Frequently Asked Questions

Fusion is not a Development Finance Institution like those established under the auspices of the various government and inter-governmental bodies: We have no public monies available to us, and are not answerable to political masters. On the other hand, we are keen to support the good work of DFIs in our target markets, and we share many of their goals.

No.

No. The company was founded by Christians and is run on Christian principles. However, we all believe that a company, like civil society, should be a 'neutral space' in which individual employees are permitted the privacy of their own beliefs and practices. Individual shareholders and Directors share in the belief that the company is there to do something good as well as something profitable, but hold a variety of religious persuasions. The company operates no religious or political bias in its recruitment or employment practices, or in its investment selection.

We currently operate primarily in East Africa. We believe that this region is currently the part of Africa which is most likely to benefit from our particular approach to investment, for the following reasons:

• The newly reformed East Africa Community (Kenya, Uganda, Tanzania, Rwanda, Burundi) represents an accessible marketplace of 140 million people
• It is a region which is opportunity-rich and capital-poor
• There are shared histories, cultures and institutions
• The basic infrastructure for growth (physical and other communications, financial systems, legal framework) is in place
• Good education systems produce talented and well-motivated work-forces
• The peoples of the region include energetic and gifted entrepreneurs

Fusion will continue to focus on East Africa (and on European businesses which also target opportunities in that region) for the time being. This allows us to focus our limited resources to good effect. We will also keep our eye on potential opportunities from other parts of Sub-Saharan Africa, which may form part of the longer term future.

We believe in business as the most powerful catalyst for economic growth and development. We believe that a broadly based economy which encourages and rewards entrepreneurship is the only reliable solution for poverty. Within this general statement, SMEs clearly have a particularly powerful role to play. Unlike very large scale business activities, their ownership tends to be broadly spread, they offer natural diversification for the economy and for the financial system, they do not facilitate the concentration of power and resources in elites and foreign hands. Unlike micro-businesses, they are focussed not on subsistence, but on growth, and they can generate high quality jobs which are available outside of tight family groups.

SMEs are, however, quite difficult to service in financial terms:

• Their requirements tend to be individual, and require a high degree of tailoring – the kind of mass marketing which characterises personal banking and micro-finance tends not to work very well
• They need to be appraised and monitored individually
• They need non-financial as well as financial input
• If they are growth-oriented, they take risks with their businesses

Servicing the financial needs of SMEs can therefore be both risky and expensive. In economies which are capital-poor, major financial institutions such as banks naturally tend to focus on the easier 'mass market' targets, such as salary-based lending. MFIs also tend to focus on those customers whose needs can be met within a formulaic approach. This tends to leave SMEs relatively underserved.

At Fusion, we have developed a methodology for meeting the needs of SMEs, based on the long experience of our Directors and shareholders in financing and running this kind of company. We believe that this methodology has wide application in the developing world.

Everything has to begin somewhere. One of us met Luke Kinoti in Nairobi, and Fusion Capital was born out of the dialogue with him. Fusion Investments as a distinct company, came after Fusion Capital. Fusion Investments did not, then, begin as a 'grand design' in someone's mind. Rather, it grew out of an experiment in Kenya which worked, and which made us see that other such ventures could also work. As it turned out, Kenya was a providential place to start. Nairobi is the hub of the East African region, and the Kenyans are particularly energetic and innovative business people. See www.fusioncapitalltd.com

We are quite proud of our rather unique history. We think that starting 'at the hard end' with an actual business in Africa, and then seeking the right way to finance and support it, gave us a healthy dose of realism from the beginning.

We have a pragmatic and hands-on approach to due diligence. We request the highest possible level of information and spend a significant time on-site to get a deep understanding for the business, the market and the management team. We conduct all due diligence ourselves, as we believe it is important to build a strong understanding for the business - both to make the correct investment decision and to support the business after the investment is made.

We have noticed that the due diligence requirements of major institutions can be a major obstacle to completing good deals. Powerful institutions are in a position where they are able to dictate processes which are very convenient for them, but which impose huge costs on the applicant companies. Because we do not see ourselves as being in such a position of power, we do not follow this route. Our diligence is extremely penetrating, but it is relatively swift and leads to a definite decision.