Right Place, Right Time (continued)

We continue to receive daily confirmation that we are in the right place at the right time….so you’ll forgive me if I issue a second installment on the same topic as last week.

Additional indicators that Karisimbi Partners is ideally situated:

• A couple months ago, I received a letter from a program director at Harvard Business School. He described to me an MBA ‘immersion’ program that sends some of their top students to Rwanda to work with organizations. He found out about what Karisimbi Partners was up to and contacted me through our website. I’m not sure what I could have done to warrant such interest had I remained an academic in California, yet before we even moved to Rwanda we were known and contacted!

• You can imagine what a pleasant surprise it was to be told we may be able to guide ten Harvard MBA students with an interest in Rwanda. They will be broken into two teams in order to serve our clients in a short-term consulting capacity. The program leader had no idea he had reached scholar that had led business students on an immersion program himself.
  

• There is a popular hotel here in Kigali called the Novatel (or Laico, its new name) where many Westerners and well-placed Rwandans mingle by poolside. Today we shared a drink with an Israeli agronomist that introduced us to an English businessman who owns the largest mineral export company in the country. He has lived in Rwanda 12 years, and upon hearing us explain our plan, he said no less than four times “you guys are absolutely in the right place at the right time”…

• There are now 16 Americans moving to Rwanda as part of our little venture. All have arrived except those attached to the Jukanovich family. We recently learned that the family across the street needed to move suddenly to Nairobi, Kenya. We contacted the owner (who happens to live in Canada!) and reached an agreement last night that will ensure the Crockett’s and Jukanovich families will be very close neighbors!
  

Although our move is looking more ‘reasonable’ by the day, I can’t help but remember many of these emerging points of confirmation only became visible once we took what seemed unreasonable first steps.

For anyone else pondering a vision, I hope this is encouragement to make the initial leap… you may find yourself on firmer ground than you thought! Hindsight is a validating factor.

Onward & Upward,

-Carter

The Joy of Being in the Right Place at the Right Time

I have been a part of organizations that seemed perpetually “behind the times”. I have also worked at organizations that have been so ahead of their time they could not capture a viable market for their products and services. Together, these experiences have instilled in me a great appreciation for being in the right place at the right time.

Karisimbi Partners certainly seems to be ideally situated for the challenges and opportunities facing Rwanda today. Many of the most important validating factors were not visible until we visited and eventually became residents here. The following is a partial list of the indications suggesting we are ideally situated for the present conditions:

· Rwanda has garnered a great deal of international attention, goodwill and resources (partially as a result of the devastating atrocities of 15 years ago; partially due to the subsequent vision and pace of progress since)

· Rwanda is very much “open for business”, as indicated by the following:

o A recent World Bank/IFC report just named Rwanda the developing country that is reforming its business practices and regulations faster than any other in the world (link to report).

o Many consider Rwanda the least corrupt, safest business environment in Africa

o The Rwandan economy is established enough to boast over 70,000 micro-businesses and the services sectors to support them…. yet there are less than 50 ‘large’ companies in the country… offering tremendous untapped potential for small and medium-sized enterprises that hope to grow

· After many group training sessions and short-term management interventions, the Government’s Rwanda Development Board (RDB) has concluded what is needed now are “company-specific interventions” for translating abstract, generalized concepts in ways that offer practical impact for individual companies

· The vast majority of Western business influence in Rwanda has come in the form of investment capital and short-term management interventions… making Karisimbi Partners distinctive for partnering long-term and locally to build up the management capacity of promising Rwandan ventures

…and these are just a sample of the indicators that the timing is right for what we are doing. Other anecdotal signs: I arrived while the national “Code of Business Ethics” was being drafted and was able to co-author the document and receive an appointment to the new “Ethics Committee”at the Private Sector Federation (PSF) managing this initiative…. A new building has been built to support the growth of small and medium-sized enterprises and the owners are now seeking professionals with top credentials to occupy the new offices…. We happened to find a super guard/gardener from a family that happened to be leaving Rwanda the same week the Urquharts arrived…

Indeed, we have daily confirmation we’re in the right place at the right time. Thankfully, a more pressing concern is this: how can I publish a blog regularly when the electricity (and thus internet access at my house) is anything but regular?

Onward & Upward,

-Carter

Custom Solutions for Developing Contexts

You’ve got to admire the ingenuity of people in developing countries. Last summer, while leading a group of college students through rural China to study the growing phenomenon known as ‘social entrepreneurship’, we saw many ingenious solutions to local problems. One clever example of a “new” application used by rural peasants for boiling hot water is depicted below.

Satellite-enhanced solar kettle

In Rwanda, there are also daily reminders that products created in the Western countries can take on an entirely new meaning when placed in such a context.

New luggage... traditional carrying technique

Such images are a good reminder to us at Karisimbi Partners: we should not expect our experiences and understanding to translate here… at least not directly in the manner we may otherwise assume. In the high-tech U.S. corporations where we’ve worked in the past (e.g. Microsoft, AT&T Wireless) we learned that technology changes much faster than human behavior. Such lessons are only magnified in the context of a developing country where the same modern technologies face traditional behaviors that are significantly less modernized than they are in the West. Cynthia Smith has highlighted this challenge in her book “Design for the Other 90%”, stating that the items many of us take for granted are out of reach for the vast majority and the contexts they live in.

In a developing economy like Rwanda, it seems bringing the best of Western business perspectives will be the easy bit… the real challenge is adapting them to the context in the most meaningful fashion for those we aim to serve.

Onward & Upward,

-Carter

The Power of Cultural Values

President Kagame and his administration clearly have an agenda that is more than merely about political and economic power… they have a social and moral agenda as well. Some of the explicit messages that are disseminated attempt to encourage people to be “good” in terms that may surprise Westerners (e.g., When was the last time a politician you knew erected billboards discouraging constituents from being ‘Sugar Daddies’ or ‘Sugar Mamas’?).

In the fight for a better Rwanda, and given the social/moral agendas that are a part of that, the current administration has tapped the ideological power of traditional cultural values. Some of these values are encapsulated in simple words; all are uniquely Rwandan and convey powerful cultural meaning. ‘Gacaca’, is a traditional village forum for resolving conflicts and community healing re-invigorated in Gacaca Courts starting in 2001 in an attempt to deal justly with the influx of cases overwhelming conventional judicial processes in the wake of the genocide. ‘Imihigo’ is an important concept referencing a long-standing cultural practice in Rwanda whereby two parties publicly commit to achieving a particular task toward the greater good. Missing the stated targets leads to dishonor as for each party, as well as the community. Among ambitious Rwandan government and other leaders, Imihigo is now being used and employed again. ‘Umaganda’ references a culturally-embedded ideal suggesting progress and beauty are everyone's responsibility. Thus, the 4^th Saturday of every month has been dubbed ‘Umaganda’, and is something of a national clean-up day when everyone (including the President) attempts to dedicate their morning to picking up trash, filling in potholes, and building up their communities together. Given Umaganda was the Saturday after we arrived, it was also a great way to meet people!

After breakfast, my kids and I collected trash along the dirt road in front of our house, trying to do our small part in the beautification of our neighborhood. Afterward, my son Oliver brought out a soccer ball, and a crowd of boys soon formed and was split into two teams. For the next hour, it seemed many of our differences fell away as we played a wonderful game on our street (interrupted briefly by ‘traffic’ in the form of 2 cars and 11 goats). This opportunity to work and play together with our neighbors has become one of the chief highlights of our first week as Kigali residents.

We already appreciate some of the Rwandan cultural values we are learning…although only once a month, Umaganda encourages us to work together better and more often than we might otherwise do on our own.

Onward & Upward,

-Carter

Market/Non-Market Partnership (formerly known as Public-Private Partnerships)

Economies develop through the creativity and hard work of entrepreneurs who have leveraged Market and Non-Market principles and partnerships. Consider the U.S. economy at its early stages of development. It wasn’t built simply upon government largess nor did it develop only because of the creativity inspired by market dynamics. Rockefeller’s monopolistic Standard Oil, by definition, grew out of what economists consider a “market failure,” but it did presage the development of huge swaths of the U.S. economy. The men who supposedly “risked everything” to build the transcontinental railroad system were able to mitigate their risk due to factors put in place by the federal government.

Let’s define the players in a Market/Non-Market Partnership. Historically, the Market category consists of private companies and public companies that have a purpose to generate financial returns for equity share owners. The Non-Market category consists of government institutions, churches, foundations and any others who do not return any of their profits to equity share owners. In fact, the differentiating factor between the two is that these Non-Market (commonly referred to as Non-Profit) entities do not have equity share owners.

Market/Non-Market Partnerships take some commonly recognized forms but they are a pervasive part of almost any economy. Consider some examples relevant to economic development in East Africa. Churches partner with banking institutions to develop systems whereby poor community members are able to save and invest. A national government builds a hotel with government funds and then sells the hotel to a hotel developer and operator. A railroad builder raises money for his venture through the sale of government-secured debt. Market/Non-Market Partnerships are integral to enterprises from education to transportation to health care; from airplane building to designer clothing merchandising. Increasingly, it’s a fallacy to think we can draw a clear line between Market and Non-Market enterprises.

These partnerships work best when the Market by itself is not able to efficiently provide the products or services, or when there are broader societal benefits that will accrue from said partnerships. The practical micro-economic implication in these scenarios is that a Market-oriented entrepreneur needs Non-Market based incentives to help improve his risk-return ratio to a level sufficient to move forward with certain ventures.

To be blunt, as it relates to East Africa, the strictly Market-driven risk-return ratios don’t justify development of a transcontinental railroad. They don’t justify investing in Small and Medium-sized Enterprises (SME's) in many developing countries. The only way to realign these risk-return ratios is for there to be Market/Non-Market partnerships. It is institutions who agree that “Aid is Dead,” but who are also willing to accept less-than-market returns on their investments who seem to be driving a great deal of economic growth in East Africa. These influential institutions can be led by domestic or foreign governments who have the ability to manipulate markets and therefore endure extended below-market returns. They can be led by “donors” who are willing to relinquish control through true Market/Non-Market Partnerships. Or the institution can be literally a single local entrepreneur who may well have a plan that includes a Market/Non-Market Partnership that will both align the entrepreneur’s risk-return ratio and directly or indirectly benefit the greater public good.

This type of Market/Non-Market Partnership with individual entrepreneurs seems to me the purest and most hopeful way forward for developing country economies.

Dano Jukanovich

Weighing Risk vs. Reward

I’ve been thinking about this communication for some time now, and while some of you are already aware of our decision, it is good to finally “go public” with the news. From the moment our friends, the Crocketts and Jukanoviches, announced their intention to launch Karisimbi Partners and move to Rwanda, it became difficult NOT to think of what such a move could mean for our family.

From my first trip to Africa several years ago, my heart was captured by the need and difference between our lives and those of that part of the world. And, like many others, I found that once I was aware, it was no longer an option to ‘do nothing’. Furthermore, the restlessness and discomfort with the safe and comfortable life we’ve had in a Seattle suburb has continued to weigh on our hearts. After much thought and prayer, Kristen and I made the exciting (and also scary) decision to join these two families.

Joining Karisimbi Partners was a major decision for my family and I. It involves leaving an established career at a Fortune 100 company with a clear path to ongoing “conventional” success. I have worked for over 14 years with Microsoft, including leadership roles working across the U.S., Europe and Africa. Yet while this is a major decision, it was not actually a difficult one…not when you have that pulling from deep within to do something bold…something focused outside yourself…something that requires faith just to attempt. I love Africa. I love the idea of doing all I can everyday to work towards a mission I fully believe in. I love the idea that we can make a difference – however large or small. I love the people I will be in partnership with and the chance to live in community together. And I love this scenario where a control freak like me steps out into the unknown.

The dictionary describes “Risk Taking” as the willingness to incur injury, damage or loss. Risk is dangerous chance. Hazard. Jeopardy. It is to go out of one’s depth. Reading that definition sounds a bit daunting, but all great accomplishment is also invariably associated with taking risk. To quote Helen Keller, “Life is either a daring adventure or it is nothing at all…life shrinks or expands according to one's courage.” For me, I take comfort in responding to this meaningful opportunity to move out of the comfort zone I’ve lived in for many years now. If anything, I believe there is greater danger in risking nothing, than in attempting to live a life less ordinary. As my new partner, Carter, has blogged in earlier posts, what Karisimbi Partners is working to accomplish is pioneering. The outcome is anything but certain. We are striving to push the boundaries and forge into the unknown. For me, I feel our venture in Rwanda is an opportunity to fulfill our purpose…. to step out, to take a calculated risk using our skills, experience, and passion so that we can serve and develop promising Rwandan businesses. With a reward like that, who wouldn’t accept some risk?

“Two roads diverged in a wood….”

Greg Urquhart

Unlike Microfinance: Depth vs. Breadth

It is never easy to describe a new business model…. particularly to folks that have little reference for the context in which it is being launched. When we begin explaining what Karisimbi Partners is doing, somebody will inevitably respond…. “Oh, you’re doing microfinance?”

Indeed, we founded Karisimbi Partners to help alleviate poverty and expand sustainable market opportunities. Like many microfinance pioneers, we are motivated by the social impact of our venture (not merely financial returns). We share a belief that the dreams and relationships of poor individuals are the source of tremendous wealth and dignity (which banks have traditionally ignored). But our similarities may end there….

Our focus is on depth, not breadth. Microfinance institutions often make small loans to hundreds or thousands of new ventures. Karisimbi Partners primarily invests relationally (not financially) with just a few high-growth ventures at a time, each of which may someday employ hundreds or even thousands. Microfinance often deals with small business operators that may never grow or create stable jobs for others. Karisimbi Partners identifies and supports true entrepreneurs with proven ideas and great ambitions. Many microfinance institutions begin by lending capital, and then provide related social services. Karisimbi Partners begins by building social capital and management capacity to ensure each venture is ready for financing and future growth. By focusing on a few promising ventures, Karisimbi Partners’ can offer the hands-on assistance to help client companies employ many, export often, contribute taxes, build industry sectors and establish role models which the new generation of business leaders can follow.

Indeed, microfinance is an impressive and crucial model for creating broad market opportunities in developing countries… and will remain a critical factor in the war against poverty. I am proud to be an advisory board member of the best microfinance organization I know, HOPE International, and very much agree with their leader’s recent assertion (on this blog) that Rwanda is ripe for an integrated approach to economic development. Yet our model is certainly different… Karisimbi Partners attempts to pick up where microfinance leaves off, walking alongside select entrepreneurs to significantly impact a few ventures that can make a great difference.

In Rwanda today, it seems calls to build the "missing middle" in this emerging economy also call for a model that has not yet been established…so we’ll have to keep explaining why we are not a microfinance organization.

Onward & Upward,

-Carter