Alexandra Sing

For-Profit Social Business: The Case for Capitalism in the Developing World

SIT Rwanda Fall 2011

4 Dec. 2011

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Table of Contents

Acknowledgments ii Abstract iii 1. Introduction: The Problem with Nonprofit 1 2. New Solutions 5 3. Developing Countries: The Perfect Customers 11 4. Methods 13 5. Solutions from Social Business 14 5.1 Musanze 17 5.2 One Egg 18 5.3 Haki Construction Solutions Ltd. 20 5.4 Horizon Sopyrwa 22 5.5 SOGEMR 24 6. Conclusion 27 Appendix: 31 Bibliography: 34

III

Acknowledgments

I would firstly like to thank all of the staff at SIT for their commitment to the pursuit of

knowledge, empathy, and excellence. This entire semester has been the most enriching learning

experience I have ever received, and for that I must thank Daniel Lumonya, Apollon Kabahizi,

Issa Higiro, Vestine Mukamusana, and Selina Olumbe. In particular, I want to extend a special

thanks to Dan for his challenging questions and stimulating conversations. I enjoyed learning so

much from him and truly believe that his approach to teaching and research is unparalleled. In

addition, I want to thank Russell Rainey for introducing me to the town of Musanze and the

Musanze Opportunity Center members and staff for their hospitality and friendship. I felt

privileged everyday to be around such an outstanding and inspiring group of people. I also want

to thank every individual who took the time to talk with me and share their work, ideas, and

passions. I wish it was possible to include every name, but the list is too exhausting. Regardless,

the impressions you left on me will be forever appreciated and cherished. Lastly, I want to

acknowledge my classmates and the wonderful friends I’ve had the privilege of getting to know

this semester. Your insights and contributions to class discussions were always thoughtful and

challenged me to explore ideas outside of my discipline. I will always look back fondly on this

group of people.

IV

Abstract

To date, the Millennium Development Goals are falling short, aid has failed to achieve

remarkable results, and NGOs and nonprofit organizations continue to show poor retention. A

new solution is needed to improve the standard of living for low-income individuals and develop

economies without compromising prospects for future generations. The following is a brief

overview of the impact of social business in Rwanda. Social business is a relatively new

phenomenon and thus requires greater evaluation to assess its efficacy. Bearing in mind the

goals of Vision 2020, the study was designed to explore the viability of social business as an

alternative to aid, NGOs, and government-sponsored programs. One of the research goals was to

understand how companies are able to turn an indigenous resource into profit and simultaneously

provide social benefits. In each of the case studies, common questions were posed to gain

insight into the input and output variables during the production process. By examining the cost

of labor and capital with the number of jobs created and additional social benefits, it is possible

to begin evaluating sustainability. The conclusion drawn will demonstrate the impact of social

business across sectors and income levels in order to illustrate how and where social business is

currently having an impact.

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1. Introduction: The Problem with Nonprofit

Sustainable development is defined by the Brundtland Report as “development that meets

the needs of the present without compromising the ability of future generations to meet their own

needs.”1 To achieve sustainable development, the World Bank (WB) designates three objectives:

growth, efficiency, and stability.2 Keeping this information in mind, this study will attempt to

place social business in the context of sustainable development to assess its credibility as an

alternative to aid, NGOs, and government-sponsored development programs. Rwanda, home to

an emerging East African economy driven by Vision 2020, will serve as the focus of the study.

Implemented at the turn of the century by the Ministry of Finance and Economic

Planning, Rwanda’s Vision 2020 aims to transform Rwanda into a middle-income country by the

year 2020. In growing to middle-income status, the three main objectives are reducing

dependency on foreign aid, shifting from an agrarian to a knowledge-based economy, and

producing a middle class driven by entrepreneurship. To achieve these objectives, the Ministry

outlines six pillars, comprising good governance, strengthening of human capital, private sector-

led development, infrastructure development, modern agriculture, and regional and global

integration.3 These are the initiatives Rwanda has developed for itself. My objective is to study

how social business will play a role in meeting Rwanda’s goals. The hypothesis of the study is

that social businesses make use out of available resources, find a way to turn the resources into

useful products, and achieve sustainability through self-financing. Before exploring the role of

1 Our Common Future. World Commission on Environment and Development – United Nations. General Assembly Document A/42/427. http://www.un-documents.net/wced-ocf.htm. 2 Tatyana P. Soubbotina. Beyond Economic Growth: An Introduction to Sustainable Development. Washington D.C.: World Bank, 2004, 8. 3 Republic of Rwanda. Vision 2020. Ministry of Finance and Economic Planning. 2000. http://www.minecofin.gov.rw/ministry/key/vision2020, 2-3.

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private, for-profit business, it is important to juxtapose the focus of the study to the shortcomings

of other forms of development.

Dambisa Moyo in Dead Aid presents, from an African perspective, the problems aid has

both created and failed to remedy. Since the end of World War II, over $1 trillion has been spent

on African aid, yet recipient countries have little to show for progress. In many countries,

poverty has actually worsened. Moyo describes a vicious cycle of poverty resulting from aid in

which corruption, market distortion, and augmented poverty create a greater need for more aid.4

It is no secret that many African countries suffer from corruption at every level of governance.

Unfortunately, aid is habitually most needed in areas where the risk of fraud and corruption are

highest, which means donor states must actually budget for the amount of money that will likely

be lost.5 Risk in giving aid to low-income countries is analogous to lending to low-income

individuals. The difference, however, is that there is no collateral, and accountability and

transparency are difficult and costly to ensure.

Even where aid comes with strings attached, there are significant problems. Tied aid, or

conditional aid, constrains how countries are able to spend the money they receive by design.

The issue is that aid is sometimes given with motivations besides poverty reduction.6 When

donor objectives and recipient objectives are not in accord, the benefits to the recipient country

are limited. To extend this notion, the prescriptions given by northern countries to southern

countries are sometimes divorced from realities on the ground. As a result, inefficiencies arise

4 Dambisa Moyo. Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. New York: Farrar, Straus and Giroux, 2009. http://www.dambisamoyo.com/books/?book=dead-aid. 5 “Aid Lost to Corruption May Rise as Focus Changes.” The Guardian. 20 Oct. 2011. http://www.guardian.co.uk/global-development/2011/oct/20/aid-cash-fraud-corruption-committee-warns. 6 Paul Collier and David Dollar. “Aid Allocation and Poverty Reduction.” Development Research Group, World Bank. 1999. www.stanford.edu/class/ips216/Readings/collierdollar_99.pdf, 2.

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because southern countries must utilize the money on projects that will have only a marginal

impact.

Lack of coordination even affects programs such as the Millennium Village Project

(MVP). By many estimates, the sustainability of the project was overestimated, and the

ostensible “bottom-up” approach to poverty alleviation is questionable. Lack of coordination

with local experts and implementation of western notions of development are responsible for this

problem.7 There is still time before the target date of project completion; thus, it is unfair to

declare whether or not the MVP will ultimately prove successful or not. Despite the lag time,

one thing is certain: the MVP’s success is limited because it has failed to include the private

sector except to solicit funding.

As much as foreign aid has been problematic, there are drawbacks to national aid as well.

Rwanda’s “One Cow per Family” program, which was supposed to provide households in

extreme poverty with a means of subsistence, has not had the intended impact for several reasons.

Firstly, corruption at the local level prevented intended recipients from receiving cows. Leaders

reportedly gave cows to families who were not listed as recipients and in some cases, kept the

cows for themselves.8 There is also an alleged issue of lack of oversight and follow-up to

evaluate the efficacy of the project. According to an unnamed source in Musanze District, many

families are not trained to raise cows and therefore, do not know how to properly care for them.

The result is that many cows are dehydrated so they are unable to serve as effective assets to the

families. This is not to suggest that the “One Cow per Family” program has been a failure. In

fact, there is evidence to show that the program benefits some families. The statistics, however,

7 Edward Carr. “The Millennium Village Project and African Development: Problems and Potentials.” Progress in Development Studies. 8, 4 (2008), 334. 8 Stephen Rwembeho. “Kabaija Issues Ultimatum on ‘One Cow’ Program.” The New Times. 31 Dec. 2011. http://allafrica.com/stories/200912310025.html.

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measuring the success and shortcomings of the program were conducted by the International

Institute of Social Studies, not the Rwandan government. Businesses, in comparison, must

evaluate their decisions to preserve efficiency and productive organization, an idea that will be

exhibited later.

If national and foreign governments are inadequate for transforming income status and

poverty eradication, then we should look at non-governmental organizations. NGOs are similar

to businesses in that they must acquire capital and compete with other organizations. Rather than

collaborating, NGOs sometimes find their objectives in conflict with other NGOs of similar

focus and overlapping interests.9 They need the same resources and clients for legitimacy. This

raises the problem of funding. During periods of emergency, winning over the sympathies of

donors is less exhausting, but as time passes and interests change, energy for the concern runs

dry, and NGOs must find another way to market their cause. As NGOs market their cause, they

become increasingly aware of what potential donors are willing to support, hence altering their

own objectives. Because of their financial dependence, NGOs are nothing more than

intermediaries for aid. At this point, it becomes a game of survival in which the NGO must

scramble to remain relevant.

Nonprofits in general also face a huge problem of retention. Nonprofits, by name,

discourage paying employees more than a little compensation for their work; yet, they face the

challenge of competing with private, for-profit companies for talent. As Billy Shore, founder

and director of the nonprofit Share Our Strength knows, “This sector attracts a lot of young and

idealistic people. Those of us in leadership positions are going to have to get out on a limb a little

bit. If we’re not the ones to stand up and say we need to pay them well and keep them employed,

9 Sarah Michael. Undermining Development: The Absence of Power among Local NGOs in Africa. James Curry, ed. Bloomington, Indiana: Indiana University Press, 2004, 122.

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nobody else is going to do that for us.”10 There is also the issue that nonprofits do not offer

upward mobility, stunting the career paths of young professionals. Benefits such as mentorship,

retirement contributions, and merit-based pay are lacking as well. In a survey referenced by

Justin Ewers, 3 out of 4 nonprofit executive directors are likely to quit within the next five years,

an extremely poor retention rate.11

Here’s the bottom line as I see it. NGOs and government-sponsored programs are little

more than aid intermediaries. Aid is good because aid saves lives, but aid does not improve the

lives that it saves. Aid does not improve the standard of living; therefore, aid will not fulfill the

goal of Vision 2020, promoting Rwanda from low-income to middle-income status. So what can

be done instead? The following is an introduction to social business.

2. New Solutions

Recently, the subject of corporate social responsibility has gained more attention, though

not necessarily in the context of development. For the purpose of this study, I define social

business as capitalism with a conscious. It is a business which operates like any other for profit,

yet provides social benefits through its operations. For years, companies have attempted to cater

to the sympathies of their clients and customers by engaging in activities and missions with a

social focus. These projects are often unrelated to their consumer products and services, yet their

potential to attract clientele is a testament to the placement of social responsibility on the

corporate agenda. For example, JP Morgan, a global financial service provider, has created

several service projects both locally and internationally to provide social benefits to

disenfranchised persons. Locally, their activities include community and economic development

through job training, adult literacy support, affordable housing initiatives, and contributions to

10 Justin Ewers. “The Problem with Nonprofits.” US News. 4 March 2008. http://www.usnews.com/news/national/articles/2008/03/04/the-problem-with-nonprofits, 1. 11 Ibid, 1.

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education programs. Internationally, the company partners with NGOs to support English

teaching, microcredit, and financial backing among other activities. All of these activities are

largely philanthropic in nature and do not directly relate to the services JP Morgan offers to its

own clients. Although this is commendable, other companies are doing equally meaningful work

while simultaneously benefitting.12

In 2008, famed rock star, Bono, launched the (RED) campaign with several subsidiaries,

including Gap, Apple, and Motorola. The campaign aims to fight HIV/AIDS and other deadly

diseases common in the developing world by extracting a percentage of the profits made from

products branded “(Product) Red.” All proceeds go to the Global Fund.13 With this approach,

consumers get to feel like they are contributing to a noble cause when they purchase (Red)

products, an added incentive for consumption. It is a form of corporate responsibility, which

allows companies to engage in social acts without altering the focus of their services.

Companies can offer the same products and services, support a social cause, and at the same time,

earn a profit. Since its inception, Red has raised $180 million, taking no overhead, and has

reached 7.5 million people through the Global Fund.14 This amount of money was only a

fraction of what companies made off of the products they sold. Clearly, social business can be

mutually beneficial.

To some, profiting off of social goods lacks the integrity of traditional charitable

organizations and nonprofits. However, Bill Gates argues that the future of empowerment and

socio-economic development will come to depend more on corporations. It is an idea he terms

12 J.P. Morgan. “Corporate Responsibility.” http://www.jpmorgan.com/pages/jpmorgan/ap/about/cr. 13 Ron Nixon. “Bottom Line for (Red).” New York Times. 6 Feb. 2008. http://www.nytimes.com/2008/02/06/business/06red.html?pagewanted=all. 14 Join(Red). “The Marshable Award for Best Social Good Cause Goes To… http://www.joinred.com/mashable/.

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“creative capitalism.”15 According to Gates, “It’s not just about doing more corporate

philanthropy or asking companies to be more virtuous. It’s about giving them a real incentive to

apply their expertise in new ways, making it possible to earn a return while serving the people

who have been left out.”16 Gates goes on to contend that companies need more than publicity

and approval from consumers to further their social provisions. They need monetary incentives,

not because they are inherently greedy; it is only sustainable to increase social provisions if there

are financial means to do so.17 It is more than capitalism with a conscience. This type of

capitalism targets new customers (low-income individuals), builds new markets, and contributes

to development where economic empowerment previously did not exist. More than that, it is a

sustainable model. By utilizing the talents of skilled professionals, corporations apply the best of

humanity to work with underserved populations but do not rely on external funding or resource

support. To illustrate why this model should be more appealing to the average company, it is

important to review the anatomy of a typical business.

In an extremely textbook example of a business development model, we will move step

by step through a basic strategy. Firstly, a business needs to conduct a product-market analysis.

This involves assessing what people are willing and able to purchase. For the purpose of this

paper, we are excluding luxury goods. Businesses must identify current markets, what products

and services are currently being sold, and what products and services are currently unavailable.

They must also be aware of where investors are willing to lend their financing. Next, a business

will assess what resources (labor and capital) are available for production in their geographic

area. This allows the company to minimize transport costs and provide opportunities for local

15 C.K. Prahalad. The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. Upper Saddle River, New Jersey: Wharton School Publishing, 2010, 19. 16 Bill Gates. “Making Capitalism More Creative.” TIME. 31 July 2008. http://www.time.com/time/magazine/article/0,9171,1828417-2,00.html, 1. 17 Ibid, 3.

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economic development. It also demands coordination between different entities such as

government, NGOs, and other private enterprises. The next step is to develop a strategy for

mobilizing resources to create a product that can be sold at market. At this point, it is important

for the enterprise to set targets by conducting a cost-benefit analysis as well as an evaluation of

marginal utility. By doing so, the enterprise is able to identify its production capabilities and

market options. The principle incentive is to operate at profit so as to satisfy outstanding lending

obligations and continue to improve production efficiency and product quality. In essence, the

business is sustainable as long as it continues to satisfy customer demand within its production

capacity. A nonprofit organization such as an NGO does not have this incentive. As long as

donor funds are available, it can operate at minimal capacity to satisfy whatever need it deems

necessary. This is not to suggest that all NGOs operate under this mindset. If the NGO,

however, is influenced by donor wishes, it must alter its activities in order to maintain financial

support. A private business, by contrast, must only answer to its customers and shareholders;

therefore, it possesses more autonomy.

Gates contends that social business, “Is how people can benefit when businesses find

opportunities that have been missed,”18 but many question this statement, challenging the notion

that markets which have been overlooked simply do not exist. Many corporations do overlook

those living at or below the poverty line, but a social business may actually explore this very

demographic as a possible market source. The bottom billion (to use Paul Collier’s term) are

usually those targeted by NGOs and aid programs, but they all too often fall short of achieving

long-term impact because of one crucial factor: the profit incentive. The challenge to the profit

argument, however, stems mainly from cynics who discount low-income individuals having real

18 Ibid, 1.

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purchasing power. It is true that the purchasing power of low-income households is significantly

less than that of higher-income households; however, there is a reasonable explanation for this.

In the developing world, the poor lack freedom of choice, a trend referred to as the

poverty penalty. The poverty penalty results from local monopolies, exclusion from larger

markets, and unequal distribution of resources and products.19 A private business, however, can

remedy this problem by providing the poor with options. As stated by P.K. Prahalad, “Being a

multinational or a large domestic firm does not guarantee success; the capacity to adapt and

innovate at the Bottom of the Pyramid does.”20 This, in turn, creates a competitive local market

with price controls that benefit those with less purchasing power. Contrary to popular notions,

the poor are extremely value-conscious, mainly because they have to be.21 As a result, they try

to maximize the quality of the products they buy with the means by which they have to buy them.

With choice, the chances for quality improvement at affordable prices are much higher.

As more entrepreneurs recognize the profit potential of underdeveloped markets and

create competitive businesses, more enterprises will likely be developed. There are emerging

markets that cannot afford to be ignored. Paul Polack argues, “The problem is that 90% of the

world’s designers spend all their time working on solutions to the problems of the richest 10% of

the world’s customers.”22 As previously stated, there are untapped markets at the bottom of the

income ladder and besides the poor, for-profit businesses stand to benefit. If new consumers are

successfully solicited, more businesses will recognize the potential to expand sales and

production to target previously excluded populations. With more businesses competing and

expanding new markets, the potential for industries and strengthening of the private sector will

19 Prahalad, 35. 20 Ibid, 9. 21 Ibid, 25. 22 Paul Polack, Out of Poverty: What Works When Traditional Approaches Fail. San Francisco: Berrett-Koehler Publishers, Inc., 2008, 64.

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emerge. On a macro scale, competitive industries and a strong private sector are key elements in

lifting the income status of a less developed country (LDC).

According to Gates, “There's another crucial benefit that accrues to businesses that do

good work. They will find it easier to recruit and retain great employees.”23 The reason is that

young professionals are often more energized by passions they’ve developed in their youth. As a

result, they want to work for an organization that is rewarding in more than a monetary sense.

They want to feel that their work is meaningful and has a lasting impact on communities. I

hypothesize that these are the types of people who would voluntarily join an NGO, yet social

enterprises are more likely to retain the employees they recruit because of the sustainability

factor.

A social business, however, does not exclusively employee those with degrees from

prestigious institutions; it creates jobs at the local level as well. As we will see later, when an

energy plant is in the construction process, hundreds of variable labor must be hired, pouring

income into the local community. Similarly, when a company requiring organic materials grown

locally needs production supplies, hundreds of farmers can sell their crops at a market rate. This

can create a chain reaction beginning with increased demand, leading to augmented output,

which will increase income. These companies benefit as well because they save on the price of

labor and transport. The result is a virtuous business cycle.

At the end of the day, loans and investments must be repaid, shareholders must be

satisfied, and employees must be content. The advantage of profit is that businesses are held

accountable. And they have incentives: incentives to operate above the cost of input. This

forward-looking, long-term vision requires maximizing efficiency and transparency in the

business’s operations, a positive outcome for all parties involved. 23 Gates, 3.

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3. Developing Countries: The Perfect Customers

Companies are always looking to satisfy demand where demand can be found, which

often results from a need that is currently unmet. Going by this assumption, the overwhelming

population of developing countries is a rich opportunity to target customers since the needs are

unlimited. In agriculture, for example, farmers frequently use the same tools their parents used,

which were likely the same tools that their parents used. Referring back to the second goal of

sustainable development, efficiency is key to boosting production. Thus, companies willing to

sell products (tools, fertilizer, insecticide, etc.) at affordable prices and high quality that will

enhance crop yield can increase the efficiency and productivity of agricultural industries, which

should have a tremendous impact on local communities. Because the needs of 3 to 4 billion

people are currently underserved, this presents an excellent opportunity to draw new customers

and provide widely beneficial goods.

Again, the problem with targeting lower-income customers is the fact that markets are

underdeveloped for reaching such people. Such a challenge, however, should be seen as an

opportunity. Well-established markets offer fewer opportunities for emerging businesses

because there are barriers to entry and stiff competition. Emerging markets, conversely, are

unsaturated and offer new businesses the ability to enter more freely. Companies, therefore,

avoid the pressures of stiff competition. In addition, companies that cater to existing markets

place more attention on value enhancement rather than the creation of new value. The effect is

that companies focus more on how to cut costs, which causes reorganization and job slashing.

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By directing efforts towards underdeveloped markets, companies can maintain their creativity

and ability to innovate.24

Similarly, infrastructure is underdeveloped, which yields many opportunities to build new

roads, health centers, schools, and office complexes. Because unemployment is so high in

developing countries, labor can easily be found locally, making the hiring process cheaper and

more efficient. In addition, when companies compete for contracts to these projects, they are

forced to develop a cost-effective plan that will produce a high quality outcome. Companies that

own their own projects have a greater incentive to maximize quality since they must pay back

their loans and ensure customer satisfaction. Consequently, they are less likely to cut corners in

order to save on production expenses.

Another area of growth is in environmental business. Growth in developing countries

characteristically produces greater consumption of fossil fuels such as coal, oil, and natural gas.

In a planet already plagued by environmental stressors, increased consumption of harmful

substances will prove unsustainable. Fossil fuels are also extremely hazardous and consequential

to health. Use of charcoal, for example, is dangerous and leads to destruction of forests that

house hundreds of species of flora and fauna. Although developing countries do not contribute

as much carbon output as industrialized countries, destruction of ecosystems and natural

resources is much greater. Deforestation, desertification, and aquatic destruction are just a few

of the environmental stressors. Businesses that recognize the importance and profitability of

providing sustainable alternatives can have a tremendous impact on environmental preservation

and economic growth. It is essential now to see what these businesses look like in Rwanda.

24 Christian Seelos and Johanna Mair. “Profitable Business Models and Market Creation in the Context of Deep Poverty: A Strategy View.” IESE Business School - University of Navarra. Oct. 2006. www.iese.edu/research/pdfs/OP-07-06-E.pdf, 4.

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4. Methods

I have designed this research according to the discipline in which I am acquainted:

economics. The progression of the argument is designed according to a model in which terms

are defined, necessary background is granted, and adequate evidence and analysis are presented.

Any limitations or weaknesses in the study will be acknowledged as well in order to give context

to conclusions and significance of the study.

To conduct the upcoming portion of primary research, I held several semi-structured

interviews. The interviews took place in the offices of the interviewees as well as public

locations to ensure maximum convenience and comfort for the interviewees. Permission to

speak with representatives from each company was granted so as to ensure understanding of the

subject under study. Each interviewee was given a description of the topic and research question

under investigation. With some exceptions, there were a few general questions asked to each

interviewee, the specifics of which can be found in the appendix. Although it was important to

maintain some consistency in the conversations, the interviews were only semi-structured so as

to allow flexibility and fluidity in each conversation. Every business possesses different

characteristics that warrant specific questions. The mix of both generic and non-generic

inquiries produced both quantitative and qualitative data necessary for proper interrogation and

analysis.

Part of the interviews was spent on questions relating to the basic production function,

including the variables of capital, labor and output. This production function was chosen for

simplicity purposes given the short duration of the study. It is important to evaluate the costs of

input in comparison with output so as to assess the sustainability of the business. The production

function also reveals the amount of labor and capital necessary to operate the business, which

14

reveals how many jobs are created and what value of products are purchased from other local

outlets.

Site visits to each of the companies were a major part of the research process as well.

Gaining a visual aid to complement the interviews was invaluable in witnessing social business

in practice. It was also critical for understanding the information I read in the literature on for-

profit enterprises and alternatives to aid. Perhaps most importantly, visiting the operations in-

person helped me to develop a more personal relationship with the people I met. It was

appropriate for me to show that I had respect for their efforts to accommodate me and that I was

genuinely interested in what they had to offer. The following section exhibits the findings of the

interviews and site visits.

5. Solutions from Social Business

As stated, one of the strategies of a business is to review what resources are available in a

given location and how those resources can be mobilized and turned into profit. Rwanda’s

largest grossing export is coffee, which can be found in multiple districts around the country.

Even though coffee comprises a significant amount of Rwandan exports, Rwanda’s share of the

global coffee market is only .25%.25 After the genocide, the government reopened coffee

exports to the global market. As part of strengthening the private-sector through Vision 2020,

the government liberalized the coffee industry so that producers could choose whom they sell to

and how they market.26 Another important component of the plan is to produce more specialty

coffee by increasing the amount of beans that are washed before export.27 By washing the beans,

the quality of coffee is preserved, increasing the prices farmers receive for their beans. With

25 Interview at Rwanda Trading Company. 26 Karol C. Bourdeaux. “A Better Brew for Success: Economic Liberalization in Rwanda’s Coffee Sector.” Mercatus. mercatus.org/publication/better-brew-success, 14. 27 Ibid, 13.

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increased earnings, the farmers can reinvest the additional profit to pay back capital loans and

eventually raise their income.

Rwanda Trading Company was founded in order to make Rwanda a bigger competitor on

a global scale. Its mission is multifold; it is a sustainable, profit-grossing business, and it

provides economic opportunity to a low-income country. The stated intent is to attract foreign

investment by serving as a positive example of private business in Rwanda. The approach taken

by Rwanda Trading Company is to produce high quality coffee by supporting producers through

capital financing. By taking care of its producers, the company is able to build trust and set

examples for ethical business practices. During the harvest season, growers are given direct

financing with 50% lower interest rates than available banks. The entire production process is

purchased from the growers, and any improvements needed in washing stations are financed.28

This minimizes cost to producers so they may retain maximum earnings from the entire

production process. There are two other coffee exporting companies besides Rwanda Trading

Company in Rwanda. Because farmers are able to sell to the buyer of their choice, they have

options for the types of benefits they wish to receive. Rwanda Trading Company employees

about 40,000 workers at washing stations, which allows them to produce higher quality coffee at

a higher price.29 The company also buys from over 100,000 farmers who have either entered the

coffee sector since Rwanda Trading Company’s inception or benefited from the competition

between different coffee exporters.30 Once the beans are washed and purchased, they are

transported to the mill in Kigali where they are processed and packaged for export.

About 60 full-time and 200 part-time employees are hired, the vast majority of which are

Rwandese. The employees are given daily meals, healthcare, good working conditions, and

28 Westrock Coffee. 2011. http://westrockcoffee.com/sourcing/. 29 Interview at Rwanda Trading Company. 30 Ibid.

16

contributions to social security because healthy workers are more productive. Employees also

work a maximum of 45 hours per week and are paid nearly 25-30% more than the standard of the

local labor market.31 As a foreign enterprise, Rwanda Trading Company strives to be as

transparent as possible, abides by Rwanda’s regulation of pensions, and supports government

revenue through tax payments. According to a source at Rwanda Trading Company, many

Rwandan companies do not provide health care, pay low wages, and avoid pension contributions.

Thus, there are many Rwandans who would rather work for a foreign company since they are

given better benefits.32 Treatment of employees is not the only way in which Rwanda Trading

Company is helping to strengthen Rwanda’s economy.

On the macro scale, Rwanda Trading Company is having significant bearing on the

coffee market both nationally and globally. Founded in 2008 by an American entrepreneur,

Rwanda Trading Company has achieved 15% of the Rwandan coffee market and is now

operating at profit. One of its greatest impacts is that it opened the Rwandan coffee industry to

the U.S. market. Now companies such as Stumptown and Folgers are major buyers. Even

though Rwanda Trading Company is owned by Westrock Capital in the U.S., only about 2-3% of

the coffee is exported to Westrock Coffee Company (a subsidiary of Westrock Capital). Before

Rwanda Trading Company was formed, Switzerland and Belgium primarily had a monopoly on

Rwandan coffee. Now Rwandan coffee is sold worldwide at the market price.33

Rwanda Trading Company has many goals in looking ahead. Although it has not yet

paid back all of its investments, the Company is operating at profit after just 2.5 years and is well

on its way to repaying all of its outstanding loans. The Company intends to expand its

production and buy from more farmers in the future. Other goals include making Rwanda

31 Westrock Coffee. 32 Interview at Rwanda Trading Company. 33 Ibid.

17

Trading Company as Rwandan as possible by hiring national citizens and training them to work

in higher responsibility positions.34 As a sustainable business with a mission to foster Rwanda’s

economic growth and social harmony, Rwanda Trading Company has created hundreds of jobs,

poured income into local communities, and placed Rwanda on a more competitive platform in

the global coffee market. The Company did this by capitalizing on an indigenous resource and

maintaining the integrity of the company as a Rwandan, not an American business. It has only

been in operation for a short time, but it will be interesting to see how Rwanda’s coffee industry

evolves with this new exporter. Rwanda Trading Company works with farmers on a national

scale, but it is also necessary to look at how social business can transform individual

communities. For that, we will turn to Musanze.

5.1 Musanze

Musanze was chosen as an area of focus for several reasons. Located in the Northern

Province, Musanze is one of the most populated areas of Rwanda. It is a mountainous region

famous for five of the eight volcanoes in the Virunga chain and the endangered Mountain

Gorillas. In fact, tourism is one of the main livelihoods of the local economy. About 10% of the

revenue gained from tourism is used for community projects. Most of the revenue, however, is

poured into park maintenance while the rest contributes to government revenue. About 91% of

the population is involved in agricultural activity as a means of subsistence. Each season,

farmers are supplied with 1,500 tons of fertilizer by the government to maintain efficiency in

crop production. Still, 65% of households fall below the poverty line of $1.25 by World Bank

standards.35 Street children, lack of physical facilities for schooling, and low-quality energy are

just a few of the problems faced in Musanze. Another critical problem is the threat to the

34 Ibid. 35 “Musanze District.” Republic of Rwanda. http://www.musanze.gov.rw/index.php?id=213.

18

endangered gorilla population by deforestation due to charcoal production. Most families use

outdoor wooden stoves fired by charcoal, an inexpensive, yet environmentally hazardous source

of fuel. These problems will not be easily solved, but fortunately several NGOs and private

businesses have recently located to Musanze.

5.2 One Egg

Similar to Rwanda Trading Company, One Egg was founded by an American

entrepreneur who had a vision of creating economic opportunity and jobs in Rwanda. His vision

began with a social conscience, but he chose to go the for-profit route for the purpose of

sustainability. As One Egg states on its website, “When a hen house is built it creates jobs in the

areas of construction, business, farming, transportation and animal care.”36 The choice to use

chickens as the main source of capital was selected because eggs provide a source of income to

employees and affordable protein to consumers. Malnutrition is an enormous problem in

Rwanda and is responsible for half of all mortality under the age of 5.37 Producing eggs is

proving beneficial to all parties involved with One Egg’s undertaking.

Each day, One Egg is able to produce 4,000 eggs on site and the local farmers’ market.

The price of the eggs varies depending on the size. Smaller eggs sell for 50 Rwandan francs

(Rwf), and others sell for 55 to 65 Rwf. Assuming basic math, this indicates that the enterprise

is earning at least 200,000 Rwf per day from eggs alone. In the future, One Egg is looking to sell

larger eggs at a price of 70 Rwf if there is adequate demand. One Egg does not only sell eggs; it

also sells an average of 3,000 kilos of manure collected from the chickens as fertilizer every day.

The fertilizer is sold for 35 Rwf per kilo, bringing additional revenue of 75,000 Rwf. Once

36 One Egg. http://oneegg.org/. 37 Ibid.

19

chickens are no longer able to produce eggs, they are sold as well.38 Although there are three

main sources of revenue, there are also costs which must be taken into account. For one, it is

expensive to feed the chickens. 800 kilos of feed are required every day to feed the chickens,

which costs 200,000 Rwf per day. Other costs include employee compensation and depreciation

of capital.39

As part of its social mission, One Egg is also engaged in charitable giving to

malnourished children whose families cannot afford ample sources of protein. Donors sponsor

children through schools, orphanages, and hospitals to provide them with eggs. This not only

provides protein to malnourished children but also creates more jobs for those who must deliver

the eggs.40 Although this part of One Egg’s mission is not-for profit, the sustainability of the

company allows One Egg to take on other projects that benefit disenfranchised members of the

community. In this fashion, the business is multifaceted and demonstrates that giving must be

supplemented with an approach of sustainable operations. If One Egg was simply a donor

organization, it would require considerably more donations to support daily operations and labor

costs. There is nothing wrong with giving, especially from people who live halfway across the

world; it gives everyone an opportunity to have an impact. But giving will only make an impact

if it is sustainable.

During my visit to One Egg, I was impressed that I did not encounter a single American.

Every employee was Rwandese, including the manager who oversees the day-to-day operations.

One would never know that One Egg was founded by a foreigner unless he or she inquired

because the leadership and production are primarily run by Rwandan employees. When I asked

how employees responded to working for an American-owned enterprise, I was told that

38 Interview at One Egg. 39 Ibid. 40 One Egg.

20

employees value their jobs and genuinely appreciate the opportunities they have at One Egg.41

This is another example of a socially responsible enterprise that capitalizes on resources

indigenous to Rwanda while providing a social need.

5.3 Haki Construction Solutions Ltd.

One Egg’s neighbor is a company called Haki Construction Solutions that focuses on

infrastructure development and serves both small-scale and large-scale clients. The company

was founded by 6 individuals from East Africa in 2007 and commenced operations a year later.

Its main function is to supply materials for construction, but it also designs its own projects.42

Because it is located in Musanze, the main hub between Kigali and Gisenyi, it is able to engage

in construction projects in each of these areas, which are the fastest growing in Rwanda. As the

company develops, it hopes to become the leading construction company in Rwanda and

eventually expand contract opportunities to other East African countries. Its vision is to set the

standard for efficiency, make use sustainable, non-hazardous materials, and utilize modern

technology.43

Each year, Haki receives contracts and conducts its own construction for an average of 30

projects with revenue varying depending on scale, design, and clientele. It builds primarily in

Musanze, Kigali, and Gisenyi and is considering opening a branch in Goma. During

construction, the company uses local materials, including sand in its production and leaves little

to no environmental impact because it does not cut down trees. The types of products offered

include but are not limited to pavers, cement blocks, road curbs, caustras, slates, and slabs.

Prices for each vary depending on size and are set at the standard market rate. The range of

41 Ibid. 42 Interview at Haki Construction Solutions. 43 Haki Construction Solutions Ltd. http://hakiconstruction.com/.

21

clients varies greatly from government contracts, private businesses, and personal ventures. On a

larger scale, projects in the past have included hotel, school, bank, and church construction.44

Haki is also focused on the social responsibility side of its business and takes great care

of its employees and community. As of now, there are 45 full-time employees and hundreds of

variable workers each year who participate in the different construction projects. Leadership

includes a business manager, accountant, technician, and engineer. Each month, the company

typically hires 60 variable workers. Full-time employees are given health care and pensions and

at the end of each year, they receive a cow as additional equity. In the future, the company is

hoping to begin personal home construction so that it can serve more families in the Musanze

community. The social impact of the company can also be seen by simply visiting the

neighborhood. More entrepreneurs have located to the area around Haki, creating a small market

place of shops and enterprises. Within two weeks of establishing its headquarters, property value

around Haki tripled.45 These are just a few of the social benefits that Haki has both directly and

indirectly created in the short time it has been in operation.

Having a premier contractor will also make Rwanda more competitive locally and

regionally. Much of the infrastructure built in Kigali is contracted by foreign firms; the Chinese

in particular have a large presence. Although infrastructure is the backbone of development, the

Rwandan economy would benefit much more from rewarding contracts to national firms instead

of foreign contractors. This will create more jobs and allow Rwanda to take control of its own

development instead of catering to foreign companies. When a foreign company is given a

contract to build in another country, the question arises as to who will ultimately own and control

the property. Haki Construction offers a solution to this quandary. More importantly, it could

44 Ibid. 45 Interview at Haki Construction Solutions.

22

become a regional competitor if it is able to expand exponentially, hence making East Africa less

reliant on foreign contractors.

5.4 Horizon Sopyrwa

Another company that is capitalizing on Rwanda’s natural resources is Horizon Sopyrwa,

a subsidiary of Horizon Group. Horizon Group Ltd. is a private limited investment company that

supports sustainable, profitable Rwandan businesses across different sectors. The sectors

targeted are those of “strategic and national importance” which show promise for building

Rwanda’s private sector and adding to development in Rwanda.46 One business that stood out as

a strategic opportunity was Soprywa, a pyrethrum processing company. In 2007, Horizon Group

purchased 70% of the shares of Sopyrwa and soon acquired the entire company as one of its

three subsidiaries.47

Pyrethrum is a small, white flower that looks like a daisy and works as a natural

insecticide. It is a difficult plant to grow because it can only survive in specific, ideal conditions.

One of those conditions works to Rwanda’s advantage: volcanic soil. Not surprisingly, only

three areas of the world are known for pyrethrum production: China, Australia, and East Africa.

Because Musanze houses part of the Virunga volcanic chain, the soil and temperature around the

northern area is conducive to pyrethrum farming. The flowers are harvested by hand and then

dried to prevent pyrethrin loss. Once the flowers have properly dried, they are packaged for

transport to processing facilities where they will be ground into powder for extracting and

transformed into a commodity.48 As opposed to other insecticides, pyrethrum is organic, leaves

little residue, is harmless to humans and pets, and has a superior environmental impact to other

pesticides. The uses are multi-purposed as well. Farmers can use pyrethrum for crop protection,

46 Horizon Group. 2011. http://horizongroup.rw/spip.php. 47 Ibid. 48 Pyrethrum Nature’s Insecticide. http://www.pyrethrum.com/.

23

individuals in residential and commercial areas can use it for pest control, and public health

officials can use it for combating mosquito-produced diseases.49 With multiple functions,

pyrethrum is proving to be both commercially lucrative and socially valuable.

There are three major pyrethrum processing plants in East Africa, one of which is

Horizon Sopyrwa. At present, Horizon Sopyrwa holds roughly 5% of the total global pyrethrum

market, yet the pyrethrum from the company is said to be of superior quality to that of its

competitors. This is why Rwanda’s pyrethrum is popular in Europe and America. Cultivation is

organized into 5,600 hectares of land toiled by thousands of families.50 Since Sopyrwa’s

inception, 70,000 families in the northern Musanze area have been given jobs farming pyrethrum.

Once the plants have been harvested, they are sold to cooperatives, of which there are 24 in total,

who prepare the flowers for transport to the refinery. Here we see a supply chain in the

production process, which creates more jobs and income at different levels. Cooperatives pay

the farmers 1,000 Rwf per sack and then sell the dried flowers to Sopyrwa for 1,035 Rwf.51

Thus, cooperatives receive marginal profit, and Sopyrwa receives supplies ready for processing.

Horizon Sopyrwa’s impact is felt in both a micro and a macro sense. At the refinery,

there are 70 full-time employees, including administrators and factory workers. Sopyrwa’s

output is primarily geared towards exports, contributing to Rwanda’s trade profile, but the

company is also hoping to expand business within Rwanda. As new factories and businesses

enter the Musanze area, Sopyrwa is signing contracts to supply them with pyrethrum for various

purposes. Sopyrwa is also hoping to sell pyrethrum locally so as to have an impact on

communities who stand to benefit from disease protection and crop cultivation.52 As a resource

49 Ibid. 50 “Horizon Sopyrwa.” Horizon Group. http://horizongroup.rw/spip.php?rubrique12. 51 Interview at Horizon Sopyrwa. 52 Ibid.

24

unique to Rwanda, Sopyrwa has an excellent opportunity to boost Rwanda’s competitive

capacity on a world scale. Pyrethrum and coffee are major exports in Rwanda, which signifies

the exceptional importance of companies such as Horizon Sopyrwa and Rwanda Trading

Company.

5.5 SOGEMR

A new company that also shows strategic promise is SOGEMR, a private micro-hydro

development business. Although it is not yet completely off the ground, there are many reasons

to be optimistic about the potential effect SOGEMR could have. Hydropower is a critical

resource in East Africa as it holds the second largest hydro capacity in Africa. Yet, only 20% of

East Africa’s total hydropower potential has been tapped.53 By 2020, however, hydropower is

expected to account for nearly 80% of East Africa’s total power.54 Although countries such

Ethiopia have a larger potential for hydropower, receiving financing for hydro projects is

difficult because of the high risk involved. There is frequently low return on equity, and banks

are even further reluctant to invest in volatile regions.55 Because Rwanda has demonstrated

stability post-genocide and has a relatively positive record of intolerance to corruption, it could

be the next safe investment location for hydropower.

Only 6% of the entire population currently has access to the national grid in Rwanda, and

the capacity of hydropower that has been installed is underutilized and in poor condition. Within

the next decade, Rwanda will require more than three times the energy it currently has the

capability to produce as population and urbanization grow.56 Fortunately, there are around 100

53 Libyan Arab Jamahiriya Sirte. “Water for Agriculture and Energy in Africa: The Challenges of Climate Change.” Ministerial Conference on Water for Agriculture and Energy in Africa: The Challenges of Climate Change, 15-17 Dec. 2008. www.sirtewaterandenergy.org/docs/2009/E(Sirte_2008_INF_4).pdf, 19. 54 “ESI’s Hydropower Africa 2010.” REEEP. http://www.reeep.org/43.17320/esi-x27-s- hydropower-africa-2010.htm. 55 Interview at SOGEMR. 56 Vincent Denis. “Overview of the Small Hydro Sector in Rwanda.” MHy Lab. Oct. 2005. www.mhylab.com, 4.

25

potential sites for small hydro power plants, and about a fourth of those could possibly be

connected to the national grid.57 The problem is that appropriate government framework for

hydro power installation is lacking, and the skills required at the Ministry of Infrastructure to

develop a national plan are underdeveloped.58 If more Rwandans are to have access to quality

power, new approaches will have to be taken.

Looking at the government funded Nyamotsi site provides a vital case study for

comparison. Located near SOGEMR’s site, Nyamotsi illustrates the issues that can arise from

government contracts. According to an unnamed source at the site, the government awarded the

contract for the plant to the lowest bidder, which happened to be a Sri Lankan company. In order

to construct the plant at a lower cost, the company imported cheap parts and cut corners in the

production process. The outcome was exactly what one would expect. Several parts have

already had to be replaced and in other areas, part of the project was left incomplete because

funding ran out. The silt basin, an essential component for filtering silt before water reaches the

pipeline, does not function well. Power is unreliable and frequently cut off so that silt can be

removed. An even larger problem is that the plant is being underutilized because the initial

estimates underestimated the site’s power capacity. In fact, the plant is only producing about

20% of its energy capability. Instead of informing the government that the site had been

underestimated, the company left the contract as it stood and proceeded to complete the job it

was hired to do. The Sri Lankan company is not responsible for maintenance, and due to the

absence of a profit incentive, the government has no motivation to maintain the plant either.

57 Ibid, 9. 58 Ibid, 12.

26

Although the government thought it was saving on costs by rewarding the lowest bidder, the

Nyamotsi plant will likely prove more expensive in the long-run since it is unsustainable.59

As a private company, SOGEMR operates differently in many ways than government-

sponsored projects, which should benefit local communities. Also located in the Northern

Province near Musanze, SOGEMR’s Musarara 1 plant, which is presently under construction, is

highly labor intensive. There are several parts to a hydro power plant, which in SOGEMR’s case

consists of a silt basin, canal, pipeline, turbine and power station. For the plant that SOGEMR is

building, a canal is needed to route the water from the point of intake to the pipeline.60

Approximately 200 workers are needed during construction of the canal in addition to the 100

workers needed to construct the turbine. At the peak of construction, it is estimated that up to

400 workers will be required.61 Before SOGEMR’s undertaking, workers mainly labored in

agriculture or had little means of subsistence. Although the labor to construct the project is only

temporary, the money generated is a large amount of income going into the community.

Another critical advantage of Musarara 1 over Nyamotsi is sustainability. Quality

materials have been purchased from Dar es Salaam. Furthermore, Musasara 1 could possibly

produce up to 1 megawatt per hour (MWh) of power, whereas the Nyamotsi plant only produces

about 100 kilowatts (KWh). The quality of power should be greater as well. Instead of using

one silt basin, Musarara 1 has two so that it is always able to operate at maximum capacity. If all

goes according to plan, Musarara 1 could also be connected to the national grid in which case

SOGEMR could sell energy to the government and bring power to districts beyond Musanze.62

Even though Musarara 1 is initially more expensive to construct, it will likely prove less

59 Second Interview at SOGEMR. 60 Site visit to Musarara 1. 61 Second Interview at SOGEMR. 62 Ibid.

27

expensive in the long-run since the materials are more durable. Besides the materials used for

construction, SOGEMR also has an incentive to maintain the plant due to the profit factor. If the

plant is not producing energy or is underutilized, SOGEMR will make less money and have a

harder time paying back its loans. Unlike the company hired by the government, SOGEMR is

thinking long-term.

The overarching goal of SOGEMR is to make the company Rwandan owned and

operated. As of now, there are only three employs from outside of East Africa; two are

engineers, and one is an intern.63 The chief engineer, however, is Rwandese, and the rest of the

employees are hired locally.64 Full-time staff will also be needed to maintain the plant’s

operations such as shoveling silt from the basins.65 By combining the skills and expertise of

foreign professionals with local talent, SOGEMR could prove an outstanding example of the

benefits of social business. While operating at profit for sustainability, the company is providing

a crucial resource of clean energy to homes, schools, and hospitals. As many in the development

field agree, infrastructure is the backbone of development. Having quality, environmentally-

friendly energy is essential for improving infrastructure, creating jobs, and sustaining livelihoods.

If the project is successful, the company could adopt more projects and contribute to Rwanda’s

emergence as a hub for reliable East African energy.

6. Conclusion

Before recounting the significance of the companies studied, it is important to note the

limitations and weaknesses of the research. One obvious limitation is the time frame in which the

study was conducted. Months and even years of planning, conceptualizing, investigating and

63 First Interview at SOGEMR. 64 Laura Ego. “Doctor Turned Hydro Developer Demonstrates Energy Needs in Rwanda.” GVEP International. 13 Sept. 2011. http://www.gvepinternational.org/en/business/news/doctor-turned-hydro-developer-demonstrates-energy-needs-health. 65 Site Visit to Musarara 1.

28

analyzing are necessary for legitimacy. Nevertheless, the intention of this project was

experiential learning. Because personal experience was the purpose, I placed several additional

limitations on my project. The duration of the project was not adequate time to build trusting

relationships with interviewees; therefore, I refused to ask personal questions concerning

sensitive topics with the individuals I interviewed. I also did not use a translator. Because I was

already a stranger to the people I interviewed, I did not feel it was appropriate to have a third

party through which my interviewee and I would have to talk. To me, that would have made the

conversations extremely artificial. To combat this problem, interviews were either conducted in

French or with English-speaking individuals. I also tried to keep my interviews concise. As a

student without even a bachelor’s degree, I refused to pretend that my time was valuable enough

to take away from the affairs and productivity of my interviewees.

Other weaknesses of the research relate to the individuals selected for interviews.

Because some of the companies were founded and managed by foreigners, I often only gained

the non-Rwandan perspective. I also mainly spoke with individuals in senior management

positions. This limited my perspective by excluding the thousands of workers I included in

employment statistics. It would also have been helpful to speak with clients and benefactors of

the services provided by each of the companies. Given a longer time frame, I would definitely

have sought interviews with these people. The companies discussed are relatively new as well,

which means that opinions about the efficacy of the projects have yet to be formed. SOGEMR in

particular is not even at the operational stage. This limits the amount of data that can be

collected, leaving much of the discussion to predictions and unproven hypotheses. Lastly, social

and political factors in development were not discussed as these were beyond the scope of my

29

study. Regardless, my conviction that social business is a crucial component of development

still holds.

The combination of the projects discussed has the potential to contribute significantly to

Rwanda’s bid to reach middle-income status by 2020. Through exportation of natural resources,

construction, nutrition, and energy production, Rwanda can develop lucrative industries that

provide social needs in a sustainable manner. Each of the companies demonstrates how

capitalizing on a local resource can serve both the community and make Rwanda more

competitive on a regional and global scale. Rwanda Trading Company and Horizon Sopyrwa

provide jobs to thousands of farmers, refine their products to top quality, and export at a rate

comparable to their competitors. In the future, they are both looking to expand their businesses

throughout East Africa and cater to more local and regional clients. They also hope to gain

greater shares of the global market to help make Rwanda a more serious trading partner. One

Egg and Haki Construction do not necessarily produce products unique to Rwanda, but they do

make use out of available resources to provide sustainable solutions to local needs.

Malnourishment and underdeveloped infrastructure are two major barriers to development in

Rwanda. Reliance on donors and foreign companies for support is not sustainable, nor is it

preferable for long-term development. With the growth of these two businesses, Rwanda can

redirect its attention from foreign assistance to indigenous solutions to current challenges. Lastly,

SOGEMR has the potential to provide social needs such as health, education, and environmental

sustainability through energy production. Rwanda’s advantage with hydro power is sustained by

stability and sufficient rainfall. As East Africa looks to improve the quality and durability of its

energy production, micro hydro projects such as Musarara 1 could serve as an important

template.

30

I do not seek to discount the work of NGOs and government programs in Rwanda or

elsewhere, nor do I suggest cutting all aid to developing countries. Each entity serves a purpose,

but the aspirations of Vision 2020 and the Millennium Development Goals specifically state

sustainable development. If development is to be truly sustainable, it must come from within,

and it must be independent of external support. Charity is noble, but the problem with charity

stems from beliefs produced by idealism. Again, the goal is sustainable development, but

idealism is not sustainable, nor is it even workable. Social business turns ideals into solutions by

reconciling virtuous motivations with practical tactics. Because the Rwandan government’s

development plans are highly ambitious, it must complement its ambition with pragmatism if it

is to achieve sustainable development.

31

Appendix 1

Sample Interview Questions:

• How are Rwandans integrated into these businesses? • How do Rwandans respond to foreign social businesses? • What efforts are made to ensure these businesses will be fully Rwandan? • How is sustainability reached? • How is financing initially gathered? • What efforts are made to coordinate with other businesses in the Musanze area? • How are these businesses fundamentally different than NGOs? • What is the relationship with the government? • What fraction of employees are Rwandan and foreign? • How are efforts made to be culturally sensitive and locally knowledgeable? • What was the motivation to start these businesses? • How are needs assessed? • How is efficacy evaluated? • What are future goals? • How long does it take to reach self-sufficiency? • How many jobs have been created? • How do you see these business as “social” in nature?

Appendix 2

32

Coffee yields by region.66

66 “Zones d’intensification caféicole au Rwanda.” PT’s Coffee Roasting. http://blog.ptscoffee.com/archives/113/rwanda-map.

33

Appendix 3

This is an illustration of a typical hydro plant. The difference between this model and Musarara 1 is that there is no dam, and the reservoir is connected to the penstock by a canal.67

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