Chili Processor Becomes Rwanda’s Top Exporter— Lessons for Facilitating Long-term SME Growth
As market facilitators working with small- and medium-sized enterprises (SMEs) in Sub-Saharan Africa, we aim to provide short-term support that positions them for sustainable, long-term growth. This means that the best indicators of success are realized after our engagements with the businesses, or even after projects close, but it is important to capture these stories to understand the full impact of our work.
In September 2019, Gashora Farm, a Rwandan agribusiness, signed a contract with Chinese importer GK International Enterprises worth $500 million over five years to supply dried chili to China. This deal alone, which is valued at $100 million annually, springboards chili to become Rwanda’s top export, surpassing both tea and coffee.
So how did Gashora Farm–a small business that started producing chili for export on fewer than six hectares only four years ago — achieve such great success? Recognizing the growing market for dried chilis, owner and entrepreneur Dieudonne (Diego) Twahirwa has invested in rapidly expanding his business, which now produces on more than 40 hectares and sources from 1,000 smallholder farmers.
In 2018, Twahirwa partnered with the USAID/Rwanda Private Sector Driven Agricultural Growth project (PSDAG), implemented by RTI International. Through the partnership, Gashora received technical assistance for business planning and marketing, a co-investment grant to build a processing and packaging facility, and market linkages with buyers and other market actors. This small capital investment and business development support enabled Gashora to then access a commercial loan of over $200,000 to further expand this business. (PSDAG’s work with the financial sector has further unlocked additional SME financing—read more here.)
Twahirwa says the greatest value of the partnership with USAID was that it “helped increase our production capacity from 200 to 10,000 liters of chili oil a day. This has also given us more room to do research and come up with new products on our product line including sauces, pastes, and powder.” Before the partnership, Gashora had only 8 employees—now the company directly employs 58 staff. The export agreement with GK will constitute a nearly 100 percent increase in annual revenue.
Lessons for partnering with SMEs: So how do we design short-term partnerships that enable long-term growth?
- Partner with committed entrepreneurs. Twahirwa is a dynamic and innovative self-starter with a vision for his enterprise. He did not rely on donor funds to run his business, but rather used the partnership strategically to accelerate Gashora’s growth and unlock additional capital.
- Prioritize growing, profitable markets: Processed chili was a nascent market when PSDAG launched and was not a value chain traditionally prioritized by donor projects. However, untapped markets often offer the highest potential for growth and, in the case of processed chili, much higher margins than staple crops or even fresh horticulture. USAID/Rwanda gave PSDAG the flexibility to respond to such emerging market opportunities rather than pre-selecting focus value chains.
- Customize partnership design: Gashora, like all of PSDAG’s SME partners, received a tailored package of support that combined business development services, a co-investment grant, technical assistance, and market linkages. While designing these packages for each SME takes time, it is critical to ensure that the business receives exactly what it needs to catalyze growth.
- Look for post-project results: SMEs investing in major expansion, like Gashora, are aiming for long-term growth, not immediate results. Projects should expect the biggest gains to come after the partnerships have ended and the businesses are self-sustaining. By following up with our partners after the project “exits,” we can uncover stories like Gashora’s and see the true signs of self-reliance.
When asked about the future, Twahirwa says, “I have always had bigger dreams for Gashora. We are very happy with our current success, but still believe we have so much more potential and we can achieve our bigger long-term goals.” Twahirwa says he intends to expand his chili export into new markets and diversify into other spices in the coming years as well. These are lofty goals, but with Twahirwa’s track record of success, it is easy to believe he will achieve them.
The deal between Gashora and GK occurred two weeks after the close of the USAID/Rwanda PSDAG project. This post was coauthored by Karis McGill, formerly of RTI International.