In 2013, Rwanda’s Auditor General released a report indicating that the country had lost Rwf10.5 billion on non-billed water.
This loss represented 42.38% of the total volume of water produced and distributed in 2013 alone.
The loss was so high that the auditor general had no better way to describe it. He simply gave it a nick-name: “Inadequate Accountability For Revenue.”
This gross mismanagement of a national utility, gave two fresh graduates from Tumba College of Technology sleepless nights.
Two years ago, AlistideNdayisaba 24, a graduate of mathematics and physics told his colleague Imani Bora 21, a graduate in Computer engineering that he had an idea on how to solve the “water billing headache”.
In a late night talk, while sitting on Ndayisaba’s bed, the two contemplated about an idea of designing an electronic billing system that would put to an end the loss of billions of francs.
They turned to their computers and embarked on intensive coding after coding for a period of six months. They deprived themselves of sleep.
Friends and relatives got so exhausted from the nagging boys looking for money to buy chips and microprocessors.
After eight months of testing, a complete functioning device was showcased to fellow students and family. Everyone was excited.
However, that is all the two graduates could do. They now need a potential investor or a partner to push their invention to another level.
Bora told KT Press that they are engaging the Water and Sanitation Corporation Ltd (WASAC).
Investors Could Risk On Startups
In October, 2015, Investors at the Transform Africa summit in Kigali were attracted to new innovations showcased by young ICT entrepreneurs.
Two Rwandan college students; Patrick Umuhire and Umuhoza Cedrick exhibited Vuga Pay, an application that facilitates cross border and cross network Mobile Money Transfer.
The two innovators were seeking $20,000. They ended up accepting offers from two investors including Tigo telecom which offered to play an advisory role.
Tigo representative at the summit told the innovators that, “you managed to bypass our system.”
There are many more others.
Bora and Ndayisaba’s electronic water billing system is among thousands of up-and-coming innovations in Rwanda. Many are growing fast and generating income.
MERGIMS, a platform that enables anyone to pay for water, electricity, tuition fees, is spreading across African markets.
There is SafeMotos app that links passengers to motor taxis. Customers click and get picked up from any location. This app is now expanding to other African countries too.
Torque Ltd, has a distribution management application. Currently, one of the users of the application is BRALIRWA, Rwanda’s leading beer and beverage factory.
Another application making rounds helps children with hearing impairment. There is also a-3 D simulated animation program which works as a practical substitute to signs lessons, also intended to hearing impaired children.
These innovations have attracted investors and it’s a matter of time they roll out to other countries.
According to Rwanda Private Sector Federation and the Institute of Policy Analysis and Research, startups fail because they lack access to financing. Some of them are not ideal for the market, others lack a business model and owners lack business management skills.
K-Lab, a government funded open space incubation center for IT entrepreneurs, produces more than 250 projects annually. In 2015, however, only 10 of them attracted funding.
Pacifique Hallelua, the Manager of k-Lab explains that some startups fail to secure funding because investors don’t trust them with their money. “They don’t trust them, they don’t believe in them.”
Hallellua explains that there are instances where owners of these startups have to find someone to represent them whenever they have to pitch their business proposals to potential financiers.
On January 27, K-Lab invited Tony Nsanganira State Minister for Agriculture to interact with young entrepreneurs and inspire them on innovation and the existing opportunities in agriculture sector.
“Don’t look for a quick kill,” he said. “Successful people don’t expect money right away…it is done through hard work, paying attention to detail and not giving up,” Nsanganira said.
He advised them to capitalise on networking than doing everything individually. “Keep networking, partner with each other, it is better that way,” he said.
Some startups say there is another obstacle beyond just networking and partnering.
Banks not convinced by most startups
Hallellua explains that most startups are on halt due to exorbitant requirements including; high cost of initial capital and collateral to secure funding from banks.
However, government recently approved $100 million fund to cater for bankable ideas that cannot get financing from commercial banks or capital venturists. Rwanda Development Board will manage the fund.
Eric Kubwumucunguzi, a member of K-Lab notes there is lack of awareness about such available opportunities.
“I have been here for more than four years, we have worked on different projects, but none of them has secured funding, from government or private financiers,” Hallellua says.
And yet, on the other hand, Bora and Ndayisaba with their water billing system for example, have no idea about this fund. “We have a finished product, it works, we tested it, all we need is financial support,” says Bora. “We cannot do anything beyond where we are now.”
“We are not businessmen,” says Bora. “Our job was to find a solution to a problem, and we have done it. The rest is not our area of expertise.”
According to banks, a good proposal can easily help startups secure a loan. But most of Rwanda’s young startups do not present proper business plans.
“Most financial institutions need comfort that a business is profitable considering the high risks involved,” says Frank Abaho, the Public Relations Officer for Development Bank of Rwanda (BRD).
“BRD used to finance projects in the priority sectors that are above Rwf15million…those below the amount, the bank reaches them through its refinancing product (provides credit lines to SACCOs and MFIs) to reach the small projects,” he says.
Despite these challenges, some startups, especially those already making revenues, have crashed the walls and forced themselves into the corridors of investors.
MERGIMS, let’s say, made several pitches and has already received multiple offers. The firm’s CEO, Antoine Muhire says, “It is not easy, but you have to fight hard.”
“The money is out there, and we will go after it,” he said recently in an interview on The Big Talk show on KT Radio.