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Partner spotlight: How an OPIC-supported private equity fund helped bring quality coffee and quality jobs to Kenya

American business, Emerging markets, Small business financing, American small business, Overseas, OPIC, Impact investing, World development, Microfinance, Infrastructure, Investments, Political Risk Insurance, Entrepreneurs, Private sector, Finance, Developing countries, Improving, Investing, coffee, Java House, Kenya

Quality Kenyan coffee is sold around the world, but it hasn’t always been easy to find right there in the country. When California native Kevin Ashley came to Kenya as a relief worker in 1993, he had a hard time finding a decent cup of coffee.

“I’d had wonderful Kenyan coffee in the U.S.,” says Ashley, who wound up spending years in the Kenya, first starting an aviation business that transported relief supplies to hard to reach places, and later working to bring Kenyan coffee to … Kenya.

When he and his partners started to get serious about opening a local coffee shop, they discovered that the vast majority of coffee produced in Kenya was being exported. While these exports generated significant revenue, Ashley also understood that they might be able to generate even more value by selling some of the coffee domestically.  In 1993 they opened the first Java House coffee shop in Nairobi.

Since Kenya is a primarily tea-drinking country, Java House initially was most popular among expatriates. Over time, that changed. Java House made some adjustments to the standard American coffee shop model, for example serving coffee in ceramic mugs as opposed to paper cups, and began to attract more locals.

While Java House grew organically and swiftly, Ashley says the biggest challenges the young business encountered were learning to scale and to manage a growing work force while building a brand that offered a consistent experience. “We learned as we went,” he says.

Help came from Emerging Capital Partners, one of the emerging market private equity funds that OPIC supports. ECP is a Pan-African investment firm whose staff is mostly based in Africa and it has forged strong ties and a deep understanding of local business climates. In 2012, ECP purchased a controlling share of the business, providing the financing and the business know-how to put the young chain on a growth path. From a single café in 1999, Java House expanded with the backing of the OPIC-supported Emerging Capital Partners, into 41 restaurants in Kenya and Uganda, operating under three different food and beverage franchises including Java House cafes, Planet Yogurt self-serve yogurt stores, and the 360 Degrees pizza chain.

In addition to introducing quality coffee and comfortable restaurants to markets that had few alternatives, the company has created 1,800 jobs, all employees are African nationals and every top management position is held by a Kenyan. The company’s lowest paid workers earn twice the local minimum wage.  All workers have health insurance and a month of paid leave as well as three months of maternity/paternity leave. This commitment to high standards has helped raise standards across the board for food service workers in Kenya.

And, by keeping more Kenyan coffee in the country, the Java House chain has add value to this local crop. One kilo of coffee beans sells for about $5 on the Kenyan wholesale market, but by the time it is roasted, ground, brewed and served, it generates $160 of revenue to the local economy.

As for working in Kenya, Ashley says he found it to be an easy place to do business. “There is a young, optimistic, hardworking and educated workforce. Everybody wants a job and wants to advance.”

See also: Emerging Capital Partners: Investing in Africa’s small businesses  

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