Impact investor GBF offers financial, management support to Tanzanian commodity trader Rainbow

TANZANIA – Rainbow Haulage & Commodities Traders Company Limited in Tanzania, has received a US$350,000 investment from global impact investor Grassroots Business Fund (GBF).

Established in 2008, Rainbow mainly trades in commodities including maize, soybeans and sorghum, sourced directly from farmers across Tanzania and sold to companies in the country, Rwanda, Burundi and South Sudan.

The commodity trader sources the agri-products from farmers and aggregators, and later sorts, cleans and packages them for sale.

The strategic investment is aimed to enable Rainbow purchase sufficient stocks to meet demand of its agri-products across the East African region.

It is also designed to help the company address the challenges of fluctuations in supply and develop a more consistent payment and cash flow regime for the farmers, thus strengthening the entire supply chain ecosystem.

“Rainbow will benefit from GBF’s extensive experience in working with companies to improve management efficiency and stabilization of its financial management systems.”

Lilian Mramba – GBF team leader in Kenya

GBF also brings proven management experience built over the years to help Rainbow improve its business structuring and performance in a model that may consider bringing in other key sector players including micro-insurance services.

“Rainbow will benefit from GBF’s extensive experience in working with companies to improve management efficiency and stabilisation of its financial management systems.

“The switch from bank overdraft financing to medium-term cash flow-based funding by GBF will allow Rainbow to accrue benefits of consistent funding with repayments suited to its cash flow cycles,” said Lilian Mramba, GBF team leader in Kenya.

GBF is a global impact organization that utilizes the power of blended capital to invest in traditionally under-financed businesses, by extending structured mezzanine finance, senior debt, and business advisory services to viable, sustainable and inclusive businesses.

The recent investment was made possible thanks to a four-year senior/ mezzanine debt facility which was extended to it under the SME Programme of the Trade and Development Fund (TDF), a TDB Group institution.

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In July 2020, TDB signed an initial 4-year senior/ mezzanine debt facility of US$ 1 million to be managed by GBF, to finance agribusiness SMEs in Kenya, Tanzania and Uganda.

The facility focuses on women or youth-led SMEs operating in the agricultural sector with solid managerial foundations and high potential for social impact.

The transaction is enhanced with a partial risk guarantee from the African Guarantee Fund (AGF) of 50% with up to 75% in the case of women-led SMEs.

The facility will be blended with two technical assistance contributions from TDB and AGF totalling US$ 110,000 for the execution of mutually agreed upon co-funded investee capacity building activities.

With the blend of mezzanine and senior debt, the technical assistance will be specifically focused on improving SMEs’ financial management systems.

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