Following the Leader

Something special happened today that I’m not quite able to define.  I was about fifteen minutes into a forty minute run this morning when a Rwandan man in his late 50s (15 to 20 years my senior) started to pass me by.   For some reason unbeknownst to me I started to try to keep up with him.  You have to know this is completely counter to my general workout style.  I like to train in complete solitude.  I’ve gotten to the point where I just run and literally don’t look at people because I want to somehow feel like I’m alone, which is hard in a society where people are always out walking.  It’s especially tough to do this when people stare at you and feel free to fall in next to you and try to keep up or pass you.  This happens both when running and when biking.  The middle-aged man on the single-speed bike carrying a 10 gallon jug of milk might pass me by when I’m climbing a hill; even the young kids walking to school will sometimes sprint ahead of me over short distances.   It is not only solitude I hope for while training; it’s also freedom from the stress of even just friendly and unspoken competition with a workout buddy – another reason I train alone.

So it was very out of character for me to start following this man while running today.  I think a few different things were going through my mind.  I was aware that I wasn’t trying to race with him.  I also knew I wanted to show deference to his age so I consciously stayed a couple steps behind him and to the right.  But the hardest for me to define was this feeling that I wanted to “follow” him.  We made eye contact; he knew I was trying to keep up as we started to ascend a hill; he would glance at me and stay at a pace that I could manage but with a struggle.  He wasn’t trying to “best” me.  He was trying to train me, to encourage me, to challenge me.  And it was playful…as we crested the hill, he quickly pulled away, but then waited and as we came to an intersection, he indicated that he was going one direction while I was going the other.  We smiled and gave each other a high five and went on our way.

The significance of this experience may be a function of the role we play here at Karisimbi Partners, as advisors who get paid to provide valuable insight, lead organizations, define strategies, and implement plans.  It may just be a function of working in a developing country under the premise of being “here to help.”  It may be a function of my own flawed character and lack of respect for “the other.”  Regardless of the reason, those five minutes I got to spend this morning following the lead of a Rwandan man clearly my senior, my teacher and my better was incredibly life giving and something I will cherish and look for more opportunities to experience. 

-Dano

The Tragedy of the Uncommon Expert*

We have made the point before: the biggest hurdle standing between the present reality on the ground in Rwanda and the bold ambitions of its leadership is a lack of qualified people.  Bold ambitions infuse this place with hope.  Better yet, Rwanda’s leadership seems motivated to achieve what is in the best interests of all her people… and that is not often the case in Africa.  We continue to remark that this is an exciting time to be here; it is a thrill to work to see even some small part of this nation’s vision being realized.  Good vision, good intention…  lacking are sufficient people to put it into action.

The most recent illustration of this shortcoming is in what may be called “the tragedy of the uncommon expert”.  Earnest is one such expert.  His training and skill as a plumber is well above the norm (in a place where it is not uncommon to ‘fix’ the same appliance four or five times until satisfactory).  Importantly, Earnest has his own tools, speaks English and is trustworthy (meaning he shows up on time and does not seem to have ‘sticky fingers’ that would require accompanying him at all times on the job).  When my friends have the inevitable plumbing emergency, I’m glad to be able to offer them Earnest’s number.  Therein begins the tragedy.  Earnest does not know how to refuse, balance or delegate work.  Soon, his responsiveness and reliability suffers under the weight of too many customers.  Finally, his work begins to suffer, he stops returning calls and I stop referring him to others.  We have seen the same process play out for mechanics, electricians, realtors and the most capable of Rwanda’s business leaders as well.  This is easier to comprehend when you consider statistics such as these: 75% of the workforce has no more than a primary school education (23% have none) and just 6% of those working in the largest companies have university credentials (according to just released Establishment Census).  Too few people… doing too much work… leads to ‘burn-out’, bad work and often the need to find a new expert.

One of our clients illustrates the same point.  Emmanuel is the founder of a relatively large company (by Rwandan standards).  He employs more than a hundred people, yet complains there is only one man (Celestine) whom he trusts to make good decisions and ‘get things done’.   Emmanuel regularly laments that progress stalls if he or Celestine are not pushing daily.  When Emmanuel travels, or Celestine is sick, business grinds to a halt.  Virtually every client reveals a similar pattern in some measure: competence and trustworthiness are in short supply.  Part of what is lacking is also a certain mindset for being productive in a work environment.  Those Rwandans with advanced education or experience living in a more developed country contribute a unique and valuable mindset, but instilling this perspective in those who have not had such privileges is difficult indeed.

In Rwanda, too few qualified people have too much responsibility.  Thankfully, I don’t think I’ll need a plumber again for at least a couple weeks…

Onward and upward,

-Carter

*  subtle but intentional reference to "The Tragedy of the Commons" dilemma (popular in socio-economic theory and debate) whereby multiple self-interested individuals deplete a limited community resource. 

Our Different Way of Doing Business

It has been more than two years living and working in Rwanda, yet it is still evident that we will never entirely “blend in” or “go native” here.  The fact is, we were all born and learned about management in the United States.  We’ve all lived and worked in other countries (e.g. including Scotland, France, South Korea, etc.) but our country of origin has left an indelible mark on who we are today.  In Rwanda, the challenge can be to add the best of what American business has to offer while leaving the rest.

There are elements of the American business environment that we would never wish on Rwanda.  America’s litigious environment has created bureaucracy, de-humanized policies, and increased costs in ways we are glad to avoid here.  As relates to personnel benefits, the relatively high cost of health care and limited vacation time in America are not something we’d encourage Africans to emulate.  Unhealthy degrees of independence and competitiveness sometimes found in the US would certainly cause problems in this developing country context.   

We have also come to realize there are elements of American business culture that suit Rwanda well, although they do make us somewhat conspicuous.  It is difficult for people in a relatively structured, hierarchical culture to see how we could be content in a company with three equal partners sharing the top post.  To verify that we were a legitimate business, a government official had to come visit our office(s) and since we predominantly work from home offices, client locations, and conduct many meetings in local cafés and hotels, the inspector left scratching his head.  In the end, although our company is a significant taxpaying organization it was not counted in Rwanda’s recent business census since we don’t have a separate and dedicated office space.  Given our desire to avoid unnecessary overhead costs, and the fact that our best work is often done on site with clients, we haven’t seen fit to have an office as of yet (and we can charge our clients less as a result).  Additionally, we are frequently given funny looks when we come to meetings on motorcycles.  We are assured that no Rwandan consultant would be taken seriously if they didn’t have an office and an SUV of their own, but we tend to be less concerned about image and have found we are taken seriously, nonetheless.  Besides, at roughly $6.50 USD/gallon, this is another way we can save money, do our part for the environment, enjoy Rwanda’s temperate climate… and it is a lot more fun!

We may never blend in entirely, but we are confident some of the ways we are odd also contribute helpful differences to Rwandan business culture.  Our way of doing business brings a dose of informality, suggests our work speaks louder than our look, and suggests it can be good to say ‘no’ to unnecessary overhead costs in order to focus resources where they matter most.

Onward and upward,

-Carter

Investment Considerations for Nations & Businesses

From rural electrification to food security, the Government of Rwanda regularly considers various investment opportunities. Allow me to suggest the Government of Rwanda may be wise to approach such deliberations from the perspective of a private business.

For a business to be successful over the long-run, it must continuously invest. By definition, an investment seeks a rate of return that is competitive vis-à-vis other investments that entail a similar level of risk. Sources of capital for investment are categorized as either equity or debt. The amount of debt verses the amount of equity required for a business to be successful depends on a number of factors. Ultimately, the business has to generate enough capital to repay its debt holders and it has to generate enough profits to satisfy the return requirements of its equity holders. When a company begins to generate negative profits (i.e. lose money) and continues on that path to the point where it has insufficient funds to pay the interest on its debts, the business goes into default, which is tantamount to bankruptcy.

Reversing this course means a return to profitability which inevitably requires some form of new investment. That may take the form of equipment retrofitting to produce a different line of more profitable products. It may require factory relocation or hiring a more qualified team that will successfully manage expenses. Even reducing employee ranks requires an initial investment in some form of severance benefits to those former employees. The two criteria required to justify any investment are: 1) it generates the required return, and 2) it affords sufficient capital to fulfill ongoing commitments.

These same investment criteria apply to public sector investments. Friedrich August Hayek, renowned 20th Century economist and philosopher, advocated for nations to grow by using internally generated profits to make investments that create appropriate returns. In contrast, John Maynard Keynes, Hayek’s contemporary, argued for nations to grow by using borrowed funds to make investments that generate appropriate returns. There is a great debate continuing today in the developing world about which approach is best. The reality for any nation (or business) is that these are not mutually exclusive; both debt and equity strategies need to be pursued simultaneously to maximize growth.

Nations seeking growth implicitly or explicitly evaluate two criteria: 1) what capital structure will be simultaneously the lowest cost and still afford sufficient capital to fulfill ongoing obligations to creditors; 2) what investments will generate the highest short, medium and long-term returns.

As businesses readily attest, a nation’s best investment is in its people. This includes appropriate levels of health care, education and entitlements; more importantly it involves investing in the creation of an environment where people have the opportunity to exercise their gifts and talents to the maximum extent for the benefit of themselves, their families and their communities. Rwanda is leading the way in the East African Region by striving to maintain a competitive capital structure, while making investments that will generate good socio-economic returns for its citizens. 

Other developing countries could learn from the example set by the Government of Rwanda, while simultaneously taking a page from the logic used by business investors: prioritize investments in people, find the right balance of debt and equity, and commit to continuous investment for growth.

-Dano

Building Management As/Where the Market Demands

A 14 February 2011 article in The East African (a regional business newspaper) titled Low Capacity the Reason Africa is Still Poor highlights the need for business management capacity building.  As readers of this blog know, Karisimbi Business Partners is a Kigali-based management consulting firm offering long-term commitment and world-class advice.  As a socially-motivated venture, we aim to offer high-impact guidance to high-impact ventures.  Every day Karisimbi Partners interacts in very practical ways with a wide range of business operators in Rwanda.  Below are some examples of what this looks like.

Consumer Products Sales & Marketing: Daily mentoring of the client’s sales manager for a large (500K USD annual turnover) consumer products company.  This includes creating the template for establishing a baseline of existing customers, volumes, and prices – business has been operating for four years and this information isn’t available.  It involves one-on-one mentoring including some basic guidance like the following:

Sales Manager: “I’ve spent the day out talking to customers promising them better quality and better service.”

Karisimbi Partner: “Please don’t promise anything unless you know how you are going to deliver on that promise.  The first job has to be to listen to the customers’ concerns and let them know that the company is working hard to address those concerns.  Secondly, start the conversation by simply asking them what would be required in order for them to be willing to distribute a small additional volume of your product.  Let’s meet again in two days to review the list of customers and their responses to your questions.”

Project Management: Working with the client’s Director of Project Management to understand the current status of Project Management Reporting in a large (more than 5M USD annual turnover) construction company.  Ultimately concluding that none of the daily, weekly or monthly reports focus on analyzing changes in critical path task schedules.  Reporting only focuses on financial indicators.  As a result, most of the company’s projects are delivered on budget, but significantly behind schedule.  Currently developing and conducting one-on-one training for project managers on an Excel-based reporting process that focuses more heavily on adjustments to critical path task schedules.

Investing: Analyzing the variety of businesses within a holding group and advising the owner of the company where to invest the next 1M USD that he wants to put into his businesses.  Realizing that most of the financial reporting is on a cash-basis (as opposed to accrual) and there are significant difficult-to-track transfers between different businesses and therefore limited insight into the true profit and loss individually attributed to any one business unit.

These interactions were not conducted through group “training” sessions.  These were not theoretical or generalized approaches to particular aspects of business management.  These were relationship-based practical interventions addressing particular challenges for particular people in particular companies.  The impacts are clear and measurable and as advisors, Karisimbi Partners is actually held accountable in many ways by the client for the outcomes.  In every one of these interactions, Rwandan business managers experienced significant growth in their business management capacity.  And that growth will be passed on directly to sales people, project managers and investment analysts in those companies and other companies in those industries.

While our work often begins with asking many questions and delivering some analysis in the form of a report, interactions such as those described above suggest the report merely represents the beginning of the partnership we form with clients in order to ensure implementation.  These implementations, while difficult and time-consuming, are where the greatest impact is possible…. and they are perhaps the most rewarding part of what we do.

This approach is not necessarily the only means of building business management capacity in Rwanda but it seems to be a method that is in demand by the marketplace and we believe that ultimately the market is what should drive approaches to business management capacity building.

-Dano

Claiming Karisimbi

In naming our organization we had a two part objective:   first, as a local socially-motivated business, intent on demonstrating our commitment to the needs of Rwandan businesses and entrepreneurs, we wanted a name that was clearly Rwandan – unmistakable in its connection to the country; second, we wanted to communicate our mission and the value we hoped to bring to all organizations, leaders and enterprises with whom we had the privilege to engage. 

Our tag line is “Guiding ventures to reach new heights”, and as Mount Karisimbi represents the highest point in Rwanda (14,800 ft), is familiar to all Rwandese, and provides a clear metaphor for growth and challenge, we felt secure in appropriating it for our organization.  However….it never felt quite right that in our strategy discussions with clients, our metaphorical descriptions and comparisons of business challenges and successes to Mount Karisimbi, we had no personal experience with the great mountain itself. This changed last month with our team’s two day expedition of our namesake.

Located in northern Rwanda and bordering the Democratic Republic of the Congo, Mt. Karisimbi is an inactive volcano in the Virunga mountain range.   Despite Rwanda’s stable equatorial climate, a peak of this height means conditions far different from the rest of the country, with temperatures around 30 degrees Fahrenheit at base camp and deep mud for 90% of the trek.  As one would expect, we prepared for the adventure with appropriate clothes, packs, footwear, tents, food, water, etc and secured a national park guide to lead us up.  From that point on, our expectations and metaphors differed from those we had discussed “in theory” with clients over the past year and half, revealing some new and unexpected similarities to the challenge of building business and growing management capacity.  Allow me to list some highlights and “business” observations from our adventure:

Focus on your strengths (e.g. don’t be afraid to outsource / hire expertise):

Dano and I were both very pleased to learn that porters would be available for hire ($8.50 per day).  Neither of us had any ego associated with carrying our own 40+ lb. pack plus water up a muddy trail.  Getting ourselves up and down the mountain sounded within our “skill set.”  To prove the point, those heavily laden porters handily beat us both up and down the mountain.  Carter and a friend decided to take the challenge of carrying their fully loaded packs on day one…arriving at base camp well after us, white faced and wobbly and ready to concede the packs for day two. 

Plan for the Unexpected (e.g. allow for contingencies and protect yourself):

To our surprise, not only did we have a guide, we were assigned ten well armed soldiers to provide protection for our expedition.  We hesitate to speculate why or if they were necessary, but writing this safely back at home means I have no complaints.  Now that’s what I call insurance.

Keep your sense of humor (e.g. laugh at adversity):

There is a reason people refer to business as “serious”, but, despite its inherent challenges (or perhaps because of them), it is important to maintain your sense of humor and perspective.  Climbing a mountain for “fun”, resigning yourself to the necessary “trudging” required to keep forward momentum through muddy trails lined by stinging nettles, camping at 12,000 ft in the cold with minimal sleep… all these things can change your attitude for the worse, but only if you let it. 

Building relationships (e.g. stronger together than apart)

An obvious expectation of people taking on a challenge together is (hopefully) a strengthening of relationships and teamwork.  We certainly found this to be the case on our climb, which included deepening our own partnership, getting to know our new intern, Jon Porter, and crossing cultural lines - huddled around a campfire with soldiers at night trading hymns in our respective languages - relationship building at its simplest.

Dano, Greg & Carter- true Karisimbi Partners at last

View from the top (e.g. may not be all you expect):

Sometimes achieving the goal is quite different from the expectation.  We had often talked with clients about the proverbial “incredible views once you’ve achieved the summit of your potential”, but the reality for us was that our last 1000 feet of the climb was completely clouded over, resulting in near zero visibility from the top; the dominant recollection from the summit consists of cold, wind, ice and other debris.  Ironically, one of the most rewarding views was at the bottom of the mountain, where the fields of pyrethrum (daisy) stretched across the landscape.  This had very special significance for us given our work assisting the client whose factory these well tended fields would supply – bringing employment and security to the local farmers.

Dano, Carter & Greg after the summit

Carter thinks this should be an annual trip with clients invited, but Dano and I aren’t quite there yet.  Either way, we are proud to now legitimately lay claim to our name, Karisimbi Partners.

-Greg

Private Sector Development in Developing Countries: What Works?

Umwaka Mushya Muhire!  (Happy New Year!) 

After recent travel and varied conversations, I am convinced that there are many good (and controversial) ideas about the best form of private sector development.  I would like to take this opportunity to put the question to YOU: 

“What seems to work (and what does not) among economic development initiatives in developing countries?”

I will compile your responses (including pitfalls to avoid and best practices to consider) and add some of Karisimbi Partners' own insights in an effort to see if anything resembling a consensus can be found for application in places like Rwanda.  Please lend us your ideas and opinions on this important topic!

Onward and Upward,

-Carter

Should you Work in Rwanda?

Moving to Rwanda to establish a company has certainly challenged our expectations, and the learning curve remains steep; the surprises many.  None of us expected, for instance, that there would be so many people from North America and Europe interested in joining Karisimbi Partners.  We have been approached by a diverse array of gutsy individuals… undergraduate students and CEO’s, people between the ages of 18 and 60, folks full of great intention, significant questions and interesting backgrounds.  We did not fully anticipate the extent to which our unique model for offering socially-motivated business support services might strike a chord with a growing number of people in the West seeking to alleviate poverty, assist developing economies, contribute to Rwanda’s bold vision, or simply do something more meaningful than standard corporate jobs seemed to offer.  Many of these people are determined to engage and contribute in more intimate ways than philanthropy and short-term trips can offer.

Because our venture is yet a start-up, it has not truly been in a position to support more than the three people who started it.  Still, one Business Analyst intern has joined us for the past nine months, and another, Jon Porter, is joining us in January.  We’ve also had countless e-mail, Skype calls, interviews and meetings with candidates of one type or another (most unacquainted with Africa and/or Rwanda).  In the course of these discussions, we’ve begun to zero in on some questions that seem to matter in such considerations:

• Are you committed enough to work in Rwanda for a significant period of time? Working remotely, visiting occassionally, or working ‘on-the-ground’ for less than two weeks at a time, is clearly not sufficient.
• Have you already demonstrated excellence in a particular area?  We contend that Africa’s development requires and deserves the ‘best’ the world has to offer. Much can be done with well-intentioned people, but much more can be done if their expertise is as strong as their motivation.  This also contributes immensely to the dignity and development of the people served.
• Do you bring expertise that precisely fits at least one real and pressing need in Rwanda? Amazing things happen when a specific need at one of our client firms can be connected to world-class expertise among our contacts in other countries.  To start by cataloging our contacts and their skills in the West, in the hope they can be matched to a specific need here, is less likely to yield the mutual benefits we all seek. 
• Are you humble and flexible enough to adapt what you know to accommodate what works here? The most brilliant, experienced person in the world is useless here if they can't translate and bend as conditions require.
• Are you willing to work long and hard?  Our mission is rarely characterized by quick fixes or instant results.  Lectures, seminars, short-term visits and nice reports are never sufficient in fostering deep relationships, understanding, knowledge transfer and sustainable improvement.  There remains no substitute for what can be accomplished through hard work alongside partners and clients.

We are grateful for the surprising interest we have received.  While many conversations would benefit if every candidate could start by answering the above questions, part of what we continue to learn is how to connect the uninitiated to the type of work we do.  A similar set of questions could also help people to evaluate their fit in other developing world organizations or refine what matters most as they set up a company of their own in such a country.

While we can’t hire them all, our sincere hope is that we can encourage more people to move to, and work in, places like Rwanda.

Onward and Upward,

-Carter

Thanks for the Difference a Year Makes

One year ago we had no real evidence to prove that the idea of Karisimbi Partners was a good one.  We didn’t know if we would be accepted by Rwandans.  We didn’t know if we would be able to have a positive impact in the way we had hoped.  We didn’t know how our families would adapt (or ourselves for that matter).  It was a beginning filled with many unknowns. 

We had different challenges then than we have now.  We didn’t know where to go for good food.  We didn’t know what vehicle to buy.  We didn’t know if we would have enough money to pay rent after our first three to six months.  We didn’t know all the cultural norms for interacting with our clients.  We didn’t know the local tax laws.  We didn’t know what we didn’t know.

We still have plenty of challenges and many of them aren’t so different from the ones we had originally, but we are somehow more comfortable with the uncertainty of it all.  We still don’t know what we don’t know but by definition of having been here for a year, there is at least less that we don’t know now than we didn’t know then.

We give thanks to God for this incredible year and the opportunities we’ve had to experience His love and to share some of that love with others.  We’ve seen children adopted and deep friendships forged.  We’ve witnessed employees and interns see the world in a different light and client businesses grow and employ more people.  We’ve had countless culture-changing interactions on the street corner and within the office of the Prime Minister.  Thank you God!

Exhibit A: Over the past week, we attended a meeting with a group of seven leading mid-sized Rwandan companies, led by the Permanent Secretary (number two person) of the Ministry of Trade and Industry, where Karisimbi Partners was featured as the company “doctor” that could help turn around these ailing companies.  We led a negotiation with a global software provider in order to develop a solution for Kigali City to manage its finances and serve its people better.  We had lunch with an employee to celebrate his experience over the last six months and challenge and mentor him as he thinks about next steps.  We advised a client on how to effectively use US Government grant money.   We ended the week with a team meeting to discuss how to juggle what seems to be a growing list of opportunities that are in front of us.   Compare that discussion to one year ago, where at least I was wondering whether I would need to find a side-job as a teacher or car mechanic in order to stay busy….

Maybe the best blessing in the last year is in our families.  For one example, when my kids first arrived, they weren’t so sure about Rwanda in general.  This week, my eldest daughter asked me if we could stay in Rwanda forever.  I told her it was up to God.  Pretty cool.

Dano

Poverty Alleviation via Choice Redistribution?

We live in one of the poorest countries in the world (Rwanda is #184 out of 194 countries ranked).  Poverty could be described as a condition whereby people have insufficient resources.  Certainly, resources such as property, employment, food and income are finite and competitively sought after.  Ghandi once claimed, “There is enough for the world’s need but not the world’s greed”.  This simple sentiment suggests poverty is not only a matter of insufficient supply, but of insufficient distribution of the available supply in the global community.

It is also possible to think about poverty as the simple lack of one particular resource: choice.  The poor are depraved by the sheer lack of options they have at their disposal.  Whereas I’ve been fortunate enough to choose among many possible foods, medicines, schools, jobs and neighborhoods, my gardener had no such options to choose from.  Jean Pierre did not have the option to continue schooling past age 12.  He claimed two of the best jobs available for boys in his region, but faced death daily in the mines and on his commute.  Thanks to his Aunt, Jean Pierre was able to leave his hometown and experience the possibilities of the big city, Kigali, but he could not afford a place to live or the health care to enable him to be treated for an ulcer and keep his job.  Once he married and began a family, he felt he had not choice but to withstand the ill-treatment of his employer.  The poor can often feel stuck in a bad place few options for escape.  While my family and I chose to make some sacrifices in order to move to Rwanda, we are pleased to report Jean Pierre seems to have a few more choices as a result of our move.  We allowed him the opportunity to leave his former employer (and claim better, more regular pay).  We gave him the chance to claim his preferred job title and responsibility, that of a gardener.  At 42, he is taking coursework in English and learning how to drive (each offer a host of new options).  He and his wife are now considering how to use his first paid vacation ever.  These are small tokens of how our lives here have added some options to one additional life. 

Perhaps one way to alleviate poverty might be to prescribe a sort of “choice transplant”.  We might extend Ghandi’s claim to read: the world offers enough options for everyone, but not if some people claim the all best options for themselves.  What would happen if more of us with the best options made a concerted effort to give or share them with those born with the least?

Because Karisimbi Partners is committed to private sector development, it is easy for us to point to the expanding options that accrue when a Rwandan is employed in a job that builds a company, sector and this emerging economy.  However, I’ve recently been struck by what may be the most profound choice transplant of all: adoption.  Post genocide and epidemics, estimates are that 21% of Rwandan children have lost one or both parents, classifying roughly 10% of the population as ‘orphans’.  The Jukanovich’s adopted Nathaniel Nyanzima last March, providing an entire lifetime of new options to a boy who had few.  The Urquharts are now on adoption journey as well.  Such actions effectively transfer upon those with the bleakest prospects all the privileges and opportunities one would expect if born in one of the world’s wealthiest regions.  At times, it can seem the problem of poverty is too pervasive and attempts to address it slow and ineffective.  Consider, however, the shattered bonds and immense future of a single adopted child and be awe-struck, as I am, with what is possible. 

If poverty is defined as a lack of choices, this condition is neither fatal nor permanent.  Choice transplant is possible.  As we speak, profound sacrifices are being made to create profound opportunities for those with none.

Onward and Upward,

-Carter

CAN Borrow Does Not Imply SHOULD Borrow

When should you give a personal guarantee? When you are able to and intend to deliver on it and when doing so is aligned with your values, as they relate to yourself and the others involved in the relationship.

In the movie, “The International,” a wealthy business tycoon explains the essence of the banking industry: “The International Bank of Business and Commerce is a bank. Their objective isn’t to control the conflict, it’s to control the debt that the conflict produces. You see, the real value of a conflict, the true value, is in the debt that it creates. You control the debt, you control everything. You find this upsetting, yes? But this is the very essence of the banking industry, to make us all, whether we be nations or individuals, slaves to debt.”

This sounds cynical, and is somewhat so.  But the above description should ring true for everyone who has ever taken out a credit card or a mortgage or car or business loan (or has even been offered one, for that matter).  The sad part is that except in cases where the customer didn’t understand the terms, the resulting enslavement is of our own choosing. 

Credit is becoming more and more available in the developing world and unfortunately we see in our clients where they are becoming more and more willing to take the “risk” and accept credit from financial institutions in return for personal guarantees.  Below are some principles by which to determine when or if it is wise to take such a risk.

-       My father used to say, “don’t gamble what you can’t afford to lose.”  You may very well have to deliver on your personal guarantee.  It’s not just a piece of paper.  The bank will legally have the right to take everything you own and to even burden your future earnings.  And they will absolutely exercise this right.  You have to determine if you can afford to lose the amount that is being guaranteed. 

-       A guarantee has legal and moral meaning.  It is called a guarantee for a reason.  It’s a promise.  It’s a commitment.  You have to determine if you are willing and able to put your integrity on the line and actually perform on that commitment.

-       Can you guarantee that the assets serving as collateral for the underlying loan are sufficient to fully pay off that loan in the case of default?  When cash flow is insufficient to service the debt and it goes into default, the bank will foreclose on the assets and then liquidate them.  Will the funds from the sale of those now distressed and discounted assets be sufficient to pay off the loan?  If you are confident enough of this, then there is no risk in a personal guarantee because it won’t need to be exercised.

-       This following is a technical point, but relevant.  A personal guarantee is just another form of collateral for the bank.  Banks will strive to acquire as much collateral as they possibly can in order to minimize their risk.  The borrower should push as hard as possible to provide as little collateral as possible in order to minimize his risk.  This is just another negotiating point.  And there should be no “give” without “take” in the negotiation.  In other words, save the incredibly valuable and risky personal guarantee for when it really matters or make sure you receive significant concessions from the bank in return for a personal guarantee.

-       What is the alternative to not providing a personal guarantee?  A business loan is a loan for a business.  The bank makes the loan because it believes there is a good risk-return tradeoff.  If the bank isn’t willing to loan the money based on the business, then there are more important issues to consider regarding the business.  This is an appropriate place to reference another valuable principle: “don’t borrow money if you wouldn’t loan it to yourself,” or “just because a bank is willing to loan you money doesn’t make it a good idea to borrow it.”

  

Unfortunately bad things do happen and businesses are not always able to pay back loans.  Consider whether you are willing to sell your own personal assets or leverage your future earnings and risk your personal integrity before you decide to provide a personal guarantee.  Sound principles for dealing with banks are as true where you live as they are in Rwanda.

-Dano

Jean Pierre: Chief Gardener (Part 2)

(Continued from prior post...)
For nearly two years after the genocide, medical diagnosis was unclear or unavailable and Jean Pierre remained an invalid at his Aunt’s house.  Finally, a doctor at one of the government hospitals decided to operate and removed an ulcer.  This procedure went a long way to affording Jean Pierre a full recovery.

A naturally hard worker, now with a healthy body, Jean Pierre was able to take a job as a security guard with one of the large private security companies in Kigali.  In 1996, Jean Pierre was married and over time became the proud father of 4 children.  Although KK Security did not treat employees well (often paying a fraction of what was owed), Jean Pierre did not feel he could leave because he had a family to support and finding another job was unlikely.  Jean Pierre was still with KK Security 13 years later when I met him, last summer.  Because of the treatment of his previous employers, it was not difficult for me to pay him better and entice him to leave the company that would otherwise claim half the fees I paid for security services.  When I asked Jean Pierre what he really wanted to do, he told me he would do anything, but loved gardening.  Thus, I was able to give him the title of Chief Gardener and a uniform more to his liking as well.  Jean Pierre tells me that this is the only job he’s had that has paid him regularly since he left the Akagera Hotel.  You should have seen the look on his face when I got to tell him he would receive a raise after a year of great service to our family!

To share his story certainly takes some vulnerability and risk.  As such, I felt I should reciprocate and tell him my own.  You can probably imagine how odd that felt!  So much of his life has largely been dictated for him…. by others, by circumstance and by poverty.  As I began telling my story, I realized how many resources and choices I have had (and often took for granted).  I told him that I too scored well in primary school, but I was able to progress to middle school and eventually go to university and choose to study business, and even had the luxury of choosing a field and company I wanted to work in when I graduated.  I complained about the one hour commute I had to drive twice a day when living in Los Angeles, but felt silly complaining since I never faced the jaws of a lion as he had on his commute as a boy!  I told him I loved working hard and he said he did as well (and it shows!).  He was amazed that I would leave a job that had the potential for riches American companies like Microsoft had offered.  Although not a believer, he somehow understood that my faith compelled me to chart a different path.    

By the time I had finished my story and answered his questions, we both sat with a deep appreciation at the life the other had lived.  Although roughly the same age, being born in such different contexts made it quite amazing that two such people could ever find themselves friends.

Onward and Upward,

-Carter

Introducing Chief Gardener: Jean Pierre

Jean Pierre Barahira is the trusted Chief Gardener (and guard) we have  relied upon at our home this past year.  His capacity for English is developing faster than my Kinyarwanda, yet there are many conversations we've not yet had.  I’ve been anxious to know about Jean Pierre’s life, yet I’ve not wanted to dive too soon into a story so personal. With the help of my language tutor, Silas, I finally found the words and time to get to know this man better.  I will attempt to highlight some of Jean Pierre’s fascinating story here.

Jean Pierre estimates he was born around 1965-1966 (birth records are sometimes unreliable here). He is the 7th of 14 children born in the town of Rwamagana, in the Eastern lowlands of Rwanda. He did well in primary school, and earned the right to continue his education but was frustrated when it became known his parents were too poor to support the modest fees required.   So, at about age 12, Jean Pierre began working in the local cassiterite mine. Many boys his age were injured or died in this dangerous underground work, but after three years in the job, he left to accept a job he now claims turned out to be even more dangerous. Jean Pierre began working for the only major hotel in his part of the country, the Akagera Hotel. His duties entailed cleaning the rooms, washing and ironing clothes. It was deemed a very good job, but the danger came in the commute. Jean Pierre and the other boys who worked at the hotel lived 30 Km (18.6 miles) away. Some had bicycles and all would speed as fast as possible, but many fell prey to the lions and Cape buffalo that lived near the road. After four years, Jean Pierre had the opportunity to live with his Aunt in the big capital city of Kigali.

The first year Jean Pierre lived in Kigali, he was unsuccessful in finding work. The second year, Jean Pierre found a job as a taxi-bus ‘conductor’, helping to fill and collect fees from passengers on the road to and from Gisenyi. He kept this job for nearly three years, but developed some stomach problems that eventually made it impossible to eat properly or go into work. It was also about then that the disturbances leading up to the genocide reached a fever pitch. Jean Pierre’s friends and relations would travel from place to place trying to get away from the killing and angry mobs. For three months, they never stayed for more than two nights in one place, and every day they faced the possibility it would be their last. By July, the roaming group decided to escape over the Western border to D.R. Congo, choosing instead to face the squalor of a refugee camp, where at least you could be assured nobody would try to kill you. After three months, Jean Pierre prepared to return to Rwanda, and offered to take others with him. Most of the friends and relatives he knew refused to return (although disease and hunger took many lives each day), fearing what they would find if they went back. Jean Pierre has since learned all those that remained have since passed away. Of the 14 brothers and sisters in his family, Jean Pierre is one of only four that survive today.

It was at this point I told Jean Pierre I now realize how fortunate I am to know him. (to be continued…)

Onward & Upward,

-Carter

Rwanda: An Easy Place To Come Home To

One of the best ways to better understand the culture your in is to leave it. Upon experiencing a new or different culture and re-entering the one you knew, new aspects of each come into view. I have now lived in a few different countries, and traveled to many more, and I am still struck by how much there is to grasp about the distinctive qualities of every place. For instance, on my first visit to the US in almost a year, I was struck by the sheer amount of discretionary time and money Americans have (for hobbies, pets, sports, etc.), the overwhelming number of choices and conveniences available (300+ TV channels and 30+ types of toothpaste!). The Internet and much of life runs at a much faster pace than in Rwanda, yet few seem satisfied they are running fast enough (or have the time or money to support the pace). I suppose this once described what I called ‘normal’, but it strikes me now as ironic so many people have so many resources to chase their dreams yet find them perpetually out of reach.

Such observations remind me of a classic Time magazine article from 1956 that claimed, “not far distant is the time when Americans need spend comparatively little time earning a living…” freeing them to “unleash their considerable powers for cultural, ethical and spiritual accomplishments.” From my vantage point, in the Southern California of 2010, it does not seem such benefits of American conveniences have proven as real or satisfying as suggested.

While in the states, we were able to share and celebrate the Karisimbi Partner’s story with over 200 people at various events and over meals. This video is a wonderful summary of what we are doing (and the work of some extremely talented and generous people!): http://www.youtube.com/watch?v=tcF0U7QQauQ. Wherever we went, people asked for details of the place we now call home, so I am happy to give a few...

Observations of Rwandan culture and life are also easier to see when juxtaposed with North America. While the Kigali airport has very few amenities (effectively a one terminal, one gate airport), disembarking passengers are greeted by a giant billboard for a local telephone company featuring a larger-than-life image of an entrepreneur friend of ours (who also happens to be an advertising model). The customs official has that particularly Rwandan air about him as he takes pride in the execution of his duties to ensure paperwork is in order, but is also quick to offer a smile. On the way to my house from the airport, I was able to see many friends and familiar faces walking the streets. Since the Presidential elections are coming, the major roads are likely to be lined with police and military personnel in order to thwart any would-be disturbances. I am grateful to know that what Kinyarwanda vocabulary and pronunciation I had are still intact. There is a perpetual cloud of dust over the city now that the dry season has descended in earnest. The night air has the familiar smell of distant coal fires, Islamic chants from the nearby mosque, and a chorus of tropical-sounding birds from 4:30AM on. When nearly a mile from my home, the boys that live on my street spot me in my Rav4 and chase me all the way to my house (where I am able to present them a soccer ball I’d purchased in the states). It seems people drop everything to welcome me back, and every greeting involves genuine warmth (and usually a hug).

It is easy to come home to such a place!

Onward and Upward,

-Carter