As part of our Student Insight blog series, Olivia B. Zank, MSc Political Economy (2013-4), frankly discusses her experiences at several developmental organisations and how this led to her creating a tech-enabled supply chain finance firm in Rwanda: BeneFactors.
Olivia hiking in Rwanda’s beautiful thousand hills, December 2015
After completing a BA in International Development and Economics at UEA, I joined SOAS for a taught post-graduate programme. I was torn between which programme to join though – ultimately, I was interested in financial sector development in especially Sub-Saharan African countries, but I was also very drawn to the political economy analysis and the critical thinking that SOAS is known for. In the end I opted for the MSc Political Economy, but took every finance course that the school of economics offered. This flexibility from the school in terms of curriculum for an MSc allowed me to learn from two of the most renowned thinkers in their fields, Professors Mushtaq Khan and Costas Lapavitsas. I inhaled as much knowledge as I could from these two bright minds and I continue to see the influence on their thinking in my journey since SOAS. Alongside my MSc I was also very fortunate to work as a part-time researcher for Public World, a high-class consultancy specialising in issues of employment around the world. I had come across the Public World while dredging the internet for summer internships between my undergrad and masters and I immediately knew I wanted to work for them. I then proceeded to email the managing director enough times for him to finally agree to give me an interview and subsequently a chance at an internship which turned into part-time work during the year I spent in London. Juggling work, post-graduate studies and social life wasn’t easy but getting work experience while studying turned out to make all the difference for me post-graduation.
There is a well-trodden path from an MSc in Economics at SOAS to the ODI Fellowship programme. I am no exception and applied while still a student. The ODI fellowship is a two-year placement in a developing country government and provides unique insights into especially the capacity constraints in terms of being able to deliver services and effectively enforce regulation. This was the kind of full immersion I was looking for. However, I did not get in to the fellowship when I first applied.
Meanwhile, a friend of mine was just completing the DFID Graduate Placement, and inspired by his experience, I decided to apply and to my surprise, I got in. This (now discontinued) programme was a one-year placement to work with the UK Department for International Development and I was lucky with the team I was placed in – I got to move to Glasgow and work with the Regional Directorate’s Stats and Evaluation Team, i.e. the team of experts that help all DFID’s 32 country offices monitor the extent to which they are effective at alleviating poverty and create opportunities around the world. Having such a bird’s eye view of DFID’s multi-billion-pound country programme portfolio was another wonderful chance for learning – about how the aid sector works and how to know whether what you’re doing even has an impact. I had a wonderful line manager in Glasgow who really helped me improve my skills and become more efficient in my work. Most importantly, I also realised that while the UK civil service was a great place to work, it wasn’t for me – I wanted to be much closer to the action so to speak, and still dreamt of immersing myself in a developing country.
So I reapplied for the ODI Fellowship programme the following year and this time I was better prepared, more qualified and I got in. I was sent to Rwanda to work in the Ministry of Trade and Industry (MINICOM). In many ways, Rwanda’s civil service is one of the most effective civil services in Sub-Saharan Africa. Corruption is low, the leadership is ambitious, and there is a good amount of debate over technical policy decisions, making for a very stimulating environment for a young economist. I worked alongside local civil servants on donor coordination and planning, conducting bi-annual sector reviews on programme implementation and policy developments in the private sector development and employment space. My time in DFID had prepared me for many of the challenges that plague civil servants around the world (endless meetings, unnecessary procedures, inability to fire inefficient workers etc.), and my frustrations in MINICOM were not unlike the frustrations we had in DFID, albeit at a different scale, which was humbling and eye-opening. After about a year, MINICOM was merged with the Ministry of East African Community and the minister, now in charge of a bigger mandate, wanted more advisory support. Since I’d been delivering good work for the past year, it was decided that I would join the Minister’s Office as his policy adviser. The next year therefore saw me working on various senior government policies such as the Special Economic Zone Policy, the flagship ‘Made in Rwanda’ Industrial Policy and the 2018-2024 Private Sector Development Strategy. Rwandan politics are fascinating, and the end of my fellowship coincided with the formulation of the country’s Vision 2050 and the 2017 presidential election, revealing much about the hopes and dreams of the country, as well as its current capacity to implement transformative programmes. I will forever be grateful for the time I spent as an ODI fellow, despite the obvious challenges and frustrations of working in a low-income country’s civil service.
One issue that always ran through the policy analysis and development I did, was that of access to finance. Rwanda remains a low income country, with GDP per capita at just $702 in 2016. National savings are low, and hence access to finance continuously comes up as the number one constraint for businesses. Without a thriving private sector, Rwanda would never achieve its development goals. The only problem was, despite my strong interest in financial development, as a policy advisor in MINICOM, I was not supposed to work on access to finance, which falls under the Ministry of Finance and Economic Planning and the Central Bank’s mandates. From the sidelines, I could see these institutions focus on making it easier for companies to access loans from banks and micro-finance institutions as well as encouraging people to save. There was some efforts to diversify the range of financial services available especially in working capital, but those efforts was limited, and speaking to my friends in the business community, I couldn’t escape the feeling that introducing different kinds of finance, was actually what was going to matter in the long run.
One of BeneFactors’ first clients, Dieudonné (R) speaks to an employee in his chilli oil factory outside Kigali, Rwanda, January 2018
A specific lecture from Professor Lapavitsas’ Financial Systems and Economic Development class at SOAS also kept coming to my mind – modern banking in Europe emerged as people and companies started selling on credit, and thus having claims on each other. Having a claim on someone is not as good as having cash in cash which can be used for further production or consumption. Specialised institutions therefore emerged to buy those claims from the original holders, freeing everyone else up to go about their business. These institutions later on became more sophisticated and started extending credit, offering savings and all the other things that was being promoted in Rwanda as a solution to access to finance gap – in other words they became commercial banks. Yet those products were not how financial intermediation first emerged and banks have kept their first line of business, collecting corporate claims, even as they now offer a more diversified and by now more profitable range of services.
A conversation with a good friend running a logistics company in Rwanda and struggling with cash flow gave me a term to research – factoring. It quickly all came together – factoring, or supply chain finance in general – is exactly the act of buying claims that the first European banks started with. It is strictly working capital products, providing cash flow stability to companies within established supply chains and it is therefore considered as trade finance – and hence within my ministry’s mandate! I could work on it! I spent the next three months going down a deep rabbit hole on supply chain finance, becoming more and more convinced that introducing such financing in the Rwandan economy could have significant impact due to the widespread illiquidity found. I drafted the necessary policy documents and tried to put the issue on the relevant people’s agenda, hoping they would make the necessary minor reforms and regulatory clarifications. The goal, I believed, was to attract an investor who would set up a commercial supply chain finance company and solve the cash flow issues of Rwandan companies.
In the meantime, being very enthusiastic about this amazing opportunity I had come across, I tried it out with a few friends. I knew people in the business community who had cash flow issues and I had some savings I was willing to risk to prove my point. My first trials worked out. I not only got my money back, but also received feedback from these first clients that there would indeed be a huge market for this in Rwanda, across East Africa and beyond. To avoid any issues with the regulators, I registered a company and BeneFactors was born.
The initial BeneFactors team: Happy (L), Paul and Olivia, December 2017
If someone had told me in 2016 that within a year I would become an entrepreneur, I would have laughed for days. I was always more of the academic type, enjoying research and planning processes, not fast-paced operations and striking deals. Yet somewhere between August and November 2017, I decided to not take another job after the ODI Fellowship and dedicate myself to BeneFactors, to see whether I could make it fly or not. It was perhaps the scariest decision I ever made, and I’m on the steepest learning curve I’ve ever been on, with an unhealthy amount of stress and anxiety. However, with every new client and new issue to solve I’m learning new things – about my client’s specific line of business, finance, operations, HR, accounting, psychology, and about myself and what I am capable of. BeneFactors is still a very young company and it is far from certain that we will succeed. I certainly still have a lot to learn as a first-time entrepreneur and CEO, but it was the best decision I ever made.
BeneFactors is currently recruiting volunteers to start in June 2018 for a duration of 3-6 months. Check out the careers section on their website www.benefactorsltd.com or get in touch with Olivia on firstname.lastname@example.org for more information.
Olivia B. Zank
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