Two men and a whiteboard

The creators, Jurie Willemse, a South Africa serial entrepreneur, and Chris West, the Deputy Director of the Shell Foundation met through a mutual friend at Cape Town University. The two men discovered they shared a passion for developing a new business-based approach to unlocking the potential of Africa’s under-served small and medium-sized enterprises (SMEs); a potential engine for economic growth. A chance encounter led to the eventual establishment of GroFin, the specialist business developer and financier that now invests in African SMEs and provides them with business development assistance.

Traditionally, plugging the so-called ‘missing middle’ – the gap in financing that exists between micro-finance and commercial financing because local banks see SMEs as too risky an investment - has been the domain of development agencies and charities. However, the aid-based approach to development runs counter to the enterprise ethos needed for dynamic business growth. Chris believes such organisations are unable to meet the needs of SMEs. “The people involved don’t have an entrepreneurial mindset and approach, hence the businesses which they have supported have frequently failed.” Chris’s message is very clear: “If Africa and the developing world are to be transformed it will be through economic independence not dependency, via bottom-up enterprise not top-down handouts.”

The GroFin and Shell Foundation models brought a business focus to development challenges. “From the outset both the Shell Foundation and ourselves were clear that our model must be financially viable and able to leverage capital from the private sector” says Jurie, GroFin’s Chief Executive. “Both sides were resolute that this was a commitment to sustaining a long-term relationship.” The gauntlet had been thrown down and the challenge was embraced with earnest.

GroFin operates as a profit-making private organisation and has helped to lead the development and promotion of a new asset class. It aims to plug the ‘missing middle’ by providing vital business skills assistance and risk capital – on a competitive investment basis – to SMEs that are underserved by traditional capital sources. GroFin has a sophisticated finance policy to assess the viability, sustainability and risk-return profile of potential new business. While rigorous, it is also designed to ensure maximum flexibility. GroFin works in close collaboration with its clients, appointing a dedicated Business Development Manager, who works with the entrepreneur for the full term of the financial assistance, which is typically between four to six years.

Under estimating its potential at the onset, the partnership has pioneered a viable and sustainable way to plug the ‘missing middle’. GroFin has been built through the inspiration and commitment of two men with a vision for change – and a whiteboard.