Psf strategic plan

Building

an Entrepreneurial Private Sector Federation in Rwanda

Strategic Operating Roadmap (2012-2015) PREPARED BY: PSF Leadership

With the facilitation of:

May 2012 1

FOREWORD Rwanda is achieving growth and poverty reduction at the same time. The country has averaged eight percent in annual growth over the past eighteen years.

Business has blossomed. Such growth creates tremendous expectations on business.

Business potential is even greater than expectations.

Sustaining Rwanda’s trajectory will require both private investments and increase in SME productivity. Rwanda also has potential to serve as the gateway to East Africa’s 150 million people market.

Since 1999, the Private Sector Federation (PSF) has served businesses in Rwanda both at strategic and operational level. As it strives to improve its performance, the nation’s business leaders came together to define a concrete set of actions for the Federation to enable profitable businesses for a prosperous Rwanda.

This Road map answers the question: “how can PSF increase its relevance to its members while contributing the most to Rwanda’s development?” Our answer is that the Federation must advocate effectively and reinforce members’ businesses. This Strategic Road map identifies specific actions to fulfill this mission.

“Ubuvugizi or Advocacy” is central to PSF’s culture. Beyond simple advocacy,

2

Ubuvugizi is a pact built on trust, empathy and mutual support. This Strategic Road map outlines actions for all PSF entities, Associations, Chambers and Secretariat, to better serve businesses in Rwanda.

The Strategic Road map also calls for a shift in mindsets towards sustainability, ownership and decentralization. A decentralized approach will drive implementation of identified actions to ensure each PSF entity takes the right actions at the right time to deliver.

The private sector stands ready to lead Rwanda’s quest for prosperity through a real collaboration with the public sector and other stakeholders. The present strategic road map positions the PSF to serve as a key architect in Rwanda’s quest for prosperity.

Faustin Mbundu Kananura Chairman, Board of Directors

Contents 4 5

Executive Summary Where should the Federation go?

A. The new PSF’s mission and vision point to a new direction B. The new PSF focuses even more on member needs C. The approach is bottom-up and inclusive as well as…

D. … sustainability and service oriented

8

Where do we stand?

A. PSF’s relevance had decreased over time B. Relevance issues negatively impacted sustainability C. …the new leadership implemented urgent measures D. Specific entity focus is informed by clear business needs

11

What actions will PSF take?

A. Build proactive advocacy platforms on tax and financing B. Communication C. Strengthen the Membership base D. Build Member and Association Capacity E. Upgrade PSF Systems

14

What actions will PSF need to be successful?

A. The Federation will embrace an entrepreneurial culture B. Trust will support effective decentralization C. Greater accountability will also help in reinforcing trust D. PSF will keep the momentum through timely action

17

The Way Forward

3

EXECUTIVE SUMMARY

T

he Private Sector Federation (PSF) has registered major successes since its creation in 1999. Beyond a strong brand and membership base, PSF pioneered Business Development Services (BDS), registered wins in advocacy and played a strong national and regional role.

Yet, the business sector still needs to mature into Rwanda’s economic engine.

While Vision 2020 and EDPRS call for a private sector led economy, the business sector has not delivered. Specifically, Small and Medium Enterprises (SMEs) face a myriad of business challengesskills, access to finance and access to market.

The PSF leaders are ready to shift our approach towards greater focus on specific business assistance. Moving forward PSF has implemented a framework to engage with its base, introduce and articulate clear valuepropositions that address the critical needs of the businesses, associations and chambers.

We, the PSF leadership, have outlined the present roadmap centered on five priorities. This plan is the product of a bottom-up approach and has been validated by all PSF major stakeholders.

Each chamber and the PSF Secretariat agreed on actions to implement within a specific timeframe.

•

Advocacy or Ubuvugizi - the most important member need. PSF will build based on a strong and pro-active advocacy platform.

•

Membership - our customer focus will translate into service delivery, attraction of new members and measuring satisfaction regularly.

•

Communication - all PSF stakeholders, from members to staff to leadership want information. We will communicate more and better.

•

Capacity Building - will focus on training of SMEs and entrepreneurs as well as association capacity building.

•

Systems - we will invest in the right staff, processes and resources to deliver.

We will also launch a Special Project Implementation Unit (SPIU).

We realize that a strong Private Sector Federation must also achieve financial self-reliance.

Our members and our leaders have expressed willingness to support the Federation based on performance. To move towards self-reliance, we now have a clear membership fee structure.

Leadership will be critical for success. The key to success is ownership and accountability from all PSF stakeholders over the plan i.e. the Secretariat, Provinces, Chambers and Associations. Both Rwanda’s trajectory and PSF’s history illustrate the power of determined leadership to deliver results.

4

1.

Where should the Federation go?

PSF will mature into an entrepreneurial organization. In charting the way forward, PSF leaders drew inspiration from the common experience of all its members, running businesses. To embrace an entrepreneurial mindset, we have invested to know our customers and understand their needs.

We will relentlessly deliver quality services that our members, customers, are willing to pay for. First, we need to turn-around the organization. We must adopt a new vision and mission that will help us achieve self-sustainability and stakeholder participation.

A. The new PSF mission and vision point to a new direction Building on the organization’s proud heritage in conscience, the newly elected Leadership wants to turn-around PSF. To achieve a turn-around, the PSF Leadership wants to redefine the role of each PSF entity to ensure it is focusing on its members.

As a mission, “Profitable businesses for a prosperous Rwanda” reconciles business and Rwandan society. The PSF leadership elected to espouse a mission where the business community aligns its interests to that of Rwanda. Advocacy and business services are identified as the two key mechanisms in the mission.

Figure 1: PSF Mission and Vision

Vision Mission

Profitable businesses for a prosperous Rwanda

Advocate effectively and re-inforce members’ businesses

Values Trust: Empathy, results and accountability Ownership: Member driven, bottom-up and independent Service: Member focus, clear offering and sustainable Collaboration: Shared vision, clarity of roles and responsibilities Openness: Transparency, frequency and diffusion

Beyond mission and vision, the PSF leadership also espoused five core values; trust, ownership, service, collaboration and openness. These values will not only inform the future of PSF but also form the basis for the consultative process that led to the adoption of the present

5

strategic roadmap for PSF.

B. The new PSF focuses even more on member needs

Since its creation, PSF has achieved strong national recognition. Today, we are present throughout Rwanda. As a result, we must manage the expectations of approximately 4,000 very diverse members spread across 73 professional associations, ten chambers and five provincial representations.

Figure 2: PSF an umbrella organization

This recognition has been cemented by clear wins. The existing structure brings together members under a decentralized structure. PSF has registered great wins in advocacy, pioneering BDS in Rwanda and established strong national recognition through initiatives such as Expo.

Yet, Rwanda’s vision and its young business sector call for a stronger PSF. Businesses face many challenges calling for a strong voice, support and assistance.

Government and its partners want a strong business sector with a distinct voice to foster the right policies for development.

Members and stakeholders also have high expectations that we have failed to meet.

We asked ourselves whether or not the lives of our members would be changed if we did not exist. We concluded that lack of clear and communicated focus has led everyone to question the relevance of PSF.

C. The approach is bottom-up and inclusive as well as‌ Numerically, micro enterprises or traders (98%), SMEs (2.7%) and larger firms (0.3%) make up Rwandan business. While larger firms access the Secretariat, SMEs and micro-enterprises struggle through associations and chambers. Solving this challenge requires a stronger decentralized structure.

The first step is to give the Federation strong roots through a bottom-up approach. A bottom6

up approach would also put ownership where it belongs, i.e. with the membership base.

This begins with the creation of stronger professional associations serving businesses, ensuring that most problems get addressed where they surface at the base.

To succeed, PSF will ensure that specific entities with which members interact are delivering.

Strong professional associations are critical to address sector-specific business challenges.

Chambers must support associations. Effective associations will enable the Secretariat to be an effective leader.

D. Sustainable and service oriented Associations, Chambers and Secretariat alike are defining clear services based on consultations.

The consensus has emerged that if each PSF entity can focus on a few services deliver well, the Federation would easily build its membership base.

Best practice organizations such as the Kenya Association of Manufacturers focus on clear services to their members. This global experience applies to the Rwandan context. In fact, various private sector organizations have had different levels of success based on their ability to help members.

Structurally, PSF faces the challenge that each entity serves different types of businesses.

Finding a clear focus is difficult given diverse needs and sometimes diverging interests.

Historically, the Secretariat has tried to do too much leading to a loss of focus and reduced effectiveness.

Figure 3: Case Study Kenya Association of Manufacturers

•

Sustainability: KAM is self-sustainable and relies mostly on its membership fees and KAM consulting revenues.

•

Policy advocacy, research & business information: KAM built a strong technical team that ensures strong and quality input in discussions with the government.

•

KAM consulting: Now account for 20% of KAM total revenues. Services are tailored made to the needs of the members. Non-members can access at a premium fee.

•

Membership: Grows at 18% per annum and dues account for 70% of KAM revenues. KAM offers 7 membership packages. An annual survey informs the board on member’s satisfaction and needs.

•

Communication: KAM communicates regularly to it’s members and partners. KAM has also invested in building a brand in Kenya and beyond.

7

2.

Where do we stand?

PSF is the strongest private sector organization in Rwanda. Yet, numerous challenges over the recent years have hindered our capacity to deliver. It is paramount to learn from past mistakes and focus on a limited number of concrete actions moving forward.

A series of national consultations yielded new insights. Those consultations were conducted through Chambers General Assembly across the country, a survey of over 380 stakeholders and a leadership seminar with all chamber leaders has helped us to better understand our members and define our priorities.

A. PSF’s relevance had decreased over time Relevance emerged as a cross-cutting issue across ALL PSF members. While various member categories express their sentiment differently, micro enterprises, SMEs and larger firms alike want PSF to increase its value to Rwanda’s business community.

Figure 4: Perception of PSF Members across categories

Early success such as the launch of BDS and the Expo raised expectations leading to more activities and need for more funding. Funding from government and donors came with expectations that eventually put our members second to funders. This situation led to a 8

vicious cycle with PSF trying to embrace too many activities.

B. Relevance issues negatively impacted sustainability PSF has struggled to cover its total budget from its own internal resources. In 2010, 64% of PSF revenues came from government and donors (see figure below). Our dependency on donors and government funding has taken our focus away from our members.

Figure 5: PSF Revenues Breakdown, 2008-2010 .

Running PSF as a business will require building a self-sustainable organization. The PSF management has determined that the organization can reliably generate RWF 700M or $US 1.2M every year through it’s VIP Golden circle membership dues collection as well as targeted events.

Relevance and sustainability issues undermined the PSF. Conscious of this important challenge, the new leadership began with the base through elections at the district, provincial and association levels, brought a new management team for the Secretariat.

C. …the new leadership implemented urgent measures The New Leadership used an inside-out approach to strengthen the Secretariat. As the heart of the Federation, a well-functioning and motivated Secretariat is critical to a strong and healthy federation.

Our ambitious plan to “fix the engine”consisted of 27 practical actions ranging from an organizational restructuring to a revised budget to a new process for advocacy, the implementation of a stronger membership platform and other actions aimed at increasing PSF value proposition to our members.

9

Figure 6: “Fixing the engine” actions March to June 2011

These actions have started changing PSF’s culture beyond the Secretariat. A more effective Secretariat is important to provide support to Chambers, Associations and decentralized PSF entities. In parallel, we have also begun defining clear focus for each entity.

D. Specific entity focus is informed by clear business needs Advocacy, regional and international trade as well as business support emerge as the top three areas of need. That being said when surveyed on the importance of business challenges, PSF members rate every challenges as “very important”. In an environment where everything is a “priority”, success requires choice.

Focus requires strong expectation management. In national consultations, all members agreed that a clear focus was essential to PSF success. An important implication of expectation management and focus is the need for partnership beyond what PSF alone can deliver.

Figure 7: How important is it for PSF to deliver the following services?

10

3.

What actions will PSF take?

We will focus on five priorities; advocacy, membership, communication, capacity building and systems. Advocacy is essential to build a strong membership base that requires communication as well as strong institutions and capacity. Strong systems will ensure PSF delivers in an efficient manner.

The core financing of the federation’s activities will mainly come from it’s trading activities (membership fees, targeted events and services). The sources of financing tend to be small and inelastic given the institution’s history. It’s important for the secretariat to align it’s expenses to core programs and operate on self-generated budget.

Other strategic and large initiatives will be undertaken on a program basis under a Special Programs Implementation Unit –SPIU. In addition, the SPIU will design programs and mobilize resources for them. A deliberate and strategic direction for the SPIU has been decided upon.

The Unit will focus on key strategic areas such as Capacity building, Entrepreneurship promotion, access to finance and markets and design programs to address gaps and respond to challenges facing the business community in Rwanda. Associations will be encouraged to evolve and cover their own expenses from membership dues.

Figure 8: Priorities, Actions and Budget

11

A. Build pro-active advocacy platforms Pro-active Advocacy is about anticipation, relationships and research. By the time issues surface, it is often too expensive or late to solve them. PSF will cultivate relationships with key partners ahead of crisis. Fact-based advocacy will enable anticipation.

PSF will build pro-active platforms at all levels through continuous engagement with relevant partners. Professional Association platforms will focus on key sector issues. District platforms will focus on information on taxation and local regulations affecting businesses while the Secretariat will focus on cross cutting issues at National level.

B. Communicate–Information Sharing The Federation will expand it’s ongoing communication efforts to reach more members. PSF will establish an ongoing communications platform through different medium (radio, mobile phones, print and TV). This communication platform will be based on a broader partnership with media houses (private or public).

Associations and Chambers will be put in the spotlight-thanks to the Secretariat. The Federation will shift communications from the Secretariat only to Associations and Chambers. Media support is a core service that the Secretariat will offer to it’s member entities. It will also be a mechanism for co-ordination.

C. Strengthen the Membership base The Secretariat will launch a revamped VIP scheme and maintain strong members database.

The new VIP scheme provides clear value for money for discerning business leaders. The Secretariat will also work with Associations and Chambers to complete it’s ongoing audit of the PSF membership.

Elected Association leaders will lead a membership drive. Building on the consensus that all members must contribute according to their means, elected leaders will provide membership cards, collect dues and update member information over the upcoming national PSF membership drive.

D. Build Member and Association Capacity The focus of capacity building for each entity must be to ensure they have strong institutional systems instead of being dependent on individuals. Each Association needs strong staff, clear regulations and solid finances. The Board has given a clear mandate to the Secretariat to enforce.

12

Figure 9: PSF members’ top training needs

Firms will benefit from training and a revised study tour program. The Secretariat will leverage it’s unique access to members to provide a list of certified potential trainers. It will also work with Chambers and Associations to increase transparency and impact of it’s study tour or “Ingendo Shuli” programs.

E. Upgrade PSF Systems Greater focus on business needs means a bigger role for Associations and provincial chambers.

Thanks to their proximity, associations and provincial chambers are best placed to address sector specific initiatives and local level challenges. We want to empower these entities paving the way to effective decentralization.

A clear focus on staffing, operational systems and their efficiency, as well as corporate governance is central to the Federation’s effectiveness. The PSF leadership recognizes that effective decentralization requires strong systems not only at PSF entities but also at the Secretariat level.

13

4.

What will PSF need to be successful?

What we need to be successful is a different culture. The PSF board agrees that our culture must focus on three elements; members as customers through service and satisfaction, collaborative platform based on honesty and integrity and a decentralized structure with a bottom-up culture.

We elected to draw inspiration from Rwanda’s rich cultural heritage. The PSF will leverage three pillars; “Agaciro or self-worth, Kutanga icyizere or trust and Ubuvugizi” or advocacy.

We believe these values will propel us to achieve self-sustainability within two years.

A. The Federation will embrace an entrepreneurial culture “Agaciro” or self-worth will be a cornerstone of PSF’s new culture. Members’ ownership will in turn translate into greater focus on member services and financial independence. It will also help us strengthen its bottom-up approach as outlined in the present strategy.

Second, Trust or “Kutanga icyizere” will permeate the new Federation. PSF is experiencing it’s lowest level of trust with members and stakeholders. Communication followed by delivery will help in rebuilding the trust. This trust will be essential for each PSF entity to play it’s role in a co-ordinated manner.

Ubuvugizi or “Advocacy” will also be essential to the Federation’s new culture. Beyond simple advocacy, Ubuvugizi is a pact built on trust, empathy and mutual support. Promoting Ubuvugizi will help PSF leverage all entities; Associations, Chambers and Secretariat, to avoid blame and promote collaboration.

B. Trust will support effective decentralization Capacity at the provincial and district level is relatively low. Therefore, the PSF Board must invest time with the base. Associations and Chambers will be empowered to deliver. Effective decentralization is only possible when ownership meets clear vision, strong systems and accountability.

PSF has began equipping districts level PSF offices. While the Secretariat supported recruiting, staff quality is uneven and the rollout has created some confusion. The Secretariat will upgrade this process through involvement of its senior most executives and the PSF Board.

Some Chambers such the Youth and Women Chambers have identified provincial representatives. This first step must be followed by a clear roadmap for how these representatives will co-ordinate with Sector and Provincial Chambers. We will follow this process with clear training so that elected leaders can deliver.

Trust will also help us cement our national and international partnerships. This new strategic roadmap identifies specific activities and gives the Federation the opportunity to engage 14

with government and development partners to respond to our members’ needs and build a stronger private sector.

C. Greater accountability will also help in reinforcing trust The Federation must improve governance along with decentralization and sustainability. The newly elected leadership has vowed to be more active through more regular board meetings and the establishment of working committees on the board that can liaise with key aspects of the Secretariat.

The present strategic plan used a bottom-up approach where elected leaders and management suggested and signed-off on every item. While this bottom-up approach consumed much time and resources, it is critical to ensure accountability: every leader must now fulfill their commitments.

The Federation has adopted the practice of Imihigo to drive decentralized performance. All PSF entities will sign performance contracts on specific actions to undertake within six months with consequences. All PSF entities will publish audited financial statements available to members and partners.

D. PSF will keep the momentum through timely action The current PSF leadership has vowed to have a self-sustaining PSF within two years.In fact, the true measure of whether or not the Federation is successful will be to see if members are willing to support the organization. That will be a proof that it matters to their businesses.

Ultimately, Associations must do the bulk of fundraising by sharing resources with Chambers and the Secretariat. However, a gradual approach is necessary with the Secretariat focusing on the Golden Circle or VIP members and reducing its dependence on donor funding significantly over the next two years.

Together, we must now walk the talk. Below we outline a high-level timeline organized by semester that the PSF board has identified as a mechanism to ensure that the turn-around happens within two-years. The PSF management will endeavor to keep the target and sustain the momentum.

15

Figure 10: High-level timeline

16

THE WAY FORWARD The election of the new leadership team has opened a unique window of opportunity for the Federation. The new leadership team has seized the measure of the challenges and has decided to embark on a long and courageous journey to transform the Federation.

We are committed to embrace an entrepreneurial mindset founded on “Agaciro” “Kutanga icyizere” and “Ubuvugizi”. As illustrated in the present plan, we have translated our commitment to these cardinal values into specific actions that we have committed to continuously deliver on.

The bottom-up approach we opted for combined with the national consultations has allowed us to better understand our members and clearly highlight their needs. It is now our responsibility to configure the Federation to best address our members’ challenges. We now need to move from talk to actions.

Communication, decentralization and strong systems will be critical to deliver. We will combine brand and topic based campaigns to inform our members. Our decentralized structure will enable us to empower business from the district level up. We will reinforce our systems for sustainability and effective delivery.

We are now inviting like-minded partners to join us in our transformation journey. Our heritage has prepared us to become the point of reference in advocacy, business support and private sector development. Our membership and systems make us the ideal partner to service businesses in Rwanda.

While the transition towards a new PSF will be gradual we need to keep the momentum alive.

Rwanda’s successes and her track record in economic development are here to remind us the potential of determination, focus and accountability.

17

Appendix 1: Chamber logical Action Framework  

18

Appendix 1: Province logical Action Framework

19

Private Sector Federation P.O.Box 319, Kigali, Rwanda www.psf.org.rw

20