is no longer optional but necessary as demonstrated by Umutanguha Finance Company Ltd, which expedited the launch of their digital/mobile banking services. As a result, more than 20% of their customers now use these channels. The majority of SMEs in Nguriza Nshore’s pipeline do not have an online presence and were profitable and growing prior COVID-19. However, the pandemic has and will continue to change the way business is done and consequently establishing an online presence will continually become a priority for SMEs. Nguriza Nshore learned from this rapidly changing reality and began offering technical assistance to SMEs in areas covering social media, online deliveries and other digital services. Nguriza Nshore will continue to provide this support in FY 2020 which will enable partner SMEs to survive the crisis and experience growth throughout and after COVID-19.

Quick data is key in crises. Nguriza Nshore carried out surveys during the first weeks of the COVID- 19 lockdown with the SMEs it supports to identify how they were affected by the pandemic. These surveys helped the Activity understand which areas to target when supporting SMEs and tailor support accordingly. For instance, Nguriza Nshore learned that SMEs needed and were open to developing alternative channels to reach their customers and the Activity pivoted and provided assistance in designing social media strategies which helped mitigate losses from traditional channels.

Radio is a successful medium for sourcing more SMEs. After Nguriza Nshore was featured on Kiss FM, a popular Kinyarwanda-speaking radio show, in Q2 prior to the Sankalp Africa 2020 Summit, 12 SMEs walked into the office to inquire about Nguriza Nshore. This is the most concentrated interest the Activity project has seen from social media and traditional media outreach efforts. Nguriza Nshore

48 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov intends to partner with more Kinyarwanda speaking shows in FY 2021in order to expand the Activity’s sourcing efforts.

Debt and equity often go hand-in-hand, but debt comes first. Nguriza Nshore observed that many SMEs in the process of raising equity often need to raise debt first before equity is needed. For example, at SME workshops, Nguriza Nshore observed that SMEs attend workshops because they are interested in the concept of equity finance but do not understand it. After attending, 95% of the businesses seek traditional debt finance because they are not ready for equity. These companies are excellent candidates for commercial bank finance and Components 1 and 2 will work closely together to cross-pollinate pipelines and support companies at various stages of development. Nguriza Nshore is now educating SMEs earlier in the engagement process on what private equity investors require and the continuum of finance and investment options as businesses mature and grow.

Strategic sourcing and selection. Based on lessons learned from FY 2019, Nguriza Nshore has begun a more strategic company engagement selection. Recognizing the lengthy timeline between selection and deal closing, Nguriza Nshore is working to compress the due diligence process through improved and timely document collection and quality control filtering noting that those are able to respond quickly demonstrate their seriousness about fundraising. Nguriza Nshore is using its local knowledge and expertise to advise transaction advisors, particularly those new to Rwanda, to select SMEs that are truly poised to become investment ready. In addition, the Activity’s two new transaction advisors sourced more advanced SMEs able to transition through investment readiness and due diligence.

Post-investment is important. As more SMEs secure investment, Nguriza Nshore is learning that post-investment support is critical as SMEs face growth challenges post investment.

Investors want to see their money is deployed efficiently, with a clear path to impact, and investment de- risked; business owners/SMEs, once investment deal is closed, start resetting priorities; look good talent to help manage business growth, and they also focus on marketing strategies and sales processes; improving finance systems, increase their time and resources for networking.

For the support rendered in post-investment areas: a) For example, in Q2 if Nguriza Nshore hadn’t intervened on behalf of easyHATCH when facing a challenge with the energy authority, it could have lost its investment b) Q1, Q2 and Q3 supported GET IT; Jali Finance and easyHatch to continue tracking the social impact dimensions of their invetsment and operations on society by developing impact assessment monitoring metrics c) In Q2, Nguriza Nshore received requests for assistance in areas of marketing; staff training to sustain business growth; technical assistance to improve finance and operations systems

SMEs require more advanced and customized technical assistance as they receive investments and grow. As SMEs receive investment and expand, they require customized and advanced consulting support. Furthermore, CEO/founders face added time constraints on their daily schedules and they must balance their internal resources to manage expansion and engage with current investors and new potential investors. With increasing limitations on their time and with trust established between the company and Nguriza Nshore, CEOs/founders continue seeking advice and support from the Activity as they seek additional investment and operational support. Given that these companies have successfully received Nguriza Nshore support and private capital investment, the businesses have an established track record and are excellent candidates for ongoing Activity support designed to improve operations and attract further investment. Nguriza Nshore will support these opportunities as investments are placed and companies seek ongoing Activity support.

Put all data reporting requirements in MOUs. One of the challenges that Nguriza Nshore faced in FY2019 was to get some partners to report investment/finance outcomes after they received technical assistance. Nguriza Nshore now includes data reporting requirements in MOUs and discusses all data requirements with the partners early and upfront to avoid last minute surprises. During FY2020, Nguriza Nshore created a more streamlined process for all MOUs to go through the MEL Team in order to

49 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov ensure that the necessary data are included and has worked with transaction advisors to secure partner SME data.

Social impact measurement technical assistance is in demand. During FY2020, Nguriza Nshore saw an increase in impact measurement support requests from both SMEs and the GoR (e.g. the BDF). The uptick in requests is from a steady stream of impact investors interested in Rwandan SMEs and the success of four SMEs to receive investment as a result of the impact measurement support provided by the Activity. Nguriza Nshore will need to expand its ability to provide this support in the coming years.

Separate sessions for women and youth work better. In the alternative finance SME workshops, Nguriza Nshore learned women and youth face different and unique challenges that are better addressed when each group is targeted individually. With this knowledge, Nguriza Nshore invited youth to the agribusiness PPD separately.

Communications support to SMEs is more effective if the company has an internal Communications or Marketing Staff. In FY 2020, Nguriza Nshore provided communications support to four SMEs the Activity supports. Nguriza Nshore observed that the two SMEs that had a person in charge of communications at the time of the technical support took greater ownership of communications as skills were transferred to the SME’s staff person as compared to the other two SMEs without a dedicated communications staff. This presents an opportunity for Nguriza Nshore to connect SMEs it supports to existing human capacity development programs to access communications interns with whom the Activity would work. Such as the internship programs are available at the Rwanda Development Board (RDB), which provides interns to SMEs while providing their stipend for a period of six months.

Partnering with local marketing experts helps build the relationship between these providers and SMEs as well as builds the ecosystem. Prior to the Sankalp Africa 2020 Summit, Nguriza Nshore hired an external marketing consultant to bolster Nguriza Nshore communications support and provide targeted one-on-one consulting to each SME attending the summit. Each SME received customized support (print materials to assistance on reworking their digital presence). The results showed that having strong materials made Nguriza Nshore SMEs stand out at the summit hence demonstrating an opportunity to develop the BSP network in Rwanda to be able to provide similar services at future events.

Challenges and Mitigating Measures

SMEs do not have enough revenues to source loans. Most SMEs have seen their business operations and revenues affected by the COVID-19 lockdown and subsequent restrictions. Without enough revenue, SMEs face challenges in securing the loans needed to survive the pandemic. Nguriza Nshore is mitigating this challenge by raising awareness among SMEs on how to leverage guarantees and other de-risking mechanisms.

Most SMEs do not have strong strategies to cope with crises. As COVID-19 spread across the world and took hold in Rwanda, all businesses had to quickly adapt to survive the pandemic. However, most business do not have the strategies and tools in place to quickly adapt. Nguriza Nshore is mitigating this challenge by offering technical support to SMEs to restructure their businesses and put coping strategies in place.

Active investment deals in Nguriza Nshore pipeline slowed down or on hold due to COVID- 19. As outlined in the Component 2 COVID-19 section, investment across all sectors and regions significantly declined. Several SMEs in Nguriza Nshore’s pipeline, such as AC Group, were on the cusp of closing investments, however investors elected to halt or postpone investments because of COVID-19. To address this challenge, Nguriza Nshore is continuing to build investor relationships remotely and work with SMEs to comply to new investor demands such as business continuity plans.

Investor focus shifted to essential businesses. Throughout the various stages of the COVID-19 lockdown, priority was given to essential sectors such as agribusiness and healthcare. Therefore,

50 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov businesses in sectors considered non-essential, such as Munyax Eco (clean, renewable energy sector), have not received interest from investors. Nguriza Nshore is mitigating this challenge by supporting SMEs to redesign and adapt their businesses and financial models, as well as put in place business continuity plans so that they can survive the current crisis and thrive in a post-pandemic world.

Gap between start-ups and established SMEs. As Nguriza Nshore has delivered more SME workshops outside Kigali, the Activity has observed a “financing gap” between micro-businesses and SMEs—the latter group eligible for Component 2 support. Micro-businesses, particularly in the poorer southern and western provinces, are more suited for debt finance from MFIs and SACCOs as opposed to private investors. This fact is particularly true for youth-owned businesses as Nguriza Nshore has learned from the partnership with the Rwanda Youth Agriculture Forum (RYAF). Nguriza Nshore has collaborated well with RYAF, where a workshop was organized for youth in business in East Province (40 participated) awareness and training on alternative financing for start-ups and microbusinesses. Further engagement with RYAF is on-going, where a MoU will be signed in Q2 of financial year 2020/2021. Results will be shown in subsequent year.

Nguriza Nshore is mitigating this challenge by drawing a strong linkage between Component 1 and 2. At SME workshops, the Activity is recommending micro-businesses to the MFIs Nguriza Nshore supports under Component 1. Going forward, Nguriza Nshore will also invite MFIs to attend SME workshops. In addition, the Activity has begun paying close attention to stand-out SMEs that show strong growth potential. For example, Nguriza Nshore connected one youth entrepreneur from Musanze who has a rapidly growing small business to a partner transaction advisor with the intention that this company may soon be ready to pursue private investment (in the Nguriza Nshore pipeline).

Provide pitch training support prior to large events. Many SMEs in Nguriza Nshore’s pipeline are not ready to engage investors on their own at large investment conferences like Sankalp. To assist businesses well in advance of potential investor discussions and event participation, Nguriza Nshore began providing standard pitch training and related communications support when SMEs join the pipeline. For example, once an SME signs an NDA with a transaction advisor, Nguriza Nshore produced a standard investment one pager and provide the company with initial pitch training. This eased the preparation for future events and create a broader list of SMEs that are ready to interface with investors early and before events take place.

Investment readiness and the progression to deal making is not linear. The process of assisting SMEs to become investment ready and engage with investors on deal making is not linear. For example, the Activity can provide an SME with technical assistance and investment readiness support that piques investor interest, but investors often have additional requirements the company must meet. Therefore, the process involves continuous feedback between the SME, Nguriza Nshore and investors—and ongoing technical assistance based on investor feedback before an investment can close. Nguriza Nshore experienced this drawn out process with nearly all SMEs the Activity has supported to date. To mitigate this challenge, Nguriza Nshore communicates to SMEs that the process will be time-consuming, labor intensive and non-linear requiring significant interaction between the SME, Nguriza Nshore and investors. Nguriza Nshore must openly discuss process issues and investor requirements upfront during initial and ongoing conversations with SMEs to avoid discouragement and to counter potential SME fatigue by calibrating expectations.

Transaction advisors can’t do everything an SME needs to become investment ready. TAs conduct their due diligence knowing what investors base their investment decisions on. TAs don’t provide management consulting, complete business plans, audit financials, provide legal advice, etc. To mitigate this challenge, TAs refer promising companies with needs beyond their capabilities to Nguriza Nshore for technical assistance and consulting support.

Upfront commitment fees to hire transaction advisors. Commitment fees required to secure TA services is new in Rwanda and a barrier to entry since many, if not all, SMEs are cash constrained and some do not understand the value of paying for services that could lead to investment. To mitigate this challenge, Nguriza Nshore educates SMEs on the importance of accessing TA services as well as

51 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov negotiating with them to restructure fees as milestone-based deliverables so SMEs can pay as they go and when success is achieved.

Customization is effective but time consuming. Customizing investment readiness support individualized for each SME is labor intensive since they have unique needs and the process is part of a continuous feedback loop with investors. However, this approach is the most effective. To mitigate this challenge, Nguriza Nshore embeds itself in the process with SMEs, TAs and investors so that the Activity can offer advice and provide support when necessary.

Digital MEL systems were crucial especially when working remotely. Despite the lockdown, Nguriza Nshore continued to remotely access, collect and process all the Activity’s data because Nguriza Nshore had digital data systems in place before the crisis unfolded. The Activity now supports partners to do the same for efficiency, remote access and data security. Nguriza Nshore programmed all SME data collection tools in Kobo Toolbox, an online and free data collection platform. The Activity also handed over tablets to two SMEs to ensure that they have the equipment needed to continue to conduct electronic data collection. The efficiency of electronic data collection is complemented by the dashboard and data visualization features in Kobo Toolbox that make data analysis easier for the SMEs.

Women entrepreneurs expressed significant challenges in accessing finance in alternative finance workshop. Women attendee’s at Nguriza Nshore’s workshop on alternative financing provided the project a deeper understanding of the practical challenges women face in accessing finance, including: (i) they have difficulties using their house or other property for collateral if it is co-owned with their husband, (ii) the opportunity cost of running a business is high given their domestic responsibilities and (iii) there is societal pressure for women to start and run a businesses that supplements family income, rather than succeed in business and (iv) they are less likely to have had exposure to training or encouragement to grow their business. Finding ways to work with women in forums that encourage entrepreneurial drive and reward business success helps identify and work with women-owned business. Nguriza Nshore will continue to strengthen its partnership with RCWE and design appropriate interventions to overcome obstacles that disproportionately impact women, such as addressing women entrepreneurs’ liquidity challenges linked to the pandemic.

Most SMEs do not know how to position their business for impact investors. While preparing for the Sankalp Africa 2020 Summit, Nguriza Nshore recognized that the majority of SMEs did not know how to develop a compelling business narrative required to attract potential investors. To overcome this, Nguriza Nshore helped them to create communications materials and reframe their stories and pitches which compared favorably to non-Rwandan businesses at the summit.

Most SMEs lack marketing capacity. Most SMEs, especially those working with Nguriza Nshore, have very limited capacity in areas of communication and marketing. While this seems to be the case with SMEs working with Nguriza Nshore, it generally is countrywide. Marketing as a vital activity in business growth, not only builds brand awareness it also increases sales, facilitates business growth and engage customers.

All SMEs working with Nguriza Nshore, do not have strong communications and marketing materials and lack materials that meet investors’ expectations. This is because SMEs fail to invest in communications, preferring to focus their limited funds on the core business and have limited exposure to investors or pitch meetings.

Nguriza Nshore provided limited technical assistance in communication. This was limited but very helpful especially in communicating SMEs intententions/objectives to potential investors. Support was given to Charis, Masaka Creameries, Jali Investments, and Kigali Farms.In addition to providing the SMEs direct support in this area, there is it presents an opportunity for Nguriza Nshore to build the capacity of BSPs who can help SMEs develop marketing materials.

Entrepreneurial culture does not encourage marketing. Similarly, early-stage businesses often fail to invest in marketing as entrepreneurs are focused on the mechanics of getting their business launched and running off the ground and lack awareness of the importance of marketing in making their business

52 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov successful. Nguriza Nshore will continue to encourage SMEs to see the importance of this in the investment readiness support the Activity offers as well as through the EDP.

COMPONENT 3: STRENGTHEN THE POLICY ENVIRONMENT FOR SMEs AND AGRIBUSINESSES TO INCREASE PERFORMANCE AND PROFITABILITY

Nguriza Nshore’s approach to Component is to:

• Support the government to become more constituent-oriented where ordinary citizens have a voice in policy development and implementation oversight. This requires changing the generally top-down process, driven and managed in Kigali to one based on public input and co-creation, with more effective on-going engagement with the private sector and communities to ensure government initiatives and programs are effectively implemented, monitored and reported upon. • Focus on catalyzing a set of support services, including civil society, that are funded locally, and demand driven, through research/public relation’s firms, media and industry associations.

FY 2020 Achievements

Table 9: Component 3 Targets Percent Life of Life of Life of FY20 FY20 Indicator Achieved Activity Activity % Activity Actuals Target FY20 Actuals Achieved Target Q1 – Q4 FY20 % FY18-FY20 % Value 3.1 EG.3.1-d Milestones in improved institutional architecture for food 19 16 119% 39 72% 54 security policy achieved with USG support [Multi- Level]

In FY 2020, Component 3 activities contributed to the following Activity-level indicator:

• Number of jobs created with USG assistance (Custom)

In addition, the Activity achieved:

• 15 national level, three sub-national level and one international level policy milestones were achieved • The Activity was a key partner to the GoR in addressing COVID-19 challenges

Highlights and Successes

During FY 2020, Nguriza Nshore strengthened Rwanda’s business enabling environment as outlined below:

Supporting the Development and Implementation of the Entrepreneurship Development Policy

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Supported MINICOM in receiving What is included in the EDP? cabinet approval for the EDP and jumpstarted implementation.

During FY 2020, Nguriza Nshore partnered with MINICOM to address all outstanding questions related to the EDP at each level of policy formulation, including feedback and questions raised by the Economic Cluster and the Prime Minister Office. Additionally, the Activity prepared and submitted a Cabinet paper summarizing important components of the EDP to guide Cabinet deliberation on the policy. This resulted into the approval of the EDP by Cabinet on 17 April 2020. The key goal of the EDP is to remove barriers to entrepreneurship and To jumpstart EDP implementation, enterprise growth in Rwanda, resulting in more bankable businesses, Nguriza Nshore hired and seconded an enterprise growth, and creation of 1.2 million jobs over the next seven Embedded Advisor based in the office years. of the Permanent Secretary of The seven Pillars of the EDP include: human capital and management, MINICOM and directly reporting to business support, access to finance, business enabling environment, access to markets and value chains, technology and infrastructure, and the Permanent Secretary. culture.

Following the approval of EDP by Cabinet, Nguriza Nshore supported MINICOM to host a week-long stakeholders’ workshop to review the EDP implementation plan during which participants updated the priorities the COVID-19 crisis and linked the plan with GoR economic recovery activities. The workshop participants outlined all the necessary action items and institutions responsible for implementing each policy item of the EDP, mapped out the budget required for each action item, and explored strategies to finance different pillars of EDP. MINICOM expressed appreciation, noting the value of the workshop as a means to bring all the main actors together and put EDP implementation at the forefront of the Ministry’s policy implementation agenda. The workshop was attended by Senior Government Officials, entrepreneurship experts in Rwanda from Akazi Kanoze Access - a youth and livelihood skills training organization, Inkomoko - a business accelerator, and DOT Rwanda - a social innovation accelerator, and representatives of the Private Sector Federation. The MINICOM Permanent Secretary joined the conference on the final day and gave a closing statement.

Nguriza Nshore will continue to place more effort in stakeholder engagement and work collaboratively with other actors to support the implementation of EDP and Michel Sebera, Permanent Secretary at MINICOM other GoR policy intervention requests. Nguriza delivering remarks at the EDP implementation review Nshore will also continue to onboard Development workshop Partners to support the implementation of EDP at the Sector Working Group (SW level and through other channels.

Supporting Rwanda with COVID-19 Response

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Provide advisory services to the GoR on COVID-19 response. In Q3 of FY 2020, Nguriza Nshore received requests from the GoR to support the COVID-19 (ERF). The requests had two interrelated components. The first request for technical assistance called for resource mobilization for the ERF. This assistance includes working with the GoR to identify and map potential funders and put in place resource mobilization strategies as well as directly engage with donors, investors and other financiers on behalf of the GoR to mobilize resources. The second request called for advisory services to support SMEs, including: direct coordination and implementation support to the SME Fund, working with SMEs to reshape business models, create continuity plans, prepare funding proposals/applications. The assistance is intended to create the conditions for rapid uptake of ERF funds to sustain business, growth and job creation.

Most recently, MINICOM requested support from Nguriza Nshore to recommend structures that facilitate NGOs supporting entrepreneurs and SMEs. Every year, NGOs renew their registrations and MINICOM is the only government institution that reviews the registration certificates for NGOs working within the entrepreneurship and SME space. Nguriza Nshore was sought out because of its experience with entrepreneurs, SMEs and development partners.

The numerous requests for technical assistance from the GoR are evidence of the growing and positive relationship between Nguriza Nshore’s and GoR. It also shows how the Activity was able to leverage the relationship built with MINICOM during the design, formulation and approval of EDP to broaden and deepen its relationship with the GoR. In FY 2021, the Activity will partner with the GoR to provide the requested technical assistance.

Leveraging Survey Data to Inform the GOR’s COVID-19 Response. In Q3 and Q4 of FY 2020, Nguriza Nshore partnered with the GoR to support Rwanda’s post-COVID economic recovery. During the six-week lockdown, Nguriza Nshore supported the GoR with drafting ministerial directives for business continuity interventions. The ministerial directives specifically focused on business guidelines for post lockdown reopening. In addition, using its market systems approach, the Activity facilitated stakeholder interactions with evidence-based analysis through surveys and impact assessments. The surveys, such as the COVID-19 FI Survey, conducted in partnership with RBA, detailed the extent of the impact at a sector and not individual firm level offering policy markers with numerous insights to devise appropriate solutions.

Relationship Building with Other Entrepreneurship Ecosystem Actors

Built partnership with the Business Development Fund (BDF). In Q3 of FY 2020, with the concurrence of the GoR, BDF requested Nguriza Nshore to support the implementation of the $5 Million ERF received from the GoR for the BDF partial guarantee fund for micro-businesses and SACCO refinancing. Other components of the request included: (1) resource mobilization for the ERF, (2) support BDF to develop an effective M&E framework and (3) the provision of advisory services to BDF’s SME clientele. As noted in the section on Component 1, this has led to a larger relationship with BDF.

As noted in the section above on Component 1, Nguriza Nshore is also responding to a request from BDF to strengthen their monitoring and evaluation system to measure the social impact of their work.

Enhanced the capacity of MINICOM to attract resources for the implementation of the EDP. Through close collaboration with MINICOM, Nguriza Nshore engaged partners to support activities under the EDP as per the implementation plan and M&E function. In FY3, Nguriza Nshore supported MINICOM to reengage partners that participated in the drafting and formulation of the EDP. The commitment resulted from Nguriza Nshore’s inclusion of Inkomoko in the design and quality control of the EDP prior to its approval. The Ministry instructed Inkomoko to follow EDP

55 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov guidelines and focus on two pillars: finance and advisory services. Inkomoko assisted MSMEs in two areas with a focus on enterprises most affected by the COVID-19 pandemic.

Strengthened the relationship with Rwanda Chamber of Women Entrepreneurs (RCWE). In Q1 of FY 2020, Nguriza Nshore established a partnership with RCWE and signed an MoU covering the following topics: increase awareness about finance/investment opportunities, co- sponsor networking events, build RCWE capacities and capabilities and identify member businesses to receive Nguriza Nshore’s support.

In Q1 and Q2 of FY 2020, Nguriza Nshore partnered with RCWE to conduct three investment readiness workshops aimed at supporting women entrepreneurs. Taking place in Kigali, as well as in Nyagatare and Musanze districts, the workshops covered thematic challenges affecting the growth of women-owned businesses and built consensus on proposed solutions. Key outcomes from the workshops included: matching women entrepreneurs to banks, highlighting opportunities for women-owned business as suggested in the EDP and building the capacity of the RCWE to conduct structured dialogue sessions. Due to COVID-19, no additional workshops were organized in FY 2020.

Lastly, Nguriza Nshore provided technical assistance and preliminary recommendations on how the RCWE can achieve its vision of creating a women investment fund.

Developed partnership with the Rwanda Bankers Association (RBA). In Q1 of FY 2020, Nguriza Nshore signed an MoU with RBA. The MoU covers key areas including: developing an annual survey on financial products and services; creating an annual SME “best” service award for the banking industry; designing customized trainings on SME and agribusiness finance; creating and conducting an annual consumer satisfaction study to improve products and services offered by RBA and its member banks; and producing additional industry learning and adapting platforms focused on consumer feedback.

Following the conclusion of the MoU, Nguriza Nshore developed the scope of work for the “best” service award and the annual banking survey. In addition, the Activity finalized discussions with RBA management on the proposed two embedded advisors–a research specialist and communications specialist–proposed in the MoU. The two embedded advisors’ role is to facilitate RBA to build its internal research capacity as well as support RBA to build systems and processes to conduct regular stakeholder engagement. Due to COVID-19, RBA chose to postpone the best service award and the placement of embedded advisors. Nguriza Nshore will follow up with RBA in FY 2021 with regards to resuming partnership on these areas.

Lastly, Nguriza Nshore partnered with RBA to conduct a survey on the impact of COVID-19 on FIs. This provided Nguriza Nshore with an opportunity to connect with many banks and MFIs and enquire about emerging challenges and potential areas of partnership. Findings of this survey are detailed under the COVID-19 section of this report.

Strengthened partnership with Rwanda Finance Ltd (RFL). In Q3 of FY 2020, Nguriza Nshore and RFL concluded an MoU and appointed point-of-contacts for each component of the MoU to ensure efficient implementation of the MoU. Nguriza Nshore’s partnership with RFL was strengthened by COVID-19 as RFL’s mandate to attract new investors to set up and invest in the country is now seen as part of the recovery of the economy after COVID-19. As part of the technical assistance to RFL, the Activity issued and is now evaluating two RFPs to undertake trainings and to advise on the structure of the council, as well as the development of a training levy and skills development fund.

Partnering with GoR to Conduct Regular Public-Private Stakeholder Engagements

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Built GoR capacity to conduct regular public-private stakeholder engagements. In the EDP, MINICOM identified the Public Private Dialogue (PPD) process as essential for the GoR to identify issues and potential solutions as part of continuous engagement with stakeholders. The Activity has observed that helping to improve the structure and content of the PPDs process is helping to increase the ownership of the PPD process by the government. Nguriza Nshore will conduct an assessment of the PPD resolutions implemented since its engagement in the coming year.

During FY2020, Nguriza Nshore supported the GoR to establish an agribusiness joint public and private sector multi-sectoral steering committee. The steering committee is tasked with coordinating agribusiness PPD sessions throughout the country and reports directly to the Private Sector Development and Youth Employment Sector Working Group (PSDYE SWG). These PPDs are focused on agribusiness rather than a broad multi-sector approach as previously conceived in other PPDs so that they may be more focused, productive and relevant to stakeholders.

After establishing the steering committee, Nguriza Nshore supported the GoR, Private Sector Federation (PSF) Chamber of Group discussions were held by cluster at the PPD Agriculture and Livestock, and RYAF to conduct an agribusiness pre-dialogue session in Musanze district (Northern Province) in Q2. The pre-dialogue was co-chaired by Director Generals (DGs) from MINICOM and MINAGRI and its purpose was to ensure stakeholders come to the dialogue session prepared with evidence-based analysis and recommendations. At the pre- dialogue session, participants discussed cross-cutting challenges hindering the growth and development of the agribusiness sector in the Northern Province and proposed recommendations.

Following the pre-dialogue, Nguriza Nshore facilitated the first agribusiness PPD chaired by the Governor of the Northern Province who applauded the scope of the dialogue and the involvement of youth- and women-owned businesses. The session brought together 130 participants: SMEs, women and youth representatives, PSF representatives, financial institutions, central and local government representatives, development partners at the district level, civil society and academia.

Key stakeholders involved in the entire process included: MINICOM, Ministry of Agriculture (MINAGRI) and its affiliated agencies Rwanda Agricultural Board and National Agricultural Export Board), Rwanda Bureau of Standards, Rwanda Development Board, Rwanda Cooperative Agency, Ministry of Infrastructure, development partners at the District and Provincial level, PSF Chamber of Agriculture and Livestock, Rwanda Youth in Agriculture Forum, financial institutions, SMEs, district and provincial leadership.

Partnering with MINICOM to Facilitate NGOs Supporting Entrepreneurship and SMEs

Built the capacity of MINICOM to facilitate Non-Governmental Organizations (NGOs) supporting Entrepreneurship and SMEs. In FY 2020, MINICOM requested the Activity’s support to improve the ministry’s capacity to assist NGOs working within the Entrepreneurship and SMEs Cluster. Nguriza Nshore recommended systems and processes MINICOM can adopt to facilitate NGOs supporting entrepreneurs and SMEs.

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The Activity recommended the appointment of a point-of-contact who will report directly to the Nguriza Nshore embedded Technical Advisor based at MINICOM. The point-of-contact was assigned and is undergoing training with the Nguriza Nshore Embedded Technical Advisor. The scope of the capacity building was jointly developed with MINICOM and entails: training on designing of MoUs, appraising action plans, leading stakeholder engagement, managing online registration systems, aligning objectives of NGOs to the interests of entrepreneurs, and conducting needs assessments. In addition, Nguriza Nshore has been supported to establish MOUs and engage with EDP implementing partners, including Spark, SBFIC, and Inkomoko.

In year 4, Nguriza Nshore intends to support MINICOM to introduce more business-friendly regulations for NGOs working in the entrepreneurship and SME space. This will improve the business enabling environment, increase efficiency and reduce duplication at the national and provincial level.

Responding to COVID-19 impact on Component 3

COVID-19 has negatively impacted the business enabling environment across the board for SMEs and has delayed the implementation of some business enabling environment activities with key partners in the GoR and the private sector. At the policy implementation level, building consensus and prioritization remains challenging considering the various competing demands within the country. The economic challenges have also led to budget deficits for the GoR as taxes were revised considering COVID-19, presenting a major challenge since the GoR’s budget is 60% reliant on domestic revenue. As a result, all GoR institutions have had to revise their budgets and consequently their annual plans which will continue to have an impact on the enabling environment.

Component 3 activities put on hold or delayed due to COVID-19

Two events Nguriza Nshore planned to hold this quarter were canceled due to COVID-19. First, Nguriza Nshore, in partnership with MINICOM, planned to hold a second agribusiness public private dialogue (PPD) in Q3, following on the first PPD held in the Northern Province in Q2. The second PPD was postponed to Q4 and recently the Office of the Prime Minister recommended that the event be rescheduled for FY 2021 due to the increase of COVID-19 infections in the Western Province. In addition, Nguriza Nshore and MINICOM had planned to present the final report from the first agribusiness PPD to the SWG in Q3 of FY 2020, however this was put on hold as the SWG was focused on its COVID-19 response. Similarly, a workshop Nguriza Nshore planned to hold in partnership with the RCWE aimed at helping the chamber better advocate for its members by conducting dialogues and raising issues to a policy level was put on hold due to COVID-19.

Further, Nguriza Nshore continued to partner with the Rwanda Bankers Association (RBA) throughout Q3 on conducting the FI/NBFI COVID-19 survey; however, the hiring of two support staff requested by RBA – a research specialist and communications specialist – was put on hold due to COVID-19 since RBA preferred the specialists start after its office reopens.

The study on business informality scheduled for Q3 was also put on hold due to COVID-19 as experts could not travel to Rwanda due to land and air border closures.

Finally, the Entrepreneurship Development Policy (EDP) was passed by Cabinet in April 2020. However, this important Activity achievement was not publicly announced so as not to overshadow COVID-19 GoR responses. Consequently, the EDP is not yet widely known to the public, which will require Nguriza Nshore, in partnership with MINICOM, to build public awareness of the EDP in FY 2021. The EDP launch was also postponed due to COVID-19.

Component 3 activities modified due to COVID-19

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All partner meetings were held online throughout Q3 and Q4 due to COVID-19.

New Component 3 opportunities due to COVID-19

To support Rwanda’s post-COVID economic recovery, Nguriza Nshore continued to rely on its market systems approach and the Activity facilitated stakeholder interactions with evidence-based analysis through surveys and impact assessments with RBA and AMIR, highlighted in the Covid-19 section. The surveys detail the extent of the impact at a sector and individual firm level, providing policy markers with numerous insights to devise appropriate solutions.

The first major request from the GoR called for Nguriza Nshore to assist its COVID-19 Economic Recovery Fund (ERF). The two main components of the request included support to $100 million ERF, a loan from the IMF. The ERF was bifurcated with $95 million channeled through the National Bank of Rwanda to commercial banks and $5 million through BDF. The Activity received requests to support both initiatives – one from MINECOFIN for the former and another from MINCOM for the latter.

• The Activity partnered with MINICOM to engage the German NGO Savings Banks Foundation International Cooperation (SBFIC) in support EDP implementation. SBFIC will focus primarily on supporting EDP pillar one: output 1 (improving marketability of tertiary academic programs), output 4 (improving availability of technical skills trainings outside formal education) and output 5 (improving business governance). At the time of writing this report, discussions between MINICOM and SBFIC are still ongoing and the partnership will continue into FY 2021. • The Activity will continue to work with MINECOFIN’s in regard to the money channeled through banks when it becomes more clear what type of assistance, if any, is required. • Nguriza Nshore started supporting the ERF through its partnership with MINICOM and BDF (detailed above) since its request is more straight forward. It also provided the opportunity to extend the relationship with BDF and address several of the key issues facing BDF (details provide above).

In addition, Nguriza Nshore supported the GOR directly in its COVID-19 response by drafting ministerial directives for business opening guidelines for post-lockdown reopening.

Also noted above is the strengthening of Nguriza Nshore’s partnership with Rwanda Finance Limited (RFL), as RFL is now seen as a key player it the ecosystem linked to the recovery of the economy after COVID-19 by attracting new investors into the country.

The passing of the EDP by Cabinet in Q3 of FY 2020 presents an opportunity for Nguriza Nshore to play a role in various COVID-19 responses as the implementation plan of the EDP was adapted in Q4 to reflect new pandemic realities. For example, the entrepreneurship portal was discussed as a key priority since COVID-19 emphasized the importance of entrepreneur’s ability to access information online.

Lessons Learned and Opportunities Identified

Lockdowns have made meetings with GoR officials more frequent, but less fruitful. Nguriza Nshore found it was often less complicated to secure meetings with high-level decision makers and key managers at institutions virtually rather than scheduling in-person meetings as done in the past. High-level officials had lighter meeting schedules in the early months of the pandemic making it easier to schedule time. However, it often requires multiple meetings given the limits of technology and build the personal relationship.

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Engaging stakeholders in policy development leads to greater public-private cooperation and wins buy-in for implementation. During EDP formulation, Nguriza Nshore included Inkomoko in the design and quality control of the policy. As a result, Inkomoko has more ownership over the EDP itself. In this reporting year, Inkomoko approached MINICOM with a request to directly support the implementation of EDP.

Government enthusiasm for Public-Private dialogue is high but it must be done well and integrated with a systems approach. While the GoR is committed to private sector dialogue to improve the business enabling environment, this objective is not matched with the level of effort required for structured dialogue. For instance, there is a dearth of the concrete, long-term strategic planning necessary to build a permanent and inclusive dialogue. Even more so, dialogues are ad hoc, lack M&E to track implementation of recommendations, and are not aligned with the planning processes of the GoR such as ministerial budgets and action plans.

Through engagement with the GoR, Nguriza Nshore has adopted a systems approach and proposed dialogue enhancement that ensure more inclusive coordination in the consultation process at the provincial level, ownership of the process by stakeholders (district, provincial and national governments, major agribusinesses and financial institutions) and the steering committee to monitor and track implementation of the dialogue results and recommendations. The GoR through MINICOM intends to embed the agribusiness framework as well as the M&E function into its budgetary allocations, an action Nguriza Nshore was informed is the first of its kind. Nguriza Nshore’s support creates and facilitates the conditions for GoR ownership, sustainability and eventual budgetary support.

With an increase in requests from the GoR and MINICOM, Nguriza Nshore must prioritize, manage resource and GoR expectations. While it is important to continue building the capacity of MINICOM, Nguriza Nshore is aware of its mandate, sustainability of support and limited resources. Through the SWG, the activity intends to leverage its influence at MINICOM to introduce more structured and coherent support in line with Rwanda’s development priorities as opposed to “one-off” requests. As part of this effort, the Activity is seriously considering MINICOM’s request for Nguriza Nshore to co-chair the Youth Employment and Entrepreneurship Promotion SWG technical working group, to be further clarified as Nguriza Nshore rolls out the PPDs. The proposal is at initial discussion.

Success begets success. Since the EDP moved through multiple levels of government review and approval, the policy was read throughout and commented by the GoR at key ministries. Ministers remarked on the inclusive development process employed by Nguriza Nshore and on the quality of the policy. As a result, during COVID-19 MINICOFIN reached out to Nguriza Nshore for partnership and assistance on policies of vital importance to the GoR. Equally, the RFL, a subsidiary of MINECOFIN sought Nguriza Nshore’s support on two new policies—laws on Private Capital and Foundations/Philanthropy—and support to RFL to prepare, position and market Kigali as a regional financial hub.

Nguriza Nshore was in the right place at the right time. Nguriza Nshore did not suggest the EDP as a policy action to MINICOM; MINICOM approached Nguriza Nshore for support. Since the EDP was a high priority for the GoR, the government’s commitment was clear, and the Activity did not have to devote time and additional resources convincing MINICOM of its development importance for Rwanda. Nguriza Nshore will continue following the GoR’s lead and partner with the government on its high-priority policy reform efforts.

The employment multiplier micromodel can be customized and used by other projects and partners including the GoR. The micromodel is a tool that other projects and partners can learn from and/or tailor to their own context. Nguriza Nshore has noticed a need for jobs calculations especially in the public-sector organizations where those organizations are most of the

60 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov time required by the GoR or other donor organizations to report on jobs creation as a result of their intervention. For example, in FY2020, Nguriza Nshore received an M&E request for technical assistance from BDF among other things, where BDF was very clear about the challenge they currently have of not being able to track indirect and induced jobs that are created as a result of their MSMEs support. The Activity believes that if tailored to BDF, the employment micromodel may be a good tool to resolve this challenge not only for BDF but also for other public and private institutions.

Challenges and Mitigating Measures

Competing interests for agribusiness PPD. There is a risk of duplication of efforts between donor partners in conducting PPDs. To mitigate this challenge, Nguriza Nshore intends to continue engaging development partners, especially Trade Mark East Africa, to explore opportunities for collaboration and alignment.

High expectations from MINICOM vis-à-vis the embedded technical adviser. MINICOM’s technical teams under the Industry and Entrepreneurship Department expect to benefit from the adviser’s support in all policy related matters, which is unrealistic because the focus of the adviser is on the EDP and support regarding entrepreneurship and SMEs. Following Nguriza Nshore’s engagement with MINICOM, clear instructions on the terms of reference of different advisers working with MINICOM currently were released by the Office of the Permanent Secretary and a clear distribution of tasks between advisers was shared with all DGs and Directors. It is now clearer that the embedded technical adviser is only working with the entrepreneurship development unit of the ministry, with time to support the Permanent Secretary’s Office and the planning Directorate as needed. This adviser now reports directly to the Permanent Secretary and not to any DG or Director.

Lack of visibility surrounding the approval of EDP by Cabinet. The EDP was approved by Cabinet this reporting year; however, it was not widely publicized due to COVID-19 given the Prime Minister’s Office focus on releasing regular bi-monthly updates regarding COVID-19. Currently, the EDP is not widely known in the public sphere, risking similar challenges encountered by the precursor to the EDP, the SME policy. To mitigate this challenge, Nguriza Nshore, in partnership with MINICOM, will need to put considerable effort into awareness campaigns to reach Rwandan citizens in all sectors and levels of society to ensure that implementation is a success.

Nguriza Nshore cannot influence the GoR schedule. The Activity was responsive and met timebound requests from the GoR in accordance with the EDP, however the EDP policy approval took far longer to be considered and approved by cabinet than expected. To mitigate this challenge, Nguriza Nshore strived to produce high quality documentation requiring minimal back and forth with the GoR so the government could advance the work and obtain necessary approvals. Going forward, Nguriza Nshore will need to maintain a close partnership with the GoR based on frequent, open and transparent collaboration and communication.

Competing interests can complicate work. With every activity and intervention proposed or undertaken with the GoR, Nguriza Nshore needs to identify and analyze other GoR partners engaging on the issues to determine whether those relationships compliment or offer competing or contradictory strategies and implementation tactics. In some cases, the GoR might have two or more donors undertaking the same activity which are not always named up front. To date, Nguriza Nshore has navigated these issues and has not encountered any problems but the Activity must remain vigilant. To mitigate this potential challenge, Nguriza Nshore directly asks the GoR if other partners are involved at the start pf the process and it networks with other consulting firms, such as PWC and Dalberg, that provide assistance to the GoR.

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Consensus building is time consuming but critical. During COVID-19, the GoR (MINECOFIN) took the lead in soliciting ideas from stakeholders to formulate policies to improve the business enabling environment. Despite this commendable effort, when the government leads, private sector actors sometimes tend not to fully participate or take ownership of policy interventions. The Activity noted this challenge and responded by partnering with RBA and AMIR to survey banks, MFIs and SACCOs to understand challenges and identify opportunities for support. The Activity advised MINECOFIN leadership to work through the RBA to invite all bank CEOs for a session and build consensus on all aspects of the COVID-19 recovery fund. Nguriza Nshore committed to support the GoR in consensus building and at the time of writing this report RBA and MINECOFIN are holding internal consultations.

CROSS CUTTING THEMES

Market Systems Development

In FY 2019, Nguriza Nshore adopted a market systems approach to Activity implementation. In other words, the Activity is more focused than before on interventions that change incentives and behaviors of businesses and other market players – public, private, formal, informal – in a way that make market actors committed and capable of reaching excluded populations. During FY 2020, Nguriza Nshore made significant progress in including and expanding the market systems development approach in Activity implementation as outlined below.

Strengthening Market Systems Development Understanding and Tools

In Q1 of FY 2020, Nguriza Nshore took steps to ensure all project staff are trained in this approach. The team completed an online market systems training conducted by EcoVentures International (EVI) which covered topics such as adaptive management, amplification, and financial market systems. This enabled Activity staff to be able to identify changes in the systems, track how Nguriza Nshore’s work is impacting the market system and subsequently build that into the learning agenda.

Additionally, EVI supported Nguriza Nshore to develop a financial services system change wheel which the Activity will use as a tool to monitor changes in the market system over time. More details about the financial services system change wheel and how Nguriza Nshore uses it can be found under the Collaborating, Learning and Adaptation section.

Expanding the Market Systems Development Approach to Nguriza Nshore’s Partnerships

Following the adoption of the market systems approach, Nguriza Nshore applied the concept to its work with different partners in FY 2020 as described below:

Rwanda Chamber of Women Entrepreneurs (RCWE). EVI provided onsite technical assistance, they develop the Women in Made in Rwanda (WinMIR) Proposal which unfortunately failed to qualify.for the proposal aimed to support RCWE to develop a strategy for a fund targeted at women entrepreneurs. Thereafter RCWE requested Nguriza Nshore to draft a Women Saving Fund includinga strategy for this fund; the request is under review.Nguriza Nshore will be helping them shape their concept after reviewing operations of existing funds, the support is planned to be completed in FY 2021.

Rwanda Bankers Association (RBA). In Q2 of FY 2020, EVI and Nguriza Nshore sought to expand its partnership with RBA by embedding two advisers for communications specialist and research specialist to enhance the association’s positive influence in the market. This support will help RBA to brand itself and strengthen its position as a representative organization, including creating events and awards for top banks in terms of supporting SMEs. This will send a strong signal to the industry of the importance of designing products that best serve SMEs. Second, by conducting

62 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov research and disseminating findings, RBA can provide industry-level data to banks to help them put in place evidence-based strategies. Due to COVID-19, this request for assistance was put on hold by RBA.

Rwanda Finance Limited (RFL). In Q2 of FY 2020, EVI and Nguriza Nshore began support to build up RFL and developed detailed scopes of work for RFL support regarding a marketing and communications strategy, laws on private equity and philanthropy/foundations, and a financial sector capacity building strategy. These scopes of work were built on market systems thinking, which will enable RFL to influence change in the market.

Supporting SMEs to Be First Movers

In FY 2020, Nguriza Nshore witnessed SMEs, such as Masaka Creamery, Kigali Farms, Jali Finance, and Charis UAS innovate in response to COVID-19 (i.e. starting home delivery services, customizing loans to fit business needs, and using drones to aid the Rwanda National Police to spread messages about social distancing.). Nguriza Nshore provided communications and marketing support to these SMEs to amplify these innovations as a signal to other SMEs to innovate and adopt such practices.

Participating at the Market Systems Symposium 2020

In Q4 of FY 2020, Nguriza Nshore participated at the online Market Systems Symposium 2020 to share Nguriza Nshore market systems approach with different international development projects, partners and donor organizations. At the virtual summit, Nguriza Nshore was featured in three sessions: Working with the Formal Banking Sector to Grow their SME Client Segment: Colombia & Rwanda; Evolution of Blended Finance and; Clinic on Framework: Financial Market Systems Change Wheel. Nguriza Nshore will continue participating in platforms bringing together different partners in various market systems in FY 2021, to share its learning and acquire insights to positively affect the market.

Gender

During FY 2020, Nguriza Nshore worked with different partners to increase women’s awareness about financing options and access to finance. It participated and supported events for women entrepreneurs through which it gained insights that it is now turing into action to address the systemic biases related to gender within the financial services and investment ecosystem and business enabling environment, as described below:

Increasing Access to Finance

Building on FY 2019, Nguriza Nshore continued incorporating a gender-lens across various activities as outlined below:

Incorporating gender in FIs SME strategies. In FY 2020, Nguriza Nshore supported two FIs, Cogebanque and RIM, to develop an SME strategy. The strategies include clear plans on how to increase access to finance for women as well as a dissemination plan to ensure that women are aware that the FIs have products tailored for them.

Increasing the capacity of MFIs managed by women. At the AMIR training for MFIs and SACCOs, 37 women SACCO managers and/or board presidents participated. In FY 2021, Nguriza Nshore will continue partnering with RBA, AMIR and individual FIs to build the capacity of women managers, by encouraging their participation in trainings and workshops.

SME workshops on women’s access to finance. Access to financial resources is consistently recorded as a major constraining factor by women-owned business in Rwanda, despite the existence

63 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov of financial schemes for women offered by several banks. For instance, Equity Bank has a specified loan facility dedicated to women entrepreneurs. In response to this reality, Nguriza Nshore organized three SME workshops in partnership with RCWE, which were themed “Alternative Sources of Financing” in FY 2020. Specific objectives of the workshops included raising awareness about preparing for business financing readiness for women entrepreneurs; identifying and establishing possible channels of marketing women entrepreneurs’ events; sourcing investment ready women owned businesses; facilitating women entrepreneurs to network between themselves.

The first workshop took place in Kigali in Q1 and brought together 20 women-led SMEs. Nguriza Nshore screened the participating SMEs, and five of these fulfilled the investment readiness support criteria. Of the five, one was recommended for private investment readiness support, while four were supported to apply to Equity Bank for loans. The second and third workshop in Q2 took place in the Eastern Province and Northern Province respectively. The workshops brought together 138 women-led SMEs. Following the workshops, Nguriza Nshore screened participants and identified five women-led SMEs were identified for potential investment readiness and brought into Nguriza Nshore’s pipeline in partnership with RCWE. Four were recommended for SME finance and referred to Cogebanque; and one was connected to Umutanguha, an MFI. Unfortunately, none of these four companies have secured loans yet as their performance was affected by COVID-19. Also, due to COVID-19 social distancing measures and travel restrictions, no additional SME workshop was organized in Q3 and Q4 of FY 2020.

Strengthening the RCWE Relationship

Nguriza Nshore continued to partner with RCWE in FY 2020. RCWE has been helpful in identifying and inviting participants for workshops and recommended two SMEs from its members to receive investment readiness support provided by Nguriza Nshore. Of the two SMEs, one was still in early start-up stages and was recommended to a business accelerator, while the other did not fulfill Nguriza Nshore’s selection criteria. Furthermore, RCWE submitted two requests for technical assistance in FY 2020. These include: supporting RCWE to: i) develop a Women Saving Fund and ii) increase digital literacy and use digital platforms for entrepreneurial networking and customer outreach. Nguriza Nshore started working on both requests and will release RFPs for the technical assistance in FY 2021.

Youth

During FY 2020, Nguriza Nshore made significant progress in ensuring youth have the knowledge and access to alternative financing options, and that they are represented at dialogues aimed at improving the business enabling environment, as described below:

Increasing Access to Finance

SME Workshops. In FY 2020, Nguriza Nshore organized three SME workshops under the theme “Alternative Sources of Finance”. The Eastern SME workshop included youth representatives identified by RYAF. The workshop was organized in response to youth micro enterprises in Rwanda being classified as high risk by financial institutions due to inability to scale and meet collateral requirements. At the workshop, 48 youth participated, however no youth-led SMEs were selected for investment readiness support by Nguriza Nshore as most of them are still in the start-up stage. This is an important step to introduce youth-owned microenterprises to the Activity. More details about the workshops can be found under Component 2.

Nguriza Nshore also plans to sign an MOU with RYAF with the intention of sourcing more youth- owned SMEs who will be referred to banks, MFIs, SACCOs, accelerators and incubation centers – all geared towards facilitating them to access financing.

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Improving the Business Enabling Environment

Public Private Dialogue (PPD). In Q2 of FY 2020, Nguriza Nshore partnered with MINICOM and other partners to host the first agribusiness public private dialogue. This PPD took place in the Northern Province and brought together various stakeholders in the agribusiness sector. At the dialogue, youth participated in all agribusiness cluster conversations, and brought a youth perspective to recommendations for the local and central government. Nguriza Nshore will continue partnering with umbrella organizations like RYAF, to ensure youth voices are included in all activities and dialogues aiming at improving the business enabling environment. More details about the PPD can be found under Component 3. Persons with Disabilities

In FY 2020, Nguriza Nshore worked to better involve Persons with Disabilities (PWD) in the entrepreneurship ecosystem as described below, with disappointing results. The challenges are documented below, highlighting the current and future mitigating measures.

SME Workshops. At the three SME workshops organized in FY 2020, Nguriza Nshore invited PWDs under RCWE and RYAF, and chose accessible venues for events to ensure their participation. Unfortunately, no PWD-owned SMEs chose to attend these workshops despite the Activity’s efforts. Similarly, Groups representing PWDs in the agribusiness sector were invited by the local government to the Northern Province PPD but did not attend. When organizing the Western Province PPD, Nguriza Nshore followed up on the invitations, and received confirmations of attendance from PWDs groups in agribusiness. This engagement was put on hold because the Office of the Prime Minister cancelled the PPD due to Covid-19 concerns. It has been rescheduled to Q1 of FY 2021.

Cross Cutting Themes COVID-19 Updates

Cross Cutting Themes activities put on hold or delayed due to COVID-19

Due to COVID-19, no MOU was signed between Nguriza Nshore and the Rwanda Youth in Agribusiness Forum (RYAF) as planned in FY 2020.

Cross Cutting Themes activities modified due to COVID-19

No cross-cutting activity was modified due to COVID-19.

New Cross Cutting Themes opportunities due to COVID-19

Due to COVID-19, women entrepreneurs face severe liquidity challenges. Nguriza Nshore is partnering with RCWE to advise on the design design of a Women Savings Fund. Furthermore, with most events are now turning virtual to curb the spread of COVID-19, Nguriza Nshore will continue to leverage the remote, virtual participation to include more PWDs, since online events offer more opportunities for socially inclusive participation compared to in-person events.

Lessons Learned and Opportunities Identified

Staff understanding of market systems approach needed before market system change can be created. The market systems approach was new to most Nguriza Nshore team members. Training project staff on the market systems approach has successfully equipped them with the knowledge and tools necessary to identify changes and leverage points within the market system, use the newly-developed financial services system wheel to track changes in the system, and subsequently build that into project selection, design and the learning agenda. This experience shows the value of investing in staff training, supplemented by external consulting, to efficiently and cost-

65 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov effectively introduce new technical concepts and methods for designing interventions with Nguriza Nshore’s partners.

Challenges and Mitigating Measures

Working with Persons with Disabilities remains a challenge. (PWDs) The Activity has consistently sought to include PWDs in different events without success. Ngurize Nshore learned from this and made a point to directly follow up on invitations to PWDs for the second planned PPD, which was cancelled. While we don’t know if direct follow up with PWD-owned SMEs is sufficient, the Activity will work with our organizing partners to individually follow-up with invited PWDs to provid extra encouragement and reassurance to them. It will also monitor if PWDs attend virtual events to see if offering virtual attendance is part of the solution.

MONITORING, EVALUATION & LEARNING

During this reporting year, Nguriza Nshore completed a data quality assessment (DQA) by USAID, finalized building the macro and micro employment models to measure job creation, continued conducting the SME and FI baseline and follow-up surveys, and finalized the suite of data collection tools for performance monitoring and learning. Nguriza Nshore continued to support SMEs to build social impact measurement systems to attract more social impact investors and finished building the Activity’s data model and Power BI dashboard. This third year of implementation included challenges and lessons learned including the adaptive process of data collection especially during the COVID-19 crisis. Nguriza Nshore continued to conduct monthly progress reviews and planning sessions which served as a good platform to quickly adapt to the COVID-19 pandemic that marked most of FY2020.

Highlights and Successes

Data Quality Assessment (DQA) Conducted and Completed

During Q1, FY 2020, USAID conducted the first DQA on two standard indicators (EG.3.2-26 and EG.3.2-27). The DQA was followed by a meeting with USAID’s Bureau for Food Security’s MEL Advisor and the Nguriza Nshore COR to discuss adjusting the EG.3.2-26 targets from a percentage change to a monetary value, as per the Feed the Future indicator definition.

Conducted SME and FI Baseline, SME Follow-up and COVID-19 Impact Surveys

As detailed in the MELP, Nguriza Nshore conducts FI baseline surveys to inform the Activity of technical assistance needs. Nguriza Nshore’s first baseline focused on collecting data from limited number of banks and a few non-bank financial institutions. The FI baseline collects data about technical assistance received and FIs’ lending portfolio and products, especially for SMEs, agribusinesses, and women. In Q1 of FY2020 during the AMIR MITF awareness campaign, Nguriza Nshore conducted a one-time survey with 264 AMIR members from 20 districts to determine the technical assistance needs of AMIR members.

Nguriza Nshore conducts a rolling SME baseline and shorter follow-up surveys to collect data on SME annual sales, firm-level jobs and hiring practices and plans and needs. The Activity delayed the baseline and follow-up surveys from April 2020 to August 2020 to avoid burdening the SMEs with heavy data reporting given their other, more pressing priorities, i.e. keeping their businesses afloat amid the COVID-19 pandemic crisis. The survey was sent to 18 SMEs, receiving 11 responses. This included eight baseline surveys and three follow-up surveys of firms that have reached the “investment readiness” or “deal making” stage of the pre-investment support offered by the Activity. The response rate was a challenge in FY2019 and continued to be a challenge in FY2020 even with extensive help from the transaction advisors this year.

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Nguriza Nshore also conducted two remote surveys on the Impact of COVID-19 on SMEs and FIs. 18 SMEs and 15 FIs completed the surveys. These surveys informed Nguriza Nshore as to what technical assistance the Activity could provide partners during the pandemic. One of the clearest needs from the survey was the lack of marketing expertise within firms to be able to communicate effectively through new channels during and after the lock downa. Building on the survey results, Nguriza Nshore helped AMIR provide remote training to its members to help Conducting a baseline survey at Gase SACCO, Gashenyi Sector, the SACCOs increase lending and Gakenke District. recover from the COVID-19 pandemic. Response to one of the questions in the COVID-19 SME impact survey. The Finalized a Suite of Nguriza Nshore infographics for the SME and FI surveys are included in Annexes 4 and 5. Performance Monitoring Tool

In FY2019, Nguriza Nshore developed monitoring tools and created online partner profiles to track technical assistance as part of the suite of performance monitoring tools for reporting Nguriza Nshore’s nine performance indicators. Nguriza Nshore finalized all the performance monitoring tools and systems in Q2, including making updates to the electronic forms that feed into the PowerBI reporting dashboards.

Nguriza Nshore continued to use Fulcrum – as its primary data collection software. The Activity also uses TAMIS to track partners and securely store supporting documents on project attribution and contribution. During FY2020, Nguriza Nshore focused on transferring all remaining data collection tools from FY2019 into a digital format accessible online, a move that was allow MEL to continue now that the Nguriza Nshore team has been working remotely since March 2020 due to the COVID-19 pandemic.

Created the Nguriza Nshore Power BI Dashboard

Nguriza Nshore created internal and external facing data dashboards powered by Microsoft PowerBI – a Microsoft analytics and visualization service that allows Nguriza Nshore to more easily create real-time data reports and dashboards. The Nguriza Nshore data is being pulled both from the DAI secured Structured Query Language (SQL) database (housed at DAI’s headquarters) and from Fulcrum into Power BI. During Q2 of FY2020, a Data Scientist from DAI headquarters, led an in- person training for Nguriza Nshore in Kigali on restructuring the existing Power BI data model using the star schema, ensuring that Nguriza Nshore has the internal capacity to maintain and update the dashboard with minimal support. Nguriza Nshore created a dashboard for each performance indicator to allow the Activity, USAID and other external audiences to access near real-time data and updates. Each dashboard allows the user to drill down and disaggregate the data. The Power BI dashboards are helping Nguriza Nshore to make quarterly and annual reporting more efficient, increase transparency and help the Activity track progress toward targets. The external facing dashboards will be finalized in Q1 of FY2021 and a link will be shared with USAID.

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Below is an example of a draft indicator dashboard for Custom Indicator 2.3: Number of firms receiving USG-funded technical assistance for improving business performance. The live dashboards are interactive and allow for disaggregation and drilling down by various data points including milestone level, milestone category and fiscal year quarter. For all Standard FTF Indicators, the dashboard will display the mandatory disaggregates, as specified in the FTF Indicator Handbook, updated September 2019. When the dashboards are finalized in FY2021, the dashboards will be housed in a password protected domain and USAID/Rwanda will be given login credentials to be able to access up-to-date progress towards annual and life of project targets.

One of Nguriza Nshore’s dashboards for custom indicator 2.3: Number of firms receiving USG-Funded Technical Assistance for Improving Business Performance. Attended USAID Development Information Solution (DIS) Training

During FY2020, Nguriza Nshore attended the USAID Rwanda’s training on USAID’s new Development Information Solution (DIS). Starting the the FY 2020 year end results, Nguriza Nshore will use DIS to report the Activity’s performance indicators. Going forward, Nguriza Nshore will migrate its reporting to Feed the Future Management System (FTFMS) to DIS, per USAID’s request. Nguriza Nshore, along with other FTF implementing partners will be trained on the use of the updated DIS in early FY 2021 before annual performance indicator results reporting are due.

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Conducted Regular Progress Reviews and Planning Sessions Monthly progress reviews and planning sessions help Nguriza Nshore keep on track Starting in FY 2019, Nguriza Nshore has held monthly and learn about market-system changes team pause-and-reflect workshops as part of the During the monthly progress planning sessions, the internal performance monitoring and learning process. Nguriza Nshore team goes indicator by indicator to During FY 2020, the team shifted to remote sessions track actuals against targets in regard to which had the benefit of allowing more team members performance monitoring. These monthly pause-and- and, including BiD Network on the calls. Each reflect sessions also require the team to think critically about which strategies are working or not discussion consists of sharing lessons learned, working and how to amplify positive system-level challenges and allots time to review the investment impact in the upcoming month. This has fostered pipeline and progress towards targets for each internal collaboration, continuous learning and indicator. These monthly learning and progress review adapting especially during the COVID-19 pandemic. sessions have helped facilitate internal communication, The monthly collaborations are complemented by collaboration and focus on meeting performance quarterly review and planning meetings. targets. Furthermore, Nguriza Nshore was able to use these sessions as a platform to make prompt and effective decisions in response to the COVID-19 pandemic. During the Q4 workshop, Nguriza Nshore included a session on tracking market system changes using the Financial Services Market System Change Wheel. In FY2021, these monthly sessions will continue to play a key role in giving time and space to identify market-system changes taking place and those still needed, and address the learning questions in the Nguriza Nshore learning agenda.

In Q4, Nguriza Nshore received a request from Business Development Fund (BDF) to support the institution to build a strong monitoring and evaluation system to measure the social impact of their work (highlighted in the section on Component 1). Similar to impact investors and donors, the BDF request highlights that measuring social impact is becoming important to the GoR. This growing awareness of the importance of social impact measurement is indicative of a positive market system change which can lead to a higher level of accountability for the impact of financing in Rwanda.

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Constructed and Completed the Employment Multiplier Model Employment Multiplier Model An employment multiplier model measures the number of jobs Nguriza Nshore created an employment model created as a result of a change in an economic sector. The Nguriza Nshore employment multiplier model measures the number of that calculates not only direct employment, but direct, indirect and induced jobs created as a result of investment also indirect and induced jobs created as a or finance facilitated by the Activity by using economy-level macro result of Nguriza Nshore intervention. The data and firm-level micro data to measure number of jobs created model was developed to overcome the for each investment or finance facilitated by Nguriza Nshore. difficuliteis in attributing specific jobs or increases overall employment to a specific investment. In Q1 of FY2020, the employment multiplier macro model was presented to an audience of USAID Economic Growth Team members and the M&E Advisor for Bureau for Food Security (BFS) out of Washington, DC. The model was used to set Nguriza Nshore’s custom indicator “Number of jobs created with

USG assistance” targets as well as to The Nguriza Nshore employment micromodel is a bottom-up understand how and where jobs are being approach to determine employment impact, complementing the created in the economy (i.e. market system top-down macro-model approach. The micromodel allows for the linkages or lack thereof). input of firm-level data for each Nguriza Nshore transaction to make the employment numbers more precise. To better capture the job creation by Nguriza Nshore’s partners, the Activity developed a This is how firm-level data is used in the micromodel micromodel, specifically designed to measure A. Employment – SME gives us projected direct employment jobs using firm level data. During this reporting figures with and without the investment; this direct year, Nguriza Nshore went through multiple employment is reported and used to calculate indirect iterations to create a micromodel that has a and induced jobs. user-friendly interface and that uses precise, B. Revenue – If SME can only give revenue figures with and firm-level job calculations. Nguriza Nshore without the investment; the model converts the revenue completed the micromodel in Q3 and made a to jobs using the sector level ratios to translate revenue virtual presentation on the micromodel to into employment expense and employment expense into USAID/Rwanda. In Q4, the Activity started jobs, based on average employee compensation. using the model by updating SME investment C. Investment – If only firm-level investment amount is and finance reporting tools to include a section available; Nguriza Nshore converts investment amount to where firms assisted by Nguriza Nshore are additional revenues based on sector average asset-to- required to fill in expected employment revenue ratios; then continue with Method B to convert numbers to be created or revenue amount to revenue to employment figures. be generated as a result of the investment secured. This data is entered into the micromodel for each transaction facilitated, thus producing a jobs estimate that is specific to the firm receiving the money.

Monitoring, Evaluation & Learning (MEL) COVID-19 Updates

MEL activities put on hold or delayed due to COVID-19

Several activities were put on hold or delayed due to COVID-19. For instance, data collection of the GET IT chili farmer project baseline scheduled for this quarter was put on hold, to be resumed in Q1 of FY2021 Q1. Further, the easyHATCH’s data collection for the social impact system development was delayed from Q4 FY2020 to Q1 FY2021. As noted above, SMEs surveys were also delayed by four months, concluded in August 2020. The Activity will continue to adjust to remote methods and accommodate unavoidable delays.

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MEL activities modified due to COVID-19

With events turning virtual, methods for the associated data collection also went virtual. For example, Nguriza Nshore collected participation data and feedback from the AMIR training through an online survey. Nguriza Nshore also used a Google Form to collect data from SMEs on potential COVID-19 impact on their businesses.

New MEL opportunities due to COVID-19

As noted, the provision of ERF funds to BDF opened the door for Nguriza Nshore to improve the MEL of BDF and expand it to include impact data. This in turn may open to the door to other impact investors to either work with BDF or the SMEs they serve.

In addition, Nguriza Nshore’s digital MEL systems enabled the team to continue access while working remotely, collecting and processing data as it became available. This presents an opportunity for the Activity to continue to support partners to put in place digital data collection and MEL systems for efficiency, remote access and data security.

Lessons Learned and Opportunities Identified

Designing a dashboard is a long but worthwhile effort. Nguriza Nshore’s purpose in designing the Activity’s dashboard is primarily to help the Activity have a visual blueprint of its performance results. With the Power BI dashboard, Nguriza Nshore will have access to live data, which will help in prompt decision-making and reporting. However, Nguriza Nshore learned that this process requires a significant amount of time to ensure effectiveness. In order to build the dashboard, Nguriza Nshore revisited each indicator’s detailed definition and data collection tool in order to ensure that the calculations were accurate as well as all the necessary disaggregates were included. The process involved spending a significant amount of time reprogramming some of the data collection tools to ensure the dashboard’s efficiency. Furthermore, once this reprogramming was done, Nguriza Nshore also had to rebuild the data model in Power BI to be a better fit for the Activity’s data. The building of the dashboards has taken over a year with significant support from a data scientist. Nguriza Nshore’s plan is to finalize the external dashboard in Q1 of FY2021 and share a link and credentials with USAID so that the mission can also have access to the data to use and inform decision making or future program planning.

COLLABORATING, LEARNING, AND ADAPTING

During FY2020, most of Nguriza Nshore collaboration, learning, and adapting revolved around the Activity’s response to the COVID-19 pandemic. Nguriza Nshore collaborated with local and international market actors including other development projects and the GoR. The Activity continued its internal collaboration through more regular pause-and-reflect sessions and planning workshops. The Activity continued to learn from the market and adapted to positive changes seen in the financial services market system, as explained below in the learning section on the market system change wheel.

COLLABORATING

Encouraged Continuous External Collaboration

A market systems approach requires collaboration, with Nguriza Nshore’s role to faciliate and improve relationships between market actors, e.g. SMEs and financiers, GoR and associations. That being said, during this reporting year Nguriza Nshore collaborated closely with other actors

71 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov including the private sector associations, donor organizations and other donor-funded projects. This section will focus on collaborations other than those with Activity partners. ● Nguriza Nshore continued supporting its SME partners applying for matching grants through HortInvest, helping the companies prepare business plans and financial forecasts to secure grants and bank loans as the matching component. These investments will help the four agribusinesses unlock future investments. In addition, BiD Network was added as a HortInvest subcontractor. BiD Network conducted due diligence on potential HortInvest companies which also helped BiD Network expand its SME pipeline for Nguriza Nshore. ● At the sector-level, Nguriza Nshore remained in close contact with investors and investor networks by maintaining regular check-in calls/meetings with investors to update them about the current economic situation, government response measures and the status of SMEs in the country. By helping investors get timely information during the pandemic, it helped maintain confidence in the Rwandan economy and Rwandan businesses. ● The Activity worked with the AGRF Virtual Summit 2020 to learn and build relationships with various actors in the investment space, the Sankalp Africa Summit 2020 and the 2020 ACA Summit. Nguriza Nshore’s partnerships with East Africa Venture Capital Association (EAVCA), Sankalp and the ACA continue to give Rwandan businesses exposure to the world’s largest network of investors. ● As noted above, Nguriza Nshore chose to collaborate with RBA and AMIR to survey and train their members rather than do so directly. This raised the profile of both organizations among their members and smoothed the the Activity’s process of reaching out to financial institutions, especially SACCOs and MFIs, as communication was much quicker and well received when received through these umbrella organizations. ● When USAID Hinga Weze Rwanda learned about the remote AMIR training to SACCOs that Nguriza Nshore was conducting, Hinga Weze also started to remotely train AMIR members on agribusiness. During FY2020, Nguriza Nshore held a meeting with Hinga Weze (HW) to better understand what both Activities are working on in order to find potential areas of collaboration and avoid duplication of efforts as HW trainings are focused on Agribusiness while NN focus the Business continuity plan, Credit analysis and Good Governance. ● The development and passage of the EDP required a great deal of collaboration, which opened doors to greater work with MINECOFIN and BDF. Nguriza Nshore’s collaborative approach was amplified through MINICOM which is now working with others to ensure effective and inclusive EDP implementation. ● During FY2020, Nguriza Nshore built on this collaboration to win Inkomoko Entrepreneur Development to support the implementation of EDP and the ERF. ● In this reporting year, Nguriza Nshore also created various partnerships with various organizations including International Cooperative Alliance (ICA). All of these partnerships not only will continue to benefit SMEs and financial institutions but all the actors and sub-sectors in the financial services market system. ● Nguriza Nshore also held a meeting with Trademark East Africa to discuss the PPDs it is conducting in trade in order to find areas of overlap. Nguriza Nshore continuously collaborated with Trademark East Africa to learn and avoid past mistakes and work replication. ● Nguriza Nshore also attended conferences to learn and share experience. These conferences included the Regional Investor Activity during the global health crisis and the virtual Market System Symposium 2020. ● Finally, Nguriza Nshore participated in weekly and quarterly meetings with other development partners, the GoR, and investors networks regarding collaboration on the response to the COVID-19 crisis. These different partners include DFID, the Tony Blair Institute, Access to Finance Rwanda, BDO Rwanda, McKinsey & Company and the Private Sector Development of Youth Employment (PSDYE) working group.

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Fostered a Culture of Internal Collaboration

The second sub-component of Collaborating is internal collaboration.

Monthly Review and Planning Meetings – Formal internal collaboration took the form of monthly review meetings and quarterly reflection and planning workshops. In Q2 of FY2020, the monthly reviews transitioned to virtual, using Slack to promote internal collaboration and information sharing as well as multiple videoconferencing software including Zoom and Microsoft Teams. When the monthly review sessions went online, Nguriza Nshore’s home office management and Activity’s primary transaction advisory firm started to join which made the sessions more engaging and insightful. These meetings have been key to ensuring Nguriza Nshore’s performance indicator results are met through learning and making systemic implementation decisions.

Quarterly Workshops – During this reporting year, Nguriza Nshore conducted quarterly reflection and learning workshops. These workshops consist of a series of participatory activities to encourage the Nguriza Nshore team to reflect on the progress, lessons learned and challenges of the last quarter, to adapt implementation strategy for the next quarter. Nguriza Nshore held the Q2 workshop remotely and the Q3 workshop in person, observing all COVID-19 protocols. These workshops foster knowledge management, institutional memory and also a culture of continuous learning and improvement, which was important to continue even during the COVID-19 lockdown as a way of bringing the team together to focus on adapting quickly to the changing economy and investment environment.

LEARNING

Nguriza Nshore Market System Financial Services Change Wheel helps track positive changes as a result of USG assistance

During FY2020, Nguriza Nshore launched the Rwanda financial market system change wheel which it uses to address the Activity’s learning questions and processes. The change wheel was developed by Nguriza Nshore based on a similar change wheel made for a USAID agriculture project in Bangladesh. It was finalized in Q1 of FY2020 and validated at a workshop with the Activity’s COR. The change wheel depicts the various sectors and actors that work together to influence the financial services market system. Nguriza Nshore’s objective is to create positive change within the market system in order to increase rural employment. The Activity will visually track this incremental change and its subsequent multiplier effect through the financial market system change wheel. The Activity’s main questions are:

• What change has there been in the financial market system? • How was this change created? • What role did Nguriza Nshore play in this change? • What did Nguriza Nshore learn from this change? • How has Nguriza Nshore adapted to this change?

Using these guiding questions, in the first and last quarters of this reporting year, Nguriza Nshore discussed positive changes that have been observed in the market system and what the team has learned in response. The interactive process to discuss Nguriza Nshore’s place on the wheel and observed changes in the financial services market system are detailed in the following highlight box.

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Highlight Box 6: Nguriza Nshore Financial Services Market System Change Wheel The Nguriza Nshore change wheel depicts the various sectors and actors that work together to influence the financial services market system. This includes the core system – bank and non-bank financial services and investment banking and private capital systems. These are core Nguriza Nshore intervention areas – and counterbalances and reinforcements – inter- connected systems, financial support, and enterprise systems. These systems play a role of strengthening the core system. When these work well, they allow an enabling environment for the core system. For each market actor, the wheel defines three growth stages from early stage growth to tipping point change. During Q4 of FY2020, Nguriza Nshore gathered together to discuss the Activity’s financial services market system change wheel. The process the team went through consisted of two sessions.

Session 1 – Marking the current status of the market system

Nguriza Nshore split into two groups where one group focused on the Core Systems segment of the change wheel and the other group on the Counterbalances & Reinforcement segment. The purpose of this activity was for the team to go through each of the sub-segments and place a mark on the stage where Nguriza Nshore thinks the sub-segment stands today. During this exercise, team members had enough time to agree on stages as well as discussed reasons for each marking choice.

Session 2 – Discussing Nguriza Nshore’s role in the market system After the group discussions, each team presented about where they had marked for each sub-segment. The presentation triggered more deep conversations about why certain sub-segments were placed at a certain stage, which helped the entire team learn more about what is going on in the financial services market system actors/sectors. Nguriza Nshore also discussed where the Activity should place more focus, less focus or maintain the current level of activities to encourage positive change in the market system. By placing marks on each of the sub-segment, Nguriza Nshore’s purpose was to have a baseline change wheel. On a bi-annual basis, Nguriza Nshore will continue to hold these kinds of workshops and will be revisiting the change wheel to mark any observed movement or change in the market system.

Market system changes observed and noted • Banks and Non-Banks are different: In the Nguriza Nshore financial services change wheel, the team judged it necessary to separate Banks and Non-Banks where they were not separated because those two kinds of FIs are completely different in terms of on which stage they are on the change wheel. For instance, for the Bank and Non-Bank Financial Services segment, on its Evidence Based Management sub-segment, banks were marked to be at the mid-transition change stage, whereas non-banks were marked at the early stage. This is because according to Nguriza Nshore, non-banks are still at a stage where they only collect basic information about their clients and processes. On the other hand, banks have started to invest in ICT systems to manage or automate processes as well as collect and analyze data.

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• Identification focus areas in future years: One of the activities that Nguriza Nshore emphasized is continuing to provide specific support to Rwandese-owned SMEs where they are still weak (e.g. having a financial model, a social impact measurement system, a communications and marketing strategy, etc.) Nguriza Nshore also identified sub-segments that would be too difficult for the Activity to tackle due to the nature of the sector and the time it would take to even start the collaboration. An example of a sub-segment that the team mentioned would be hard to focus on is “Academia”. Using the change wheel has been helpful to prioritize the Activity’s work and communicate some of the challenges, opportunities and gaps to USAID and other donors. • Change wheel tracking shows a marked difference in positive change in segments of the market system where Nguriza Nshore currently has interventions: The sub-segments of the market system where Nguriza Nshore currently has interventions - detailed above as the core system- are shown to be at the middle and tipping point stages of the change wheel which reflects incremental positive change in the market system. This includes areas such as bank and non-bank financial services as well as banking and private capital systems. While not all of the incremental positive change can be directly attributed to Nguriza Nshore, the Activity has observed sub-segments in the cores system move from early stage to middle or tipping point stages in part due to Nguriza Nshore interventions. This is different from the counterbalances and reinforcements part of the change wheel, areas of the market system where Nguriza Nshore largely does not have interventions, in which most of the segments remain at the early stage. • Change wheel tracking shows a marked difference in positive change in the financial services market system where Nguriza Nshore currently has interventions: Nguriza Nshore works with bank and non-bank financial services and investment and private capital (parts to the “core system”). A look at the outer wheel, the highlights the areas most relevant to the strengthening of these core systems. There has been progress in several areas, such as stronger alliances through AMIR and RBA, retail expansion into the SME market and factoring, and greater private flows of capital. Nguriza Nshore has contributed to these advances and the Activity believes that in these areas and other related to the core systems, the sector is reaching a tipping point – a point in which it will continue to advance without Nguriza Nshore support.

Nguriza Nshore will continue to use the change wheel both for learning purposes as well as to identify where the market system is compared to baseline and how Nguriza Nshore can intervene at different stages of the wheel to encourage positive change.

The detailed change wheel baseline is found in Annex 7.

Photo: Nguriza Nshore team discussing financial services market system change wheel

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Implementing the Nguriza Nshore Learning Agenda

In addition, during this reporting year, Nguriza Nshore used the financial Learning Agenda and Process A learning agenda includes a set of questions addressing critical market systems change wheel as the knowledge gaps, a set of associated activities to answer the basis for developing learning questions questions and strategies aimed at disseminating findings. A and a learning framework. Nguriza learning agenda is designed to be used and applied as the Nshore is starting to explore the learning happens during or beyond the life of a project. connection between individual and systemic approaches to catalyzing more Learning Process dynamic entrepreneurial firms, services In order to explore the two Nguriza Nshore learning questions, and networks. More specifically, two the learning process will be interactive, building on an evidence important learning questions related to base over time. The learning process will: entrepreneurship and entrepreneurial eco-systems have emerged and will be • Build a learning framework in terms of key sub- questions/areas of inquiry and proposed methods, explored through Nguriza Nshore’s including both qualitative and quantitative methods learning agenda. They are: • Frame a blog that will define the context for each learning question that will be based on a real-life case 1. What is the difference between • Conduct initial qualitative research to gain more entrepreneurship by necessity insights into criteria and context for each learning and mission-driven question that will be used to determine the parameters entrepreneurship? of quantitative and additional qualitative research • Develop blog posts that capture initial findings and 2. How does the type of emerging knowledge gaps and other considerations investment or financial service • Conduct a second round of research to generate a affect business behavior? more robust evidence base that is grounded on initial findings During FY2020, Nguriza Nshore • Produce a case study capturing the full learning process conducted interviews for and drafted and findings two learning blog posts that introduced • Disseminate findings via webinars, learning platforms the juxtaposition between (e.g., Marketlinks, Agrilinks, BEAM Exchange, etc.) entrepreneurship by necessity and through the Market Systems Symposium 2021 and other channels mission driven entrepreneurship through a human-centered storytelling approach. These blog posts will be published during FY2021. The learning agenda work had been put on hold because of the COVID-19 pandemic but will resume during FY2021 so that Nguriza Nshore can start to explore more and learn from the two learning questions.

Virtual conferences and site visits offer and opportunity for more investors to gain exposure to Rwandan SMEs

During FY2020, Nguriza Nshore attended three investment conferences of which two happened online. These events provided opportunities for Nguriza Nshore to learn and improve performance in FY2021. Nguriza Nshore also conducted its first virtual site visit in Q4, which allowed investors and other audiences inside and outside of Rwanda to “visit” a Rwandan SME that would otherwise not have been possible during the COVID-19 pandemic.

• Investment Conferences – In Q2 of FY2020, Nguriza Nshore and 10 Rwandan SMEs attended the Sankalp Summit 2020 in Nairobi, Kenya. In the months leading up to Sankalp, each of the 10 SMEs received individual and group coaching on how to pitch their businesses. This included intensive hours of pitch training in-country and during the boot camp which took place the day before the Sankalp Summit. In these sessions SMEs learned the best tools for presenting their businesses succinctly to investors as well as how to

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answer tough questions. When the SMEs arrived in Nairobi, transaction advisory firms had pre-organized meetings with investors, which made it easy for SMEs to meet on average at least six to eight investors during the Summit, the majority of which have resulted in follow up meetings after the summit. After Sankalp 2019, Nguriza Nshore reflected on ways to improve the investment readiness support to SMEs before, during and after the conference and implemented these changes in 2020. This better organization and effective preparation equipped the SMEs with the skills and confidence they needed for them to perform well in front of investors. Nguriza Nshore also conducted a pre-and-post summit survey with SMEs to learn more about what they have gained as a result of attending the summit. One of the findings from the survey revealed that after the summit, 90% of SMEs were feeling more confident telling an investor about why they should invest in their business. In Q4, Nguriza Nshore and 10 Rwandan SMEs attended the virtual ACA Summit as well as the Investors’ Forum 2020 where easyHATCH pitched. As SMEs continued to attend various conferences virtually, Nguriza Nshore started inviting financial institutions and other actors in the financial system to attend the virtual pitches, thus diversifying the types partnerships that can form from these interactions.

• Virtual Site Visit – In Q4 of FY2020, Nguriza Nshore organized and conducted a virtual site visit with Jali Finance – a Rwandan motorcycle leasing financial institution. The virtual visit participants included USAID, investors, transaction advisory firms, and other stakeholders. Before the virtual site visit had ended, some investors had already asked for more information about the company. Nguriza Nshore received positive feedback about the visit and is planning to hold more virtual site visits with other SMEs as the COVID-19 pandemic is still making it difficult for investors to travel to Rwanda.

More financial services projects are collaborating to share risk

In FY2020, Nguriza Nshore noticed an increase in finance and private sector projects collaborating to share risk across portfolios such as HortInvest, which reached out to Nguriza Nshore to help support with due diligence and investment readiness of grant applicants. The most telling change has been the evolution away from grants to blended finance mechanisms such as matching private capital. However, the cost of services by transaction advisors is a limiting factor to most SMEs. This limitation might as well impact on grants to SMEs especially where the grant is it provided as a matching grant- only disbursed upon securing of other type of financing.

Nguriza Nshore took this as signaling change in the market away from a reliance on grants to more sustainable finance options. This development is in the investment banking and private capital systems segment of the financial services change wheel. This is a small but positive shift towards a more resilient system.

SMEs are more willing to sign mandates with transaction advisors

Compared to the beginning of the Activity, in this reporting year, Nguriza Nshore noticed an increase in the number of SMEs that are willing to sign mandates with transaction advisors and there are signs of a shift from subsidized services (early stage change) to commercially viable and sustainable services that businesses are willing to buy into (mid-transition change). This is due to the fact that SMEs are starting to understand more about what investors are looking for and how transaction advisors can assist. For example, in FY2020 there was high demand from SMEs to support them with building social impact measurement systems. This is something that is not common for Rwandan SMEs to have the requests demonstrate they now recognize the importance of a social impact measurement system to attract investors. Additionally, SMEs have started to realize that having a presence online is very crucial which has triggered a significant number of technical assistance requests from Nguriza Nshore for communications and marketing support.

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The EDP design and development process has transformed the Government’s expectations for how future policies are created

The collaborative EDP design and development process resulted in a policy that focuses on regulatory change and private capital system overhaul. The recommendations and implementation plan for this policy are unique in a way that they propose coordinated systemic change. The collaborative and grassroots EDP development process and implementation plan were and are still viewed as best practice to continue in the future, which signals a positive shift in the political system segment of the change wheel. This collaborative process has been duplicated in the PPDs that Nguriza Nshore is providing support with at the provincial level. The first PPD workshops in the Northern Province took place in the second quarter of FY2020 and the PPDs are planned to resume for the remaining four provinces starting in Q1 of FY2021.

Rapid data collection will help Nguriza Nshore even after the COVID-19 pandemic

When Rwanda went into a nation-wide lockdown in Q2 of FY2020, Nguriza Nshore quickly developed two simple online surveys specifically tailored for SMEs and FIs. The surveys were designed to understand the impact of the pandemic on Activity partners and it provided real-time data to inform Activity management. The surveys also informed the Activity about each partner’s technical assistance needs. The response rate response was 100% and partners replied quickly due to the surveys’ simplicity. Complicated surveys can be a burden and even more so in times of crisis. Survey findings revealed a number of challenges that SMEs and FIs were and are still facing. Some of those have started and will continue to be addressed through tailored technical support by Nguriza Nshore in FY2021.

Low digital literacy impedes partners’ ability to continue to participate in trainings as they moved to remote platforms during COVID-19

Although Nguriza Nshore managed to move in-person trainings online as a mechanism to provide capacity building during the COVID-19 pandemic, the Activity noticed that during online trainings facilitators and participants struggled with basic internet and computer skills. For the AMIR SACCO training, 81% of participants did not have an email address and 87% reported the online training was their first. The pandemic moved “business as usual” to “first of its kind” online. Digital literacy is vital to help provide and prepare employees – throughout the Rwandan economy – with the necessary skills to navigate the rapid transition and engage the new world during and post COVID-19. In order to be inclusive of all participants, even those with very low digital literacy levels, Nguriza Nshore and AMIR provided significant help to participants before and during the trainings in order to get them set up with emails and to coach them through accessing the training link. This was extra work for the facilitators but is necessary to promote equity in digital access.

More sustainable lending models build resilience from donor funded projects

In FY2019, Nguriza Nshore started a tripartite agreement with Zamura Feeds – a leading manufacturer of animal feeds in Rwanda, and Goshen Finance PLC – a Rwandan MFI. With the tripartite agreement between the three parties, smallholder farmers were receiving a loan from Goshen Finance PLC where Nguriza Nshore was subsidizing the loan amount that Goshen Finance offered by 2% per annum to maintain a 14.8% interest rate per annum as well as was paying the administrative fees on the loans that each farmer took out. The loans were significantly helping

78 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov smallholder farmers as intended until the 3-year USAID funded project called Tworore Inkoko Twihaze ended at the end of FY2020. Nonetheless, although the USAID project ended, Zamura Feeds is looking into resuming the same program with another Rwandan financial institution so that the smallholder farmers can continue to benefit from this rare opportunity. This innovative model of offering subsidized loans to formerly unbanked farmers is possible to replicate with another financial institution and potentially with other SMEs that work directly with producers. This tripartite agreement is pushing sub-segments on the market system change wheel, as financial institutions increase their engagement with producers, which they previously had refrained from doing due to risk aversion.

ADAPTING

Nguriza Nshore uses a continuous feedback loop with partners during their “customer journey” with the Activity that allows it to adapt to different needs of the changing market. Nguriza Nshore’s adaptations for FY2020 include partner-level adjustments and larger system-level adaptations.

Nguriza Nshore adapted to first movers

First movers face significant challenges and oftentimes require more direct assistance from Nguriza Nshore than fast followers. First movers are those market system actors that are the first in the ecosystem to try something new. They are usually criticized by peers for their behavior, but once others start to see positive changes from this new behavior, others will follow. Cogebanque is a good example of a first mover in the banking sector. Before Nguriza Nshore’s SME strategy development assistance to Cogebanque, it was not easy for other FIs to understand the importance of the technical assistance. However, now that Nguriza Nshore’s assistance to Cogebanque has started showing results, the Activity has started noticing an increase in technical assistance requests from FIs. Not only did Nguriza Nshore learn from these first movers in FY2020, but must continuously adapt technical assistance, data collection and communication to simultaneously meet the needs of the partner and Nguriza Nshore reporting.

Nguriza Nshore received more technical assistance requests from larger firms

The recent push for Rwanda to become a financial hub and to raise the level of resilience of local businesses has resulted in a market-shift towards raising private capital. Nguriza Nshore is well positioned to support firms to access private capital. In Q1, Nguriza Nshore began supporting RFL and had more growth-oriented and medium size businesses reaching out regarding larger ticket sizes between $ 8 and 14 million. In response to these larger companies (>100 employees), Nguriza Nshore brought on two new transaction advisors, MIA and NISK Capital to help Nguriza Nshore adapt and meet the needs of these new SME partners. Two larger businesses that have been contracted through MIA and NISK Capital include Sina Gerard/Entreprise Urwibutso and Etablissement Nkubili Alfred and Sons (ENAS), which are seeking multi-million-dollar tickets.

Nguriza Nshore supported SMEs made smart adaptations to the pandemic

Although the COVID-19 pandemic negatively affected many Nguriza Nshore supported SMEs, a significant number of partners adapted and changed quickly. Nguriza Nshore supported several SMEs to quickly pivot their business models. To survive, some partners promptly customized their business models to develop new products that were deemed “essential” during the pandemic. Chillington Rwanda, for example, adapted its factory to produce surgical face masks and saw revenue triple in 2020 compared to the previous year. Other companies switched to product home delivery and advertised through social media channels. Nguriza Nshore partnered with Masaka Creamery, a

79 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov local dairy production company to start home delivery services and to expand their social media presence to create new customers. Masaka Creamery not only survived the lockdown but thrived by building a loyal customer base that they will continue to grow in the future. These Nguriza Nshore adaptations, not only helped businesses survive, but changes also served as important indicators to investors on business survivability and innovation potential. Many investors sought to postpone investments until after the lockdown to determine how companies weathered difficult circumstances and several businesses, supported by Nguriza Nshore, saw an increase in revenue and have received strong interest from investors as a result. Both Masaka Creamery and Chillington Rwanda received investments due to their innovation during the pandemic.

Collaborating, Learning & Adapting (CLA) COVID-19 Updates

CLA activities put on hold or delayed due to COVID-19

No collaborating, learning and adapting activities were put on hold or delayed due to COVID-19.

CLA activities modified due to COVID-19

All collaborating, learning and adapting activities were held virtually in Q3 due to COVID-19. In order for Nguriza Nshore to continue to effectively use the financial services change wheel even remotely, In Q1 of FY2021 the EcoVentures International (EVI) team is planning a training on Mural Board – a digital workspace for visual collaboration. This training will equip Nguriza Nshore with the right technical skills to use during meetings/workshops in regard to collaborating, learning, and adapting.

New CLA opportunities due to COVID-19

With COVID-19, SMEs needed to adapt quickly to survive the pandemic. This new reality presented an opportunity for Nguriza Nshore to help SMEs adapt by changing their business plans, revising their financial models and strengthening their online presence. These adaptations not only helped businesses survive and record increased incremental revenue gains during the pandemic, but it also served as important indicators for investors regarding the survivability of the companies.

In addition, like other major events that were not cancelled due to COVID-19, the ACA 2020 Summit and Webinar Series and the Market Systems Symposium went virtual. The online format of ACA 2020 Summit presented an opportunity for Nguriza Nshore to pitch a greater number of SMEs, as opposed to the five that were planned to attend the in-person event. The online format of the Market Systems Symposium allowed Nguriza Nshore to reach more attendees and featured the Activity in three rather than just two sessions.

COMMUNICATIONS

Highlights and Successes

Communications Support for High-Profile Investment Summits

In FY 2020, Nguriza Nshore provided communications support at three key investment summits as described below: Sankalp Africa 2020. Nguriza Nshore supported 10 SMEs to attend the Sankalp Africa 2020 Summit in Q2. In the months leading up to the summit, Nguriza Nshore supported each SME to strengthen its communications profile by providing one-on-one consulting. This support focused on strengthening each

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SME’s social impact storytelling narrative, developing materials such as investor focused one-page fact sheets, business cards, and condensed pitch decks, as well as improving each SME's online presence by retouching company social media pages and websites.

Prior to the summit, Nguriza Nshore supported four SMEs, AC Group, Agasaro Organics, Munyax Eco and easyHATCH, to apply for the Sankalp Africa 2020 Awards which is a prestigious opportunity for increased exposure at the summit. While no SME was selected for the top-round of the awards, the experience proved to be important exposure for the companies before the summit.

Beyond supporting the participation of the 10 SMEs in the summit, Nguriza Nshore partnered closely with the Sankalp organizers to design two sessions focused on promoting Rwanda as an investment destination. For both sessions, the Activity developed materials such as pull-ups, one-pagers and presentations. Additionally, Nguriza Nshore amplified its participation in the event through traditional media and social media.

Angel Capital Association (ACA). In Q1 of FY 2020, Nguriza Nshore attended the ACA Leadership Summit in Cincinnati, OH to network with industry leaders and plan for the May ACA 2020 Summit. Important networking and linkages with key American investors were expanded upon from the initial relationships developed at the ACA 2019 Summit. One new linkage included Cargill and its Kenyan operations with Kumwe Harvest, an SME supported by Nguriza Nshore.

Nguriza Nshore amplified its involvement in the ACA 2020 Virtual Summit, highlighted in Component 2, on its social media platforms.

Nguriza Nshore amplified the Activity’s participation in the ACA Beyond the Peak webinar series on its social media platforms.

African Green Revolution Forum (AGRF) Deal Room. Nguriza Nshore amplified the Activity’s participation at the AGRF deal room on its social media platforms.

Communications Support for Workshops and Other Events

SME Workshops. Nguriza Nshore provided communications materials and ensured proper USAID branding at the three-alternative financing for SMEs workshops in Q1 and Q2 held in partnership with RCWE and RYAF. Materials developed include pull-ups, one-pagers and factsheets. Additionally, Nguriza Nshore supported RCWE to develop communications materials which were used at the workshops to support RCWE’s greater visibility. The Activity also promoted the workshops on its social media channels.

Public Private Dialogue. At the Nguriza Nshore-facilitated agribusiness PPD, the Activity provided communications materials to ensured proper USAID branding and awareness. The Activity also promoted the event on social media and it gained a significant amount of traction.

Market Systems Symposium 2020. Nguriza Nshore amplified the Activity’s participation at the Market Systems Symposium 2020 on its social media channels.

Communications and Marketing Support for SMEs

Charis UAS. Charis received investor attention since participating in Sankalp. In response, Charis requested technical assistance from Nguriza Nshore to pivot its existing marketing and communications materials to better represent its business to potential investors. The Activity assisted Charis to revamp its branding by redesigning the company’s logo, strengthen its online presence by improving its website and social media channels, and creating blog pieces about the innovative work Charis is currently doing. In addition, Nguriza Nshore helped improve Charis’ investor-oriented materials including a pitch deck, investor memorandum and business flyer.

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Nguriza Nshore also created an ongoing communications plan and trained Charis on how to continue the work completed by Nguriza Nshore in order to ensure sustainability.

Sample of materials created for Charis including new logo, business flyer, and pitch deck

Masaka Creamery. Prior to COVID-19, Masaka did not have an online presence or a home delivery option for its customers. During the lockdown, Nguriza Nshore provided technical assistance by designing a social media strategy and building the company’s capacity to expand its customer base and offer home delivery – direct to consumer, bypassing supermarkets and hotels. Further, Nguriza Nshore connected Masaka Creamery to three delivery companies and the company is now listed on two. Nguriza Nshore also supported the company to collect strong advertisement photographs of their products to use with the delivery companies and other online platforms.

Masaka Creamery saw significant results from this support. First, unlike many other SMEs, Masaka Creamery was not forced to lay-off employees since the COVID-19 lockdown due the company’s expanded sales from home deliveries. Second, Masaka registered an increase in revenues for the March – September 2020 period as their best season in sales, compared to the previous year’s numbers for the same period. Third, Masaka invested its own resources into its on-line efforts and hired a communications and sales coordinator in Q4 of FY 2020.

Kigali Farms. COVID-19 affected Kigali Farms’ operations including exports, which typically includes 77% of its total sales. In order to strengthen its local market to survive the pandemic Kigali Farms requested communications support from Nguriza Nshore in Q3. The Activity supported Kigali Farms with a social media strategy and advised the SME how to strengthen its digital presence on home delivery companies’ websites. As a result, Kigali Farms generated social media traction, especially on Instagram. This digital channel has resulted in new customers placing orders for home delivery with Kigali Farms through social media.

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Jali Finance. Jali Finance garnered significant attention from investors at the Sankalp Africa 2020 Summit and ACA Webinar. As a result, Jali Finance approached Nguriza Nshore in Q4 of FY 2020 for technical assistance in communications and particular in developing materials targeted at investors. Nguriza Nshore supported Jali to open a social media account and designed the company’s social media strategy. Additionally, Nguriza Nshore featured Jali in its first SME virtual site visit, which gave the company an additional platform to engage with investors and transaction advisors. Nguriza Nshore will continue providing communications support to Jali Finance in FY 2021.

Supporting External Communications

Website. In FY 2020, Nguriza Nshore finished building the remaining pages of the Activity website, including resources, news, and impact pages where various market actors can access information on subjects related to entrepreneurship and finance in Rwanda as well as view regular updates on Nguriza Nshore milestones and activities. The updated website was completed in Q4. Nguriza Nshore also began posting success stories and other relevant content to boost Nguriza Nshore’s visibility locally, regionally, and internationally.

Activity Quarterly Newsletter. Nguriza Nshore developed and released its first quarterly newsletter in Q4 of FY 2020. Nguriza Nshore plans to release the newsletter on a quarterly basis, starting with Q1 of FY 2021.

First Nguriza Nshore newsletter published in Q4

Material Development

Media Trends Roundup Report. In Q3 of FY 2020, Nguriza Nshore began developing a weekly media trends round-up report to share internally and with partners. The document captures media highlights from the week related to the Activity’s work, as well as regional/sector updates, social media platform trends and news from other relevant sources.

Traditional Media

Prior to and during the Sankalp Africa 2020 Summit, Nguriza Nshore implemented a media campaign to raise awareness about Nguriza Nshore’s participation in the summit and why Rwanda is an ideal investment destination. Nguriza Nshore was featured three times on two popular radio stations, KISS FM and Royal FM and the Activity also hosted a press conference prior the summit, the first press conference held since the Activity Launch. As a result, the Activity was featured in four written

83 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov publications (KT Press, New Times, Umuseke, and Igihe) and on Rwanda Broadcasting Agency’s leading business television show, the Business Digest.

Social Media

Throughout FY 2020, Nguriza Nshore continued active engagement on Twitter. In the reporting period, the Activity’s Twitter page gained 379 new followers, and had an average of 403 profile visits per month. Additionally, the page made 230 tweets, with an overall 312.9K impressions. Nguriza Nshore gained significant traction on tweets about key events such as the Sankalp Africa 2020 Summit in Q2 and the EDP implementation adaptation workshop in Q3. Other posts that garnered interest were about Activity surveys such as the COVID-19 SME survey. More details regarding these tweets’ reach can be found on the screenshots below:

Nguriza Nshore’s tweet about Sankalp had 24 likes with 10 retweets.

Nguriza Nshore’s tweet about EDP’s implementation plan revision gained over 6,800 impressions with 42 likes.

Nguriza Nshore’s tweet about the COVID-19 SME survey had 40 likes with over 6,800 impressions.

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SME Virtual Site Visit

As noted in Component 2, in Q4 of FY 2020, Nguriza Nshore hosted its first SME virtual site visit with Jali Finance. In addition to the 29 attendees on the virtual platform, others followed the site visit on social media through the #VirtualSMETour Twitter hashtag, which reached over 100,000 accounts. Nguriza Nshore will organize more SME virtual site visits in FY 2021, as they present an opportunity for Nguriza Nshore to reach a broad audience.

Communications COVID-19 Updates

New communications opportunities due to COVID-19

COVID-19 presented an opportunity for Nguriza Nshore to provide technical assistance to SMEs in strengthening their online presence and offering options that engage their existing customers and increase their customer base. The Activity supported four SMEs, namely: Kigali Farms, Masaka Creamery, Charis UAS and Jali Finance to adapt their businesses to COVID-19. Specifically, Nguriza Nshore supported these SMEs to strengthen their online presence through tailored social media strategies, adapted communications plans, revised their visual brands and connected with customers through home delivery platforms. This support presents an opportunity for Nguriza Nshore as more SMEs will require technical assistance to adapt their businesses and strengthen their communications and branding strategies to survive and thrive post COVID-19.

Additionally, COVID-19 created opportunities to organize virtual events such as the SME virtual site visit. Nguriza Nshore observed the opportunity presented by such events including the participation of international investors, without the need to travel. Nguriza Nshore will continue organizing virtual or hybrid events, to ensure a maximum participation.

Lessons Learned and Opportunities

Visual reports are good for social media. The high traction and the level of engagement recorded by the tweet about Nguriza Nshore’s COVID-19 SME survey in Q3 demonstrates that social media users respond well to simplified and visual reports. Using this lesson, Nguriza Nshore used similar graphics to share findings from the COVID-19 FIs survey, which also gained traction. Use of visuals through social media seems to be an effective means to raise more awareness of Nguriza Nshore’s objectives, work and results.

Communications is playing an increasingly larger role in Nguriza Nshore. With the the impact of Covid-19 on-going, communications work with partners is playing a larger role in Nguriza Nshore’s work than anticipated. For example, MINICOM has requested support developing a communications strategy for the EDP, RFL also requested support in communications and marketing, and work with BDF will include support to improve communications to the public, partners and key stakeholders. These are new opportunities for Nguriza Nshore to contribute to shifts in the market system.

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ENVIRONMENTAL COMPLIANCE

Project/ Mitigation Measures Status of Remedial Actions Activity/ Mitigation Needed/ Sub-Activity Measures Remedial Actions Taken Component 1 – Expand Capacity of Financial Institutions to Lend to SMEs Activity 1.1: Catalyze banks targeting agriculture and SME clientele Sub-Activity 1.1.2: Help banks develop a) Nguriza Nshore shall review FI’s environmental a), b), c) To date, a), b), c) In the industry-specific agriculture and SME due diligence processes (EDD) processes to NN has not begun to next quarter, NN financial products evaluate the EDD of determine if they are sufficient (they must will initiate the the banks with whom process of Sub-Activity 1.1.6: Design and implement provide a strong level of assurance that the innovative de-risking tools we are working. requesting the purposes of the request for financing are known Sub-Activity 1.2.1: Support NBFIs to EDD from each FI and penalties exist if the FI becomes aware that develop industry-specific agriculture and with whom we are SME financial products the financing has been used for other purposes; working; we will Activity 1.4: Support non-traditional prohibit loans for activities normally requiring an evaluate the NBFIs Environmental Assessment (EA) in accordance thoroughness and with USAID and Government of Rwanda (GoR) completeness of legislation without the required environmental the EDD review and approval; and provide a review processes, if they process similar to the USAID/Africa Bureau exist; we will Environmental Review Form (ERF), and must determine if the include climate vulnerability considerations and FIs need additional mitigation measures to minimize adverse impacts training on EDD; from pesticide use. and we will develop and deploy EDD b) If Nguriza Nshore determines that an EDD training, if needed. process is insufficient, Nguriza Nshore shall provide TA and training to the FI to strengthen or develop an adequate EDD process.

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Project/ Mitigation Measures Status of Remedial Actions Activity/ Mitigation Needed/ Sub-Activity Measures Remedial Actions Taken c) Based on a training needs assessment, Nguriza Nshore shall provide annual training to FIs in implementing the EDD process.

Component 2 – Increase Private and Commercial Investment in SMEs Activity 2.1: Catalyze a robust SME pipeline by shifting the competitive landscape to favor businesses with value-add- oriented growth strategies Sub-Activity 2.1.1: Catalyze high-quality a) Nguriza Nshore shall tailor the USAID/Africa a)To date, NN had a)During the next business incubators and accelerators Bureau ERF template to Nguriza Nshore-specific not tailored the quarter, NN will Sub-Activity 2.1.2: Expand Nguriza support for agriculture and SMEs. The tailored USAID/Africa Bureau tailor the Nshore’s SME pipeline template will be approved by the USAID COR ERF for support to USAID/Africa agriculture and SMEs. Bureau ERF for the and Mission Environmental Officer (MEO) prior project. to using it. To guide reviewers through the environmental review process, the tailored ERF template will include potential impacts, specific to agribusinesses/agro-processing, a range of mitigation measures from which to choose, measures to reduce climate change vulnerabilities, and an EMMP. The tailored ERF template will be generally consistent with applicable good-practice guidance in USAID’s Sector Environmental b)During Y3, NN has not supported any b)None at this time. Guidelines projects that have NN does not (http://www.usaidgems.org/sectorGuidelines.htm). involved the use of anticipate providing

or purchase of support to any b) For support for the purchase or use of pesticides. project that will pesticides, Nguriza Nshore shall use provisions of involve the use or the governing USAID/Rwanda Pesticide

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Project/ Mitigation Measures Status of Remedial Actions Activity/ Mitigation Needed/ Sub-Activity Measures Remedial Actions Taken Evaluation Report-Safer Use Action Plan purchase of (PERSUAP) to prepare a Nguriza Nshore-specific pesticides. Safer Use Action Plan (SUAP), which will specify the approved and rejected pesticides and safe use

measures. This will be included in the tailored

ERF template. c)To date, NN has c) In next quarters, c) Nguriza Nshore shall complete an ERF for each not completed ERFs NN will initiate an grant agreement and obtain USAID approval for each grant ERF review of each prior to disbursement of any funds. agreement. of existing and pending grants.

d) As required by each ERF, Nguriza Nshore shall d)This will be monitor and report on implementation of d)Not applicable at initiated once ERFs mitigation measures established by ERF’s EMMP. this time are completed for each grant. Activity 2.2: Develop entrepreneurial skill sets and networking opportunities Sub-Activity 2.2.1: Release RFPs co- a) Nguriza Nshore shall complete an ERF for each a)To date, NN has a)In the next designed with SMEs proposal and obtain USAID approval prior to not completed ERFs quarters, NN will disbursement of any funds. for each grant initiate an ERF agreement. review of each of existing and pending

grants. b) As required by each ERF, Nguriza Nshore shall

monitor and report on implementation of b)Not applicable at b)This will be mitigation measures established by ERF’s EMMP. this time initiated once ERFs are completed for each grant.

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Project/ Mitigation Measures Status of Remedial Actions Activity/ Mitigation Needed/ Sub-Activity Measures Remedial Actions Taken GENERAL Capacity Strengthening a) Nguriza Nshore shall annually train their staff a)To date, NN has a)NN will conduct and partners to conduct environmental reviews; not conducted environmental to monitor implementation of mitigation training on compliance training measures, their success, and need for remedial conducting in the first quarter actions; and to report on sub-project EMMPs. environmental of 2021. reviews or monitoring the implementation of mitigation measures Comply with GoR environmental a) Nguriza Nshore shall include a requirement for a)This has not been a)This will be done regulations compliance with GoR environmental laws and initiated. as part of the regulations in each ERF template. process of tailoring the ERF for the project described above. Work Plan development a) Nguriza Nshore shall review and update the a)The process of a) The EMMP will be Nguriza Nshore EMMP annually to ensure all reviewing the Y4 updated in the next relevant activities are included and that the Workplan has begun. quarter to reflect EMMP is up-to-date. The EMMP will the Y4 Workplan. updated accordingly.

• b) Nguriza Nshore shall integrate costs to b)NN has integrated b) None necessary. implement the EMMP into overall Nguriza Nshore the costs of EMMP budget implementation into the overall budget.

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The Nguriza Nshore Project’s EMMP was approved in February 2020. Due to the urgency of having to pivot its programs due to COVID-19, the Project was not able to prioritize the integration and implementation of the EMMP into its activities. Activities to support the implementation of the EMMP during Y4 will include: • Reviewing the Government of Rwanda environmental regulations as they apply to the project • Developing a project-specific ERF • Training the staff on the EMMP requirements and how to conduct environmental reviews • Reviewing the environmental due diligence procedures of each of the financial institutions that the Project is supporting to o Determine whether they are sufficient, and o If not, provide technical assistance to upgrade and train the financial institutions

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CONSORTIUM OVERVIEW AND STRATEGIC PARTNERSHIPS

The Nguriza Nshore consortium members consist of DAI Global, LLC and BiD Network. The consortium members’ roles and responsibilities for FY 2020 include: ● DAI Global, LLC – Will continue to provide overall vision, leadership and management of the Activity in collaboration with the Government of Rwanda and USAID/Rwanda.

● BiD Network – Will continue to act as the key investment partner, sourcing and assessing SME opportunities through a standardized pre-investment readiness process. The consortium members will continue to foster key partnerships within the following areas:

Partner #1—Banks and non-banks will serve as act as key middlemen that deliver financial products and services to SMEs. The Activity will provide technical assistance and consulting to this industry to bolster their know-how and capacities.

Partner #2—SMEs will be direct beneficiaries and Nguriza Nshore technical assistance and consulting support.

Partner #3—Transaction advisors/facilitators and business service providers will support both banks and non-banks and SMEs by identifying opportunities, structuring transactions and providing technical assistance and consulting services.

Partner #4—GoR, donors, donor-funded activities and industry groups will serve as partners to share resources and expertise necessary to coordinate on a size and scale not possible alone when working to implement initiatives.

OPERATIONS AND ADMINISTRATIVE ACTIVITIES

Development of Key Deliverables for USAID

DEC Submission DEC URL Deliverable Name Submission Date Status Date

https://dec.usaid.gov/ dec/content/Detail.as px?vID=47&ctID=O Quarterly Report FY20 – Approved March 24, January 30, 2020 April 10, 2020 DVhZjk4NWQtM2Y Quarter 1 2020 yMi00YjRmLTkxNjkt ZTcxMjM2NDBmY2 Uy&rID=NTYwNTM x https://dec.usaid.gov /dec/content/Detail.a spx?vID=47&ctID=OD Quarterly Report FY20 – Approved June 15, April 30, 2020 July 7, 2020 VhZjk4NWQtM2YyMi Quarter 2 2020 00YjRmLTkxNjktZTcx MjM2NDBmY2Uy&rI D=NTY0NjQ4 https://dec.usaid.go v/dec/content/Detail .aspx?vID=47&ctID Quarterly Report FY20 – Approved August 24, =ODVhZjk4NWQtM July 30, 2020 September 11, 2020 Quarter 3 2020 2YyMi00YjRmLTkx NjktZTcxMjM2NDB mY2Uy&rID=NTcw OTAz

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DEC Submission DEC URL Deliverable Name Submission Date Status Date

https://dec.usaid.go v/dec/content/Detail .aspx?vID=47&ctID Approved October =ODVhZjk4NWQtM Year 4 Work Plan September 15, 2020 October 20, 2020 13, 2020 2YyMi00YjRmLTkx NjktZTcxMjM2NDB mY2Uy&rID=NTcy MjIw

Grants Management

No grants were disbursed during FY 2020. Nguriza Nshore is currently negotiating the use of the $130,000 remaining in its grant obligation in FY 2021.

Staffing: Reserved

Financial Summary: Reserved

Operations and Administrative Activities COVID-19 Updates

Operations and Administrative activities put on hold or delayed due to COVID-19

No operations or administrative activities were put on hold due to COVID-19.

Operations and Administrative activities modified due to COVID-19

Nguriza Nshore staff demonstrated an ability to perform while working from home, off-site and remote, and asynchronous with the COP.

New Operations and Administrative opportunities due to COVID-19

DAI’s Home Office developed a process for determining when field offices can re-open, which includes a risk assessment tool completed by the project field team under the direction of the COP. The Nguriza Nshore team has completed the risk assessment tool which has been submitted to DAI’s Global Security Team for review.

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ANNEXES

Annex 1: Success Stories

1. Improving Access to Finance through Invoice Factoring: Reserved

2. Nguriza Nshore Hosts First SME Virtual Site Visit

In Q4 of FY 2020, Nguriza Nshore hosted its first SME virtual site visit. The site visit was organized virtually to follow COVID-19 health guidelines, but also to allow people to join from different parts of the world and learn about business opportunities in Rwanda. The visit featured Jali Finance, an SME supported by Nguriza Nshore, which offers innovative leasing models for motorcycle drivers in Rwanda. The virtual event brought together 29 participants including USAID Rwanda, investors, and transaction advisors joining from Rwanda, Uganda, Kenya, Europe and USA.

With an aim of providing a seamless experience to participants, Nguriza Nshore moderated the site visit both virtually and onsite. Felix Nkundimana, Jali Finance CEO, was present onsite and guided participants through the company’s mission, business processes and model. Jali Finance stands out in the lending space by focusing on alternative measures of loan approval which go beyond credit and collateral. This is why Jali Finance is the go-to- company for disadvantaged groups.

Jali Finance’s model is an innovation which sparked Jali Finance CEO, during the virtual site visit. investor interest in other events this year. For instance, with Nguriza Nshore sponsorship, Jali Finance participated and pitched at Sankalp Africa Summit 2020, the region’s largest social entrepreneurship and impact investment event. The company held numerous investor meetings, of which four discussions are still ongoing at the writing of this report. Furthermore, the Activity presented Jali Finance as one of promising Rwandan investments at the virtual ACA webinar series. This resulted in several investors reaching out for more information about Jali’s business.

Like many other businesses this year, Jali Finance was also hit by the COVID-19. For instance, the company had to defer weekly payments from its over 100 customers for a period of 3 months as these were under lockdown. “We had to go beyond deferring the payments and support our customers as their source of income was no longer operational. That’s why we put in place a crowdfunding campaign to support them financially during that period.” Moving beyond the pandemic, Jali Finance had to adapt all its models and focus on raising capital “Nguriza Nshore’s support is very key in our success so far: the project helped us revise our financial documents to meet investor standards.” Additionally, Nguriza Nshore also offers support to Jali Finance in other areas such as putting in place an impact measurement system as well as communications.

Questions from participants during the virtual site visit included Jali Finance’s strategies to bridge the gender gap in the motorcycling business, as there are Group photo featuring onsite and virtual participants. only 3 female motorcycle drivers in the country. The

93 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov company’s plans, as shared by the CEO, include creating incentives for women motorcycle entrepreneurs to join. Such incentives include waiving the deposit fee and encourage those who don’t have a driving license to apply and accompany them throughout the process until they receive licenses.

Overall, the first virtual site visit was a success. The use of an existing and widely available platform was key in ensuring an easy participation from guests joining from different parts of the world and having an onsite set enabled Jali Finance to guide the tour in a natural way. Additionally, other interested people followed the site visit on social media through the #VirtualSMETour Twitter hashtag, which reached over 100,000 accounts. Nguriza Nshore looks forward to organizing more SME virtual site visits particularly while the COVID-19 health guidelines remain in place.

3. Cabinet Meeting Passes the Entrepreneurship Development Policy

In Q2 of FY 2020, a Cabinet meeting passed the Entrepreneurship Development Policy (EDP). The EDP was drafted in FY 2019 through a collaboration between Nguriza Nshore and MINICOM, in all policy development stages from the mapping, data collection and validation phases. In the year long process, the Activity partnered with MINICOM to ensure public participation by gathering input from different stakeholders in the entrepreneurship ecosystem, which contributed to an expressed ownership by various actors such as entrepreneurs, cooperatives, development partners and local Government among others.

Nguriza Nshore witnessed a continued strong sense of ownership among stakeholders present during the EDP implementation plan adaptation workshop in Q4 of FY 2020 where participants updated the implementation priorities to match new COVID-19 realities and align with GoR economic recovery activities. Additional stakeholders have also already begun aligning their activities with the EDP. Inkomoko approached MINICOM with a request to directly support the implementation of EDP.

Particpants at EDP implementation workshop

The passage of the EDP by the Cabinet is testament to its inclusive development process and alignment to GoR’s priorities. With this milestone, Nguriza Nshore will implement all future activities with the entrepreneurship ecosystem priorities, which will ultimately go beyond the life of the Activity. The EDP will be officially launched by MINICOM in FY 2021. Nguriza Nshore will partner with MINICOM on this event and ensure that the policy is adequately amplified across the country.

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Annex 2: Rwanda Nguriza Nshore Performance Indicators FY 2020 The following table includes actuals against targets for each Nguriza Nshore performance indicator for FY 2020

FY20 FY20 Reporting Activity Annual Life of Activity Indicator Quarterly Progress Cumulative Percent frequency IR Target Target Progress Achieved FY20 FY20 FY20 FY20 Q1 – Q4 FY20 % Value Q1 Q2 Q3 Q4 1. EG.3.2-27 Value of agriculture-related financing accessed as a result of USG Bi-annual Goal ------589% - assistance [IM-Level] 2. Number of jobs created with USG Annual Goal - - - 14,645 14,645 6,558 223% 30,000 assistance (Custom) 3. EG.3.1-14 Value of new USG commitments and private sector investment Bi-annual Goal ------120% - leveraged by the USG to support food security and nutrition [IM-Level] 1.1 Value of loans leveraged using de-risking Bi-annual IR 1 ------173% - tools (Custom) 1.2 Number of financial and non-financial institutions receiving USG assistance that Bi-annual IR 1 - 2 - 70 72 68 106% 198 extended loans and other financial products to SMEs (Custom) 2.1 EG.3.2-26 Value of annual sales of firms and producers receiving USG assistance [IM- Annual IR 2 ------103% - Level] 2.2 Percentage of firms receiving direct support by the Activity that report being Annual IR 2 - - 60% 60% 52.5% +14% deviation 55% able to recruit more labor as a result of - investment (Custom) 2.3 Number of firms receiving USG-funded technical assistance for improving business Quarterly IR 2 20 123 4 5 152 150 101% 500 performance (Custom) 3.1 EG.3.1-d Milestones in improved institutional architecture for food security Annual IR 3 - - - 19 19 16 119% 54 policy achieved with USG support [Multi- Level]

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Annex 3: Rwanda Nguriza Nshore Performance Indicators Disaggregations The following table includes disaggregations for all performance indicators and a comparison to progress to date against life of activity targets

FY20 Life of Life of Life of Reporting Activity Indicator Cumulative FY20 Cumulative Progress Disaggregates Activity Activity % Activity frequency IR Progress Actuals Achieved Target

Q1 – Q4 FY20 FY18-FY20 % Value 1. EG.3.2-27 Value of agriculture- related financing accessed as a result Bi-annual Goal - - - - - of USG assistance [IM-Level] Employment type Direct Jobs: 5,825 Indirect Jobs: 7,669 Induced Jobs: 1,151

Employment Category Permanent: 4,159 Temporary: 10,486 2. Number of jobs created with USG Annual Goal 14,645 16,572 55% 30,000 assistance (Custom) Location Urban: 5,351 Rural: 9,294

Gender Male: 8,826 Female: 5,819

3. EG.3.1-14 Value of new USG commitments and private sector investment leveraged by the USG to Bi-annual Goal - - - 32% - support food security and nutrition [IM-Level] 1.1 Value of loans leveraged using de- - Bi-annual IR 1 - - 67% - risking tools (Custom) 1.2 Number of financial and non- Type of Institution financial institutions receiving USG Savings and credit cooperative (SACCO): 70 assistance that extended loans and Bi-annual IR 1 72 Microfinance institution: 1 105 53% 198 other financial products to SMEs Non-banks financial institution (NBFI): 1 (Custom)

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Firm Size Small Enterprise (4-30 employees) Medium Enterprise (31-100 employees)

Age Owner Non-Youth (31+)

Gender Owner Male Female Mixed

2.1 EG.3.2-26 Value of annual sales of Product/Sevice Category firms and producers receiving USG Annual IR 2 - - 58% - A. Agricultural commodities (raw products) assistance [IM-Level] B. Inputs: Seeds and planting material C. Inputs: Other non-durable inputs (fertilizer, pesticides) D. Inputs: Durable equipment and machinery (land preparation equipment, irrigation equipment) E. Processed products/value added products (post-harvest) F. Post-harvest storage and processing equipment (bags, processing machinery) G. Business services (Financial, entrepreneurial, legal etc.) H. Information services (SMS, radio, TV, print etc.) I. Production support services (other services sold to farmers, including extension, veterinary services, rental of equipment, warehousing, post-harvest processing)

2.2 Percentage of firms receiving Firm Size direct support by the Activity that Small Enterprise (4-30 employees): 5 +9% report being able to recruit more Annual IR 2 60% Medium Enterprise (31-100 employees): 4 60% 55% deviation labor as a result of investment Large Enterprise (101+ employees): 1 (Custom) Firm Size Micro Enterprise (0-3 employees): 66 Small Enterprise (4-30 employees): 67 2.3 Number of firms receiving USG- Medium Enterprise (31-100 employees): 7 funded technical assistance for Large Enterprise (101+ employees): 1 Quarterly IR 2 152 270 54% 500 improving business performance Unavailable: 11 (Custom) Age Owner Youth: 23 Non-Youth (31+): 108

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Mixed: 11 Unavailable: 10

Gender Owner Male: 12 Female: 103 Mixed: 30 Unavailable: 7

Location Urban: 18 Rural: 119 Mixed: 4 Unavailable: 10

Milestone Level International: 1 National: 15 Sub-National: 3 3.1 EG.3.1-d Milestones in improved institutional architecture for food Annual IR 3 19 Policy Element 39 72% 54 security policy achieved with USG 1. Predictability of the policy framework: 1 support [Multi-Level] 2. Policy development and coordination: 8 3. Inclusivity and stakeholder consultation: 4 4. Evidence-based analysis: 1 5. Policy implementation: 5

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Annex 4: Infographic Summary of COVID-19 FIs Survey

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Annex 5: Infographic Summary of COVID-19 SME Survey

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Annex 6: SACCOs and MFIs Trained in Partnership with AMIR

Training months: June – July # Institution Name District 1. BAHO SACCO RWIMBOGO Rusizi 2. CESEKA (KATABAGEMU) Nyagatare 3. COOPEC COMICOKA Rubavu 4. COOPEC ISANGE KARAMA Nyagatare 5. DUHORANE IJABO NEMBA SACCO Burera 6. DUKIRE KABARONDO SACCO Kayonza 7. GIRINTEGO KIVURUGA SACCO Gakenke 8. GISHYITA SACCO Karongi 9. HIRWA SACCO CYUMBA Gicumbi 10. ICYEREKEZO SACCO KIYUMBA Muhanga 11. IJABO SACCO REMERA Gasabo 12. IMBADUKO MUHAZI SACCO Rwamagana 13. IRENGERE SACCO MUKO Musanze 14. ISONGA SACCO RUGANDA Karongi 15. JABANA SACCO Gasabo 16. KIRA KABATWA SACCO Nyabihu 17. KIRA SACCO MARABA Huye 18. KOVISA Ngoma 19. MWILI SACCO Kayonza 20. NEW VISION SACCO Musanze 21. NYAMIYAGA SACCO Gicumbi 22. REBAKURE SACCO RUSARABUYE Burera 23. RUGERO SACCO KIREHE Kirehe 24. SACCO CYATO Nyamasheke 25. SACCO DUKIRE NDEGO Kayonza 26. SACCO MUSHERI Nyagatare 27. SACCO NEW HOPE MUGUNGA Gakenke 28. SACCO TEA SHAGASHA Rusizi 29. SHIRUBUKENE SACCO RUVUNE Gicumbi 30. TABAGWE SACCO Nyagatare 31. TUGANE SACCO NYABINONI Muhanga 32. TUVUDUKE SACCO RUBAYA Gicumbi 33. TUZAMURANE SACCO TARE Nyamagabe 34. TWIYUBAKE MUNYAGA SACCO Rwamagana 35. TWUMBA SACCO Karongi 36. UBUMWE BWA NYAKALIRO SACCO Rwamagana 37. UMUHIGO SACCO MUHURA Gatsibo 38. UMUNARA SACCO JALI Gasabo 39. UMURUNGA W'ITERAMBERE CYERU Burera

Training months: July - August # Institution Name District 1. GAHANGA SACCO Kicukiro 2. HASHYUBUKENE SACCO RWAMIKO Gicumbi 3. HIRWA SACCO RWANIRO Huye 4. IMIRASIRE SACCO/ KINTOBO Nyabihu 5. INSHUTIZIMUGANO SACCO Nyamagabe 6. RUSORORO SACCO Gasabo

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7. RWEMPASHA SACCO Nyagatare 8. SACCO IBYIRINGIRO UWINKINDI Nyamagabe 9. SACCO ICYEREKEZO KIZIMA KIVUYE Burera 10. SACCO INDAHIGWA KAMEGERI Nyamagabe 11. SACCO RURAMIRA ICYEREKEZO Kayonza 12. SACCO TERIMBERE NYAGIHANGA Gatsibo 13. SACCO TWAMBUTSANYE MUHONDO Gakenke 14. SACCO TWIZIGAMIRE NGERA Nyaruguru 15. SACCOBUS Gakenke 16. SHISHOZA UKIRE RUSATIRA SACCO Huye 17. TUBEHO SACCO BWEYEYE Rusizi 18. TUGENDANE N’IGIHE RUHASHYA Huye 19. TUJYANE HUYE SACCO Huye 20. TURWANYE UBUKENE RWIMIYAGA SACCO Nyagatare 21. TURWUBAKE GASANGE SACCO Gatsibo 22. BADUKA SHYORONGI SACCO Rulindo 23. COOPEC INGERI GISHAMVU Huye 24. DUKIRE SIMBI SACCO Huye 25. GATENGA SACCO Kicukiro 26. GIRUBUKIRE SACCO BUYOGA Rulindo 27. ICYEREKEZO MASAKA Kicukiro 28. IMBARUTSO SACCO GATUNDA Nyagare 29. IMBARUTSO SACCO GITI Gicumbi 30. INDASHYIKIRWA MINAZI Gakenke 31. INGERI CYEZA SACCO Muhanga 32. INGOBOKA MUKAMA SACCO Nyagatare 33. ISOKO Y'AMAJYAMBERE SACCO Nyabihu 34. KAGARAMA SACCO Kicukiro 35. KAGEYO SACCO IZIGAME Gatsibo 36. KARIBU SACCO RUKOMO Nyagatare 37. KOPABIGA Ngoma 38. NDORWA SACCO BUTARO Burera 39. SACCO NTYAZO Nyanza 40. SANGA SACCO Nyabihu

Note that out of 79 FIs only 1 SACCO is a non-Umurenge SACCO and 78 SACCOs are Umurenge SACCOs.

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Annex 7: Change Wheel Baseline

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Annex 8: Nguriza Nshore Partner Selection

Financial institutions—banks/NBFIs—will be given an equal opportunity to partner with and receive support from Nguriza Nshore if they can demonstrate:

• The needs outlined in their concept note contribute to Nguriza Nshore performance outputs and targets • The approach and objectives outlined in their concept note have broad institutional approval (Board of Directors, CEO and senior management) • The approach and outputs included in the concept note offer the opportunity for industry-wide replication • Interest and willingness to work with Nguriza Nshore consortium partners to reach Nguriza Nshore goals • Willingness to provide output data resulting from Nguriza Nshore support (MEL information)

SMEs will be given the equal opportunity to partner with Nguriza Nshore and receive support if they can demonstrate:

• Supporting their business will contribute to Nguriza Nshore performance outputs and targets • Their linkage, directly or indirectly to agriculture and agriculture support value-chains • They are a growing business—not a concept or a start-up—with a proven and established client base • Their financing needs have outstripped their personal financial resources (savings, family and friends) and/or they have outgrown traditional or conventional commercial debt sources • Three-years of financial statements (preferably audited) • Interest and willingness to work with Nguriza Nshore consortium partners to reach Nguriza Nshore goals • Willingness to provide output data resulting from Nguriza Nshore support (MEL information)

Government institutions will be given the equal opportunity to partner with Nguriza Nshore should their policy reform priority intersect with and support Nguriza Nshore goals and lead to systemic improvements throughout the business enabling environment for off-farm SMEs.

Collaboration and Co-Creation

Nguriza Nshore will not apply the same support process with its partners and the Activity will instead create a unique package of support for each one, customized and designed to maximize outcomes with a diverse array of partners. This demand-driven approach ensures that partners receive the support they need through a rigorous, transparent and competitive procurement process that delivers high-quality technical assistance provided by local/regional/international service providers and consultants.

Collaboration and the process of co-design will be utilized to create financial products and/or services for SMEs, facilitate private capital for SMEs, provide targeted support necessary to improve the operational capacity and business profitability of SMEs and improve the policy and regulatory environment for SMEs.

For partners accepted into the pipeline, Nguriza Nshore will begin with a concept note provided by the potential partner which will be used to identify their unique needs and challenges. The concept note will go through a series of revisions during initial discussions between the partner and Nguriza Nshore. The concept note will be expanded into a scope of work, a memorandum of understanding and an NDA. The scope of work will detail responsibilities expected from both parties, including partner data and information reporting requirements. It will also outline the technical assistance

108 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov requirements that will inform a RFP if necessitated. Once signed, both parties will then move onto the next stage of advisory and investment readiness support, depending on whether the partner is a FI, SME or GoR agency.

Investment Readiness and Advisory Services

Using the expertise of business service providers, Nguriza Nshore will provide SMEs with investment readiness support. These services will include, but are not limited to: • Business plan development support • Financial modelling/projections • Investment plan preparation • Pitch deck and marketing materials • Workshops and trainings on business pitching • Investor mapping • Linkages to potential investors • Monitoring and evaluation framework design and support • Financial, HR, communications support, etc.

Nguriza Nshore will provide FIs, SMEs and GoR agencies with advisory services through local/regional/international experts and business support providers. For FIs and SMEs, Nguriza Nshore’s approach is centered on the delivery of advisory services, intended to provide hands-on support to increase the availability of finance, and it will focus on strategy first, then in order: asset allocation, structures, systems, skills and then, products, implementation and finance/investment. Activities underway and completed will be communicated to other market actors and increase their awareness of Nguriza Nshore successes through appropriate media channels.

With the GoR, Nguriza Nshore will be more selective because policy reform generally requires longer time horizons for outcome realization. Nguriza Nshore support will focus on: • Technical assistance to address constraints and capacity gaps • Strategy, asset allocation, structures, systems and skills • Product design and implementation • Targeted trainings on products, loan application analysis, etc. • Process enhancement and improving internal efficiencies • Market studies and assessments • Policy research, design and implementation

FI Support, SME Deal Making and GoR Policy Implementation

Through local/regional/international business service providers and consultants, the Activity will support FIs as they roll out new financial products. Based on partner performance, Nguriza Nshore will determine whether to provide on-going or additional support. Nguriza Nshore will track lending, other forms of financing and additional information provided by the FI as a result of USG assistance.

Nguriza Nshore will support SMEs during and after investment deal closing. Depending on evolving SME needs, additional technical assistance may be provided in order to leverage further investment.

Nguriza Nshore will support the GoR beyond policy design and the Activity will provide the government with technical assistance and monitoring/reporting during policy implementation. Nguriza Nshore will assist partners, when needed, to prepare lessons learned, monitor outcomes, and adaptation as ongoing or new assistance is sought.

Annex 9: Nguriza Nshore Market Systems Theory of Change

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COMPONENT 1: EXPAND THE CAPACITY OF FIs AND NBFIs TO FINANCE SMEs AND AGRIBUSINESSES

Current Market System Context

• The commercial banking sector has evolved to target medium to large established businesses, larger NBFIs and the government of Rwanda, which has limited the value/investment in retail banking products, such tailored loans and diversified savings instruments. • Financial intermediation flows from depositors to medium to large established businesses (corporates) and the GoR—limiting inclusive growth and concentrating wealth. • Banks traditionally compete for medium to large established businesses (corporates) and the GoR as their primary and most sought-after clientele, creating market saturation and increasing concentration risk. • As the market for corporates and GoR business has become increasingly saturated and competitive, medium and small banks have become more willing to innovate for new market segments and down-market clientele. • NBFIs, including MFIs and SACCOs, are more willing to innovate and assume risk but they are less capitalized than banks. • MFIs and SACCOs are far less capitalized than banks and they therefore have less outreach; however, they are more willing to take risks and innovate in underserved market segments. This fact could potentially force banks to replicate their products and services after successful demonstration is established. • MFIs and SACCOs, while moving toward commercial viability, remain narrowly focused and do not provide a diverse array of products to meet the needs of rural-based households and enterprises. • Insurance products are limited to a small band of basic products indicating narrow market and client penetration, especially in response to bottom-of-the-pyramid customers in rural communities with high-perceived risks that could be mitigated via a more diverse offering of insurance products.

Future Market System Change

• Shift competitive landscape1, to pull banks and NBFIs toward client-oriented growth. • Promote top-down change (i.e., corporate to SME) through client-oriented growth and competitive pressures by incentivizing banks and NBFIs to constantly seek new and emerging market segments, including bottom-of-the-pyramid. • Encourage banks and NBFIs to compete for bottom-of-the-pyramid clientele via a full range of tailored products targeting SMEs, entrepreneurs, and rural households that include both savings and lending-based products.

COMPONENT 2: INCREASE PRIVATE AND COMMERCIAL INVESTMENT INTO SMES AND AGRIBUSINESSES

For a fully functional, vibrant and diverse private capital ecosystem to emerge, three critically important processes must exist. • A system to identify high potential start-ups and growth-oriented SMEs and the ability to filter them into an investment-ready transaction pipeline.

1 Competitive pressure is defined in terms of its effect on a firm's incentives to undertake product and process innovations for new products to introduce into the market (which tends to lead to inclusivity and more value add) or, in contrast, to attack or hurt a competitor to gain advantage (which tends to be more extractive / rent-seeking and leads to concentration of wealth). Competitive pressure drives firms to cooperate or compete to add value and limit rent seeking or extractive behavior. 110 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov

• An ecosystem of high-quality transaction advisors and consultants able to assist, for a fee, these start-ups and SMEs to become investment ready. • Investors, preferably based in Rwanda, offering a range of investment options linked to investment- ready companies.

Investors have substantial liquidity and they aggressively seek opportunities, but they struggle to identify businesses that are transparent and growth oriented. To meet investor requirements, Nguriza Nshore will address systemic challenges that have limited SME identification, qualification and investment readiness. To catalyze systemic change, Nguriza Nshore has started and will continue to seek the services of more diverse and qualified transaction advisors and consultants. Parallel to this effort, Nguriza Nshore will support the emergence of entrepreneurial networks, incubators, accelerators, match-makers, etc. Nguriza Nshore will support new models committed to transparently and effectively provide critical support services to entrepreneurs, start-ups and growth-oriented businesses. The Activity will also build linkages with investors, and their industry groups/associations, to increase the awareness of Rwanda as a prime investment location (to locate offices) and make investments.

Current Market System Context

• The private capital ecosystem is immature—zero debt/equity funds/investors located in Rwanda, few investment banking options, a small and struggling capital market system, etc. • Business are “generally” not structured to move beyond debt: − Strong cultural biases for businesses to capture cash, as opposed to building wealth and value—which has led to a disinterest in growth and, as a result, general apathy toward equity investment. − This cultural bias results in unsustainable concentrations of wealth and power as the powerful and connected have the greatest capacity to capture margins. − An overall unwillingness to partner and share information with outsiders (non-Rwandans), including outside investors who offer growth capital and business management expertise. − Companies have traditionally received grants and struggle to make the transition to private capital investment—resulting in risk aversion which stifles business and GDP growth. • Lack of viable exit options for investors (e.g. initial public offerings), stifling the emergence of private capital and investment banking offerings/products and further limiting inclusive growth.

Future Market System Change

• Shift the competitive landscape to favor agribusinesses and related SMEs committed to client value- add-oriented growth strategies including businesses focused on mass markets/bottom-of-the- pyramid customer segments. • Shift the balance of larger start-up and growth capital services away from bank and microfinance and toward risk-sharing/private capital mechanisms. • Support the emergence of tailored risk mitigating investment mechanisms, such as royalty-based finance (revenue sharing), blended finance leveraging donor grant to de-risk commercial investment, convertible notes, etc. • Facilitate more robust exit options, including linkages to larger capital markets (Kenya, South Africa), private placement services/match-makers and mergers/acquisitions.

COMPONENT 3: STRENGTHEN THE POLICY ENVIRONMENT FOR SMES AND AGRIBUSINESSES TO INCREASE BUSINESS PERFORMANCE AND PROFITABILITY

The workplan has reframed its policy process under a methodology via its functional cycle:

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Policy development→ policy translation into laws→ public education→ implementation of laws→ monitoring

Using the EDP policy development process as a successful model, the Activity will replicate its approach when involved in other policy reform efforts.

Current Market System Context

• The political system, in support of the entrepreneurial ecosystem, demonstrates a real intent to improve the enabling environment, but at the same time, it’s organized around a highly concentrated power node (the government) which generally is not participatory and inclusive of citizen involvement in policy development, enforcement and oversight. This reality allows for decisive and unilateral action from the top, but it also results in increased fragility and a propensity to drive narrowly defined, top-down decision making, idea generation and an exclusive policy development process. It often involves external consultants unfamiliar with the Rwandan context and it (sometime) creates a lack of government ownership during implementation. (As an outlier, the development of the EDP policy process was participatory and constituent driven.) • As a result, there are specific technical fixes and systemic challenges that need to be addressed for inclusive growth to be properly supported/catalyzed over a long period of time by focusing on inclusive policy development, implementation, enforcement and oversight—and government ownership and accountability • By assessing the policy development process via its functional cycle (see the graphic above), underlying systemic limitations and biases can be clarified, especially within the context of how they’re unlikely to support inclusive growth since it directly impacts the lives, livelihoods and resiliency of ordinary citizens, to wit: − Policy development is not driven by objective and evidence-driven participatory development processes. The policy development process is top-down and expert-driven where a single expert or small group of experts, often paid by a donor, write idealized policies. The result is that policies do not align with the current political economy and cultural/economic contexts making most policies ineffectively implemented. − Policy translation into laws, regulations and enforcement protocols is not effectively transparent, professional and open to influence/counterbalance (i.e. especially if the translation seems to be hijacked) from stakeholders (often the government itself). Therefore laws, regulations, and enforcement protocols can be influenced to misalign stated policy objectives and implementation. − Public education on laws, regulations and rights/responsibilities is ineffective and results in low levels of clarity and awareness among the population. Thus, market actors and key constituencies are uninformed about laws, regulations and their rights, which also misaligns expectations and pushes entrepreneurs and businesses toward informality (tax avoidance). − Implementation of laws, regulations and enforcement practices rarely align with policy objectives. Since the expert-crafted policies are not effectively aligned with the local context and what citizens need and expect of government, it’s highly unlikely that policy objectives can be achieved. − Monitoring, if conducted, is primarily done as an in-house activity of the government in Kigali. While the government strives to conduct effective monitoring, they are unable to fully understand and capture the various perspectives of stakeholders affected by a policy because reports are prepared outside Kigali and submitted to Kigali without the participation of relevant stakeholders and citizens. The result is that they are unintentionally devaluing or actively limiting effective monitoring, as well as not gathering enough insights and perspectives to guide effective adaptation and policy improvements.

Future Political System Change

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• The political system must become more constituent-oriented and participatory—i.e. the policy development process must add value for its constituents and it must have the flexibility to adapt overtime based on changing local realities. Specific functional changes must include: − Policy development must reinforce drivers/incentives that make the function objective- oriented by seeking feedback from key constituencies and stakeholders where the government is directly involved in the process without outsourcing support to external experts. − Policy translation must decipher policies into laws and regulations in a transparent, professional and open manner, not driven in a top-down process from Kigali. The process must be open to influence/counterbalance (i.e. especially if the translation process is hijacked) to ensure vested interests align with the translation process and the needs of the Rwandan people the policies seek to support. − Public education: More inclusive systems have standard protocols (regular constituent town halls, open discussion forums, etc.) to inform and/or provide access to relevant government work products, including: draft rules, regulations and policies; analysis reports; enforcement practices; etc. − Implementation must sufficiently invest to understand and create incentives so that enforcement practices result in outcomes that align as closely as possible with policy objectives. Inclusive systems engage/empower stakeholders (constituents, citizens) during this process to adequately support and reinforce fair and transparent application/enforcement practices. − Monitoring must be performed by a diverse set of stakeholders. All levels of government, civil society, media houses research firms, NGOS, academia and so on must engage in and be empowered to observe, track and assess the alignment/effectiveness of policy implementation/enforcement. Within the government, counterbalancing structures and an independent feedback/complaint process must be created and accessible for all Rwandans throughout the country (already started in several areas, such as the consumer protection agency). The monitoring process must include strong advocacy capacity and it must be primarily delivered by stakeholders since it’s often during poor or misguided implementation/enforcement that market actors (citizens, businesses, NGOs, etc.) are most negatively affected. It’s critical that this function smoothly leads back into the participatory policy development function. − Support services, including civil society, must be funded locally, and constituent driven, and moved from a reliance on donor grants and charitable donations from outside Rwanda.

Annex 10: COVID-19 Challenges, Insights, Adaptations and New Opportunities

Rwanda registered its first case of the Coronavirus disease (COVID-19) on March 14, 2020. The GoR took rapid action to prevent spread of the disease and closed all schools and places of worship, banned all public events and group gatherings and encouraged employees to work from home. The airport was closed on March 20, 2020 excluding cargo flights and cross-border trade. The airport and borders remained closed for normal and non-essential operations until August 1, 2020. Strict stay-at-home measures and limitations on movements were enforced beginning in late March for six weeks with all businesses and workplaces closed except for those in essential sectors. The country began to slowly re-open in early May with many measures and guidelines in place such as social distancing, mask wearing, hand washing and continued restrictions on group gatherings.

As COVID-19 gripped Rwanda and the world, it became clear that the pandemic will have major economic implications for the country and particularly for SMEs – comprising nearly 98% of total businesses in Rwanda and accounting for 41% of private sector employment. The impact also rippled through and impacted the financial services sector and the business enabling environment. Insights into the impact COVID-19 had on these sectors is shared below in updates for each component.

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Nguriza Nshore closed its project office the week of March 16, 2020 and all personnel began working from home with a gradual and closely supervised re-opening anticipated in FY 2021. Despite the challenges associated with rapidly adapting to remote work and working virtually through Zoom and Microsoft Teams, Nguriza Nshore continued to conduct its activities, maintaining momentum, adapting to challenges and new opportunities required to support partners during the ongoing and evolving crisis.

This section provides a snapshot of how COVID-19 affected Nguriza Nshore and its partners as well as the sectors the Activity operates in. For more detailed information on individual activities, refer to the standard component sections of the report.

Component 1 COVID-19 Updates

Impact of COVID-19 on financial services

The financial services sector in Rwanda has been significantly impacted by COVID-19. Below is a summary of the major impacts Nguriza Nshore experienced on its operations and partnerships.

Liquidity and cashflow challenges are widespread. FIs and NBFIs across Rwanda faced liquidity challenges, particularly during the early months of COVID-19 – cash withdrawals from clients were greater than both deposits and loan repayments (generally for most FIs/NBFIs). In addition, COVID- 19 fostered negative impacts on expected cash flows for most clients and businesses, affecting their ability to pay existing loans and apply/receive new financing to mitigate consequences from the pandemic.

Deterioration of loan portfolios. Numerous clients, particularly in non-essential services sectors hardest hit by COVID-19, were unable to service their monthly loan payments of interest and principle to FIs. This problem further contributed to liquidity issues in FIs.

Restructuring of loan portfolios. In the months since COVID-19 struck Rwanda, most FIs focused on restructuring their current loans to mitigate the pandemic knock-on effects and maintain business continuity and survival. Their mitigation and survival efforts required substantial “pivoting” in both immediate planning and implementation.

Clients at risk of bankruptcy. Some businesses, particularly in the tourism, hospitality, conferencing and transport sectors – and their supply chains – are at risk of collapsing or declaring bankruptcy which creates major existential risks for FIs and their operations.

FIs/NBFIs face revenue challenges. FIs/NBFIs experienced significant revenue reversals from profitability to losses. This new reality affects their ability to maintain and pay staff as well as to invest in product development, innovation, geographic expansion and overall business growth.

Impact of COVID-19 on Nguriza Nshore FI/NBFI partners

Nguriza Nshore FI partners were negatively impacted by COVID-19. See Highlight Box 1, for a snapshot COVID-19 had on FIs/NBFIs based from firsthand evidence received through a survey Nguriza Nshore conducted with four MFIs and 11 of 16 banks in partnership with the RBA. An infographic report can be found under Annex 3

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Highlight Box 1: Results From COVID-19 FI Survey

In June 2020, Nguriza Nshore conducted a brief survey with 11 banks and 4 MFI partners to better understand COVID-19 impacts on the financial services sector. Key findings include: • 90% of banks and 50% of MFIs indicated COVID-19 had a moderate overall impact with 10% of banks and 50% of MFIs reporting high impact • The greatest high-level challenges were: credit defaults, drop in credit demand, loss of interest income and revenues from fees • 8 banks and I MFI closed at least 1 branch location • Of 5 FIs working through agents, 2 banks eliminated agency outlets • 1 bank and 2 MFIs eliminated employees with 1 bank reporting lay-offs or furloughing employees in the short-term with the plan to rehire after the lockdown ends • All FIs reported creating and implementing coping mechanisms with 100% providing loan repayments forbearances (postponements); 9 banks and 2 MFIs designed flexible payment terms (rescheduling), and 5 banks and 2 MFIs offered emergency loans or new, additional credit lines • At the time of the survey, only 9 banks were receiving financial or technical assistance from the Government of Rwanda or other development partner with the majority of support provided in emergency funding or lines of credit; none of the MFIs reported receiving support at the time of the survey • The biggest gaps in support that FIs face include: tax reductions or exemptions, interest holidays or reductions, postponed loan payments, loan extensions and training on coping strategies

Component 1 activities placed on hold or delayed due to COVID-19

Several Component 1 activities and events were placed on hold or delayed indefinitely. For instance, no new loans were disbursed to farmers during Q3 and Q4 of FY 2020 under the tripartite agreement between Zamura Feeds, Goshen Finance, and Nguriza Nshore due to supply challenges and a diminished demand from hotels and restaurants resulting from the lockdown. Further, the due diligence process for SMEs seeking finance from Afreximbank was delayed as a result of travel restrictions and the Afreximbank SME Event scheduled for September 2020 was postponed to the following year. During Q3 and Q4 of FY 2020, other institutions, such as Atlantic Microfinance for Africa Rwanda and GroFin asked to temporally suspend their requests for technical assistance from Nguriza Nshore so they could re-focus on managing their current portfolios and since they are no longer able to expand or introduce new products.

Collecting timely data from partners necessary for Ngurize Nshore’s MELP and USAID reports presented new and unforeseen challenges, particularly during the initial lockdown period. For example, Nguriza Nshore was unable to meet with Cogebanque in person to dialogue with bank personnel and have the interaction needed with the key staff tasked with collecting and reporting on lending information needed to fulfill Nguriza Nshore’s data collection needs. Acerbating this problem, Cogebanque pivoted to focus on maintaining operations and adapting to the crisis, especially during the lockdown period.

Component 1 activities modified due to COVID-19

Despite the numerous challenges presented by COVID-19, Nguriza Nshore also pivoted by moving activities to a virtual setting. In Q3 and Q4 of FY 2020, Nguriza Nshore, in partnership with AMIR, conducted two virtual trainings for MFIs and SACCOs rather than in-person training as planned. AMIR facilitated the training, using local consultants and they leveraged larger, more advanced MFIs

115 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov and SACCOs to share their experiences. The first virtual trainings were a first-ever virtual training experience for most of the 77 participants with 90% reporting the training will help them better perform. AMIR and Nguriza Nshore also adapted training content to address common challenges faced by MFIs and SACCOs by including new topics to the agenda such as business continuity and credit management in times of crisis.

In addition, Nguriza Nshore shifted to greater use of online meetings with FIs during the lockdown that helped maintain the momentum of activities underway, including the planned technical assistance for Réseau Interdiocésain de Microfinance and Umutanguha Finance Company. Nguriza Nshore found it was often less complicated to secure meetings with high-level decision makers and key managers at institutions virtually rather than scheduling in-person meetings as done in the past.

New Component 1 new opportunities from COVID-19

Several new opportunities arose – for instance, AB Bank submitted a new concept note on June 22 on assisting the bank to strengthen its capacities/capabilities in the areas of financial risk management and to expand its digital banking options because customers could not physically visit branches. Nguriza Nshore started working on the request in Q4 of FY 2020 and will release an RFP in FY 2021. Additionally, RBA and Nguriza Nshore worked together to conduct a survey of banks and MFIs to enquire about emerging challenges and potential areas of partnership which led to discussions with new potential partners including Bank of Kigali and I&M Bank. Finally, Nguriza Nshore observed that FIs/NBFIs are now more open to innovation as a means to ensure business viability or as a competitive advantage within the industry, creating the opportunity for Nguriza Nshore to provide technical assistance to create new ways of doing business and leverage technology.

Component 2 COVID-19 Updates

Impact of COVID-19 on the private capital ecosystem

The private capital ecosystem was significantly impacted by COVID-19. Major impact areas experienced by Nguriza Nshore and its partners are outlined below.

Delayed deal closing experienced Africa-wide. A general slowdown was witnessed across the Africa region as COVID-19 created considerable uncertainty both for investors and companies.

Investors and PE firms are focused on supporting current portfolio companies rather than entering new transactions. Private capital investors have double-downed on their current portfolio of companies as a risk mitigation measure. Preserving their current portfolio is not a means to minimize losses and maintain the confidence of the investors on which PE firms relay for funding.

Private equity (PE) firms currently fundraising are re-evaluating their timelines. PE firms’ ability to operated depends on their ability to build a pipeline and attracted investors (i.e. limited partners) to fund that pipeline. The crisis made both efforts difficult because (1) identifying quality companies is more difficult given restrictions and uncertainty (2) the number of quality companies has declined due to the crisis and (3) limited partners are cautious given the uncertainty and risk. The ongoing ambiguity created by COVID-19 has led to new funds placed on hold, delayed or dismantled. Without growth capital or investment to sustain operations until the pandemic recedes, businesses face bleak prospects.

Investors and PE firms are expecting delayed exits. Investors are also expecting delayed exits from current investments into companies. These investors (generally) only realize profit when they can exit and sell the companies they’ve invested. That exit point will likely be delayed given the poor performance of companies during the crisis, leaving less revolving capital for new investments.

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Due diligence is on hold due risks of COVID-19 exposure during travel. Investors, in most cases, conduct due diligence in person before they invest in a new company. With most countries experiencing a second wave of the COVID-19 pandemic, in person due diligence has become practically impossible since March 2020. Many deals are therefore on hold, including many businesses curated by Nguriza Nshore until travel becomes safer and due diligence can be completed.

Questions investors ask during due diligence have changed. Prior to COVID-19, due diligence primarily focused on growth and revenue projections. Now, due diligence is skewing toward business resilience, ability to access credit, cash flow and contingency planning. To meet new investor demands, companies must now generate new information such as business continuity and disaster recovery plans.

Businesses subject to restrictions on travel and those that rely on international supply chains are most severely impacted. To date, businesses most negatively affected by COVID-19 have high social contact between employees and clients and companies impacted by travel restrictions such as restaurants, hotels, tourism, bars, etc. Businesses reliant on extensive international supply chains for inputs and component assembly parts have also been significantly impacted.

Businesses in essential sectors are expected to see growth. Some businesses are beginning to flourish and gain traction with investors. For example, businesses in healthcare, IT solutions, transport (door-to- door direct to consumer), e-learning and fintech are experiencing growth and investor interest. These sectors that are more resilient or countercyclical could present interesting opportunities for investors.

Impact of COVID-19 on Nguriza Nshore SME partners

Nguriza Nshore SME partners were greatly affected by COVID-19. For a snapshot of COVID-19 on SMEs see Highlight Box 2 based on the survey Nguriza Nshore conducted with 18 SME partners supported by the Activity in April 2020. Out of the 18 respondents, 13 businesses were considered essential by the GoR during the lock down. For a more complete breakdown of the pandemic’s impact, refer to the infographic SME summary in Annex 4.

Highlight Box 2: Results From COVID-19 SME Survey

In April 2020, Nguriza Nshore conducted a brief survey with 18 SME partners that are supported by the Activity to better understand the impact of the COVID-19 pandemic on business, revenue, employees and expected future investments. Key findings are summarized below: • 72% of businesses surveyed are considered essential and could remain open during the lock down • 61% of businesses reported that COVID-19 will have a moderate impact on their business with 33% reporting it will have high impact in the next 6 months • 61% of businesses reported that the pandemic will result in layoffs or a reduction in employees • 100% of businesses expect the pandemic to affect their revenue in the next 6 months • 78% of businesses have put in place coping mechanisms – the most common are deferred loan payments with other mechanisms including pivoting business models, reducing salaries and laying-off employees • 44% of businesses expect the pandemic to delay planned investments next year, 2021, with 39% unsure of the effect on investments • The most highly impacted areas across all companies include: revenue, working capital, sales, investment and ability to service debts

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Component 2 activities put on hold or delayed due to COVID-19

Nguriza Nshore was unable to conduct normal sourcing activities such as workshops, networking events and roadshows due to COVID-19 travel and meeting restrictions. To mitigate this challenge, Nguriza Nshore connected with SMEs via social media and the Activity and its transaction advisors received many phone calls as opposed to walk-in visits from SMEs inquiring about investment and/or technical assistance.

Nguriza Nshore continued to work with SMEs already receiving investment readiness support and the Activity pushed forward with investor engagement and deal making; however, several investor related activities such as due diligence, as noted above, were put on hold due to the broader private capital ecosystem challenges described above.

In addition, from the COVID-19 SME Survey results, nearly all SMEs in Nguriza Nshore’s investment readiness stage were impacted by COVID-19. A few examples of how Nguriza Nshore SMEs were affected include: easyHATCH – The first tranche was disbursed on January 22 with the second tranche dependent on completing construction work from the first tranche of investment. However, easyHATCH was unable to receive construction materials from abroad, so the second tranche was not released. Nguriza Nshore continues to support easyHATCH to secure the second tranche with its investor, Rabo Foundation, by providing on-site diligence since Rabo cannot travel to Rwanda. However, this delay has also impacted additional easyHATCH fundraising Nguriza Nshore has supported – i.e. other investments were negotiated on the back of both Rabo Foundation disbursements. Nguriza Nshore continued to support easyHATCH to secure the second tranche with Rabo Foundation, and the investor has confirmed to conduct the onsite due diligence in Q1 of FY 2021.

Kumwe Harvest – Due to COVID-19 travel restrictions, the due diligence process by potential investors had been put on hold. Nguriza Nshore continued providing deal making support to Kumwe Harvest, and initiated conversations with a strategic investor, which will continue in FY 2021.

AC Group – AC Group was also in the final stages of closing a transaction post-Sankalp but it was unable to close the investment because due diligence was not possible due to travel restrictions. The company has also been impacted by COVID-19 with all transportation ceasing during Rwanda’s lockdown period, further complicating planned investment and growth opportunities. Nguriza Nshore continued providing support to the SME, and helped AC Group to apply to a de-risked loan from BRD, which the company has secured

Agasaro Organics – One of the company’s major factories in Rusizi was idled, a district on lockdown from March 22 until August 2020. Moreover, the GroFin investment was placed on hold since GroFin is focusing on sustaining its current investment portfolio.

Finally, COVID-19 caused a delay in the SME baseline and follow-up surveys that Nguriza Nshore regularly collects. Nguriza Nshore collects information through surveys to populate the indicators: “EG.3.2-26 Annual Sales” and the custom indicator “2.2 Hiring Practices.” The survey was delayed by five months, taking place in August 2020 instead of March 2020. Nguriza Nshore delayed the survey to avoid overburdening SMEs with data collection as they struggled to navigate the pandemic and government mitigation efforts. While Nguriza Nshore met its FY2020 performance targets for indicators EG. 3.2-26 and 2.2, this delay in data collection affected the response rate from SMEs. For more details, see the MEL section of this report.

Component 2 activities modified due to COVID-19

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Nguriza Nshore began to adapt its sourcing methods, particularly focusing on new companies that have demonstrated resiliency during the pandemic. Transaction advisors (TAs) have also reported devoting additional resources to address investor concerns and their interest in essential businesses and innovative companies. In other words, investors interests are converging on a narrower set of businesses than before.

In addition, Nguriza Nshore engaged SMEs virtually via phone or Zoom. Nguriza Nshore has been helping SMEs adapt to changed investor demands by advising them on how to create new documentation such as business continuity and disaster recovery plans. Furthermore, Nguriza Nshore supported SMEs to reengineer their financial models and business forecasts since the pandemic disrupted every aspect of planning and operations. Nguriza Nshore supported SMEs to navigate investor conversations regarding the anticipated impact of COVID-19 on their businesses, such as advising them to rely on official GoR policies and guidelines when answering questions.

Furthermore, the Angel Capital Association (ACA) 2020 Summit planned for Denver CO in May 2020 was adapted as virtual summit rather than an in-person event. Nguriza Nshore participated in the virtual summit, as well as the ACA webinar. In addition, Nguriza Nshore also supported SMEs to participate in other events which were adapted as virtual, such as the EVPA Summit and the AGRF Summit. More information about these events is provided in detail in the Component 2 section of this report.

Finally, Nguriza Nshore piloted a virtual site visit with an SME partner, Jali Finance, to allow international investors to learn about investment opportunities in Rwanda. More details about the virtual site visit can be found in the Component 2 section of this report.

New Component 2 opportunities due to COVID-19

Accessing alternative financing is even more important for SMEs because of COVID-19. For instance, several SMEs contacted Nguriza Nshore after a radio show held on KISS FM in Q2 and follow-up enquiries increased in Q3 since SMEs across the board felt the impacts of COVID-19.

Nguriza Nshore also began adapting its typical technical assistance approach to SMEs. For example, Nguriza Nshore assisted Masaka Creamery and Kigali Farms to offer home-delivery (business to direct consumer) during the lockdown period and the Activity supported both companies to increase their social media footprint via online delivery platforms – an increasingly popular avenue for customers to access products after the lockdown began. Nguriza Nshore, through its communication’s team, supported both SMEs to become to become active on social media and regularly generate and post online content to attract more customers for their online delivery options and product offerings.

In addition, Nguriza Nshore supported partners like Charis UAS to promote their innovations and adaptations – i.e. providing drone services for the GoR to broadcast key messages about social distancing- to attract future investment. Furthermore, as part of the Jali Finance virtual site visit, the Activity also set up a Twitter account and developed a social media strategy for Jali Finance, to help the company improve its digital presence.

Component 3 COVID-19 Updates

Impact of COVID-19 on the business enabling environment

COVID-19 has negatively impacted the business enabling environment across the board for SMEs and has delayed the implementation of some business enabling environment activities with key partners in the GoR and the private sector. At the policy implementation level, building consensus

119 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov and prioritization remains challenging considering the various competing demands within the country. The economic challenges have also led to budget deficits for the GoR as taxes were revised considering COVID-19, presenting a major challenge since the GoR’s budget is 60% reliant on domestic revenue. As a result, all GoR institutions have had to revise their budgets and consequently their annual plans which will continue to have an impact on the enabling environment.

Component 3 activities put on hold or delayed due to COVID-19

Two events Nguriza Nshore planned to hold this quarter were canceled due to COVID-19. First, Nguriza Nshore, in partnership with MINICOM, planned to hold a second agribusiness public private dialogue (PPD) in Q3, following on the first PPD held in the Northern Province in Q2. The second PPD was postponed to Q4 and recently the Office of the Prime Minister recommended that the event be rescheduled for FY 2021 due to the increase of COVID-19 infections in the Western Province. In addition, Nguriza Nshore and MINICOM had planned to present the final report from the first agribusiness PPD to the sector working group (SWG) in Q3 of FY 2020, however this was put on hold as the SWG was focused on its COVID-19 response. Similarly, a workshop Nguriza Nshore planned to hold in partnership with the RCWE aimed at helping the chamber better advocate for its members by conducting dialogues and raising issues to a policy level was put on hold due to COVID-19.

Further, Nguriza Nshore continued to partner with the Rwanda Bankers Association (RBA) throughout Q3 on conducting the FI/NBFI COVID-19 survey; however, the hiring of two support staff requested by RBA – a research specialist and communications specialist – was put on hold due to COVID-19 since RBA preferred the specialists start after its office reopens.

The study on business informality scheduled for Q3 was also put on hold due to COVID-19 as experts could not travel to Rwanda due to land and air border closures.

Finally, the Entrepreneurship Development Policy (EDP) was passed by Cabinet in April 2020. However, this important Activity achievement was not publicly announced so as not to overshadow COVID-19 GoR responses. Consequently, the EDP is not yet widely known to the public, which will require Nguriza Nshore, in partnership with MINICOM, to build public awareness of the EDP in FY 2021. The EDP launch was also postponed due to COVID-19.

Component 3 activities modified due to COVID-19

All partner meetings were held online throughout Q3 and Q4 due to COVID-19.

New Component 3 opportunities due to COVID-19

To support Rwanda’s post-COVID economic recovery, Nguriza Nshore continued to rely on its market systems approach and the Activity facilitated stakeholder interactions with evidence-based analysis through surveys and impact assessments. The surveys detail the extent of the impact at a sector and not individual firm level offering policy markers with numerous insights to devise appropriate solutions.

The first major request from the GoR called for Nguriza Nshore to assist its COVID-19 Economic Recovery Fund (ERF). The two main components of the request included support to $100 million ERF, a loan from the IMF. The ERF was bifurcated with $95 million channeled through the National Bank of Rwanda to commercial banks and $5 million through BDF. The Activity received requests to support both initiatives – one from MINECOFIN for the former and another from MINCOM for the latter. Nguriza Nshore started supporting the ERF through its partnership with MINICOM and BDF since its request is more straight forward. The Activity will continue to work with MINECOFIN’s in

120 | RWANDA NGURIZA NSHORE | ANNUAL REPORT FY 2020 feedthefuture.gov regard to the money channeled through banks when it becomes more clear what type of assistance, if any, is required.

COVID-19 also presented an opportunity for Nguriza Nshore to strengthen its partnership with BDF, something the Activity had sought to do in the past year. This gave rise to a new request linked to the $5 million of ERF fund which results in a TOR that addresses several of the key issues facing BDF (highlighted in Component 1).

Nguriza Nshore’s partnership with Rwanda Finance Limited (RFL) was strengthened by COVID-19 as RFL is now seen as a key player it the ecosystem linked to the recovery of the economy after COVID-19 by attracting new investors into the country.

Nguriza Nshore also partnered closely with RBA to conduct the COVID-19 FI/NBFI survey.

In addition, Nguriza Nshore supported the GOR directly in its COVID-19 response by drafting ministerial directives for business opening guidelines for post-lockdown reopening.

The passing of the EDP by Cabinet in Q3 of FY 2020 presents an opportunity for Nguriza Nshore to play a role in various COVID-19 responses as the implementation plan of the EDP was adapted in Q4 to reflect new pandemic realities. For example, the entrepreneurship portal was discussed as a key priority since COVID-19 emphasized the importance of entrepreneur’s ability to access information online.

Finally, Inkomoko approached MINICOM with a request to directly support the implementation of EDP. Nguriza Nshore included Inkomoko in the design and quality control of the EDP pre-approval and the SME Relief Fund, financed by Mastercard Foundation, is directly linked to Nguriza Nshore’s work in supporting MINICOM to implement the EDP through Inkomoko’s linkage to and financing of entrepreneurs and MSMEs.

Cross Cutting Themes COVID-19 Updates

Cross Cutting Themes activities put on hold or delayed due to COVID-19

Due to COVID-19, no MOU was signed between Nguriza Nshore and the Rwanda Youth in Agribusiness Forum (RYAF) as planned in FY 2020.

Cross Cutting Themes activities modified due to COVID-19

No cross-cutting activity was modified due to COVID-19.

New Cross Cutting Themes opportunities due to COVID-19

Due to COVID-19, women entrepreneurs faced severe liquidity challenges. This new reality presented an opportunity for Nguriza Nshore to partner with RCWE to expedite the chamber’s plan to design of a Women Savings Fund, following the series of workshops on alternative financing. Furthermore, with most events are now turning virtual to curb the spread of COVID-19, Nguriza Nshore will leverage the remote, virtual participation to include more PWDs, since online events offer more opportunities for socially inclusive participation compared to in-person events.

Monitoring, Evaluation & Learning (MEL) COVID-19 Updates

MEL activities put on hold or delayed due to COVID-19

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Several activities were put on hold or delayed due to COVID-19. For instance, data collection of the GET IT chili farmer project baseline scheduled for this quarter was put on hold due to movement restrictions and it will be resumed inQ1 of FY2021 Q1. Further, the easyHATCH’s data collection for the social impact system development was put on hold when Rwanda was on lock down and was rescheduled in Q1 of FY202 after the data collection training and pilot that took place in Q4. Finally, Nguriza Nshore put had put hold all SME surveys, that resumed in August 2020.

MEL activities modified due to COVID-19

With events turning virtual, the associated data collection also went virtual. For example, Nguriza Nshore collected participation data and feedback from the AMIR training through an online survey. Nguriza Nshore also used a Google Form to collect data from SMEs on potential COVID-19 impact on their businesses.

New MEL opportunities due to COVID-19

Due to COVID-19, the GoR put in place several initiatives to combat the downturn of the economy, such as the ERF. With the fund in place, the GoR through BDF reached out to Nguriza Nshore for support in measuring the social impact of the ERF. With this opportunity, Nguriza Nshore will contribute in attracting more impact investors into the country.

In addition, COVID-19 emphasized the need for strong digital systems. With remote work, Nguriza Nshore’s digital MEL systems enabled the team to continue access, collect and process data as it became available. This presents an opportunity for the Activity to continue to support partners to put in place digital data collection and MEL systems for efficiency, remote access and data security.

Collaborating, Learning & Adapting (CLA) COVID-19 Updates

CLA activities put on hold or delayed due to COVID-19

No collaborating, learning and adapting activities were put on hold or delayed due to COVID-19.

CLA activities modified due to COVID-19

All collaborating, learning and adapting activities were held virtually in Q3 due to COVID-19. In order for Nguriza Nshore to continue to effectively use the financial services change wheel even remotely, In Q1 of FY2021 the EcoVentures International (EVI) team is planning a training on Mural Board – a digital workspace for visual collaboration. This training will equip Nguriza Nshore with the right technical skills to use during meetings/workshops in regard to collaborating, learning, and adapting. New CLA opportunities due to COVID-19

With COVID-19, SMEs needed to adapt quickly to survive the pandemic. This new reality presented an opportunity for Nguriza Nshore to help SMEs adapt by changing their business plans, revising their financial models and strengthening their online presence. These adaptations not only helped businesses survive and record increased incremental revenue gains during the pandemic but it also served as important indicators for investors regarding the survivability of the companies.

In addition, like other major events that were not cancelled due to COVID-19, the ACA 2020 Summit and Webinar Series and the Market Systems Symposium went virtual. The online format of ACA 2020 Summit presented an opportunity for Nguriza Nshore to pitch a greater number of SMEs, as opposed to the five that were planned to attend the in-person event. The online format of the Market Systems Symposium allowed Nguriza Nshore to reach more attendees and featured the Activity in three rather than just two sessions.

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Communications COVID-19 Updates

Communications activities put on hold or delayed due to COVID-19

Due to COVID-19, the AMIR training was delayed from a planned April date, and was conducted in Q4 of FY 2020 as a virtual event. Additionally, the Market Systems Symposium was changed to a virtual event and rescheduled for July from its previous April date.

Communications activities modified due to COVID-19

Several events scheduled for Q3 and Q4 of FY 2020 went virtual. These include the Market Systems Symposium, the ACA Summit, EVPA Summit, AGRF Summit and AMIR training with MFIs and SACCOs. Additionally, in-person SME site visits went virtual.

New communications opportunities due to COVID-19

COVID-19 presented an opportunity for Nguriza Nshore to provide technical assistance to SMEs in strengthening their online presence and offering options that engage their existing customers and increase their customer base. The Activity supported four SMEs, namely: Kigali Farms, Masaka Creamery, Charis UAS and Jali Finance to adapt their businesses to COVID-19. Specifically, Nguriza Nshore supported these SMEs to strengthen their online presence through tailored social media strategies, adapted communications plans, revised their visual brands and connected with customers through home delivery platforms. This support presents an opportunity for Nguriza Nshore as more SMEs will require technical assistance to adapt their businesses and strengthen their communications and branding strategies to survive and thrive post COVID-19.

Additionally, COVID-19 created opportunities to organize virtual events such as the SME virtual site visit. Nguriza Nshore observed the opportunity presented by such events including the participation of international investors, without the need to travel. Nguriza Nshore will continue organizing virtual or hybrid events, to ensure a maximum participation.

Operations and Administrative Activities COVID-19 Updates

Operations and Administrative activities put on hold or delayed due to COVID-19

No operations or administrative activities were put on hold due to COVID-19.

Operations and Administrative activities modified due to COVID-19

Nguriza Nshore staff demonstrated an ability to perform while working from home, off-site and remote, and asynchronous with the COP.

New Operations and Administrative opportunities due to COVID-19

DAI’s Home Office developed a process for determining when field offices can re-open, which includes a risk assessment tool completed by the project field team under the direction of the COP. The Nguriza Nshore team has completed the risk assessment tool which has been submitted to DAI’s Global Security Team for review.

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