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Made in Ethiopia

By Lulit Negash | Tue Jun 18 2019
A blog by
Lulit Negash
(RENEW Portfolio Manager). This blog is an excerpt from our 2018 Impact Report.
I started my career at RENEW as a portfolio manager five years ago. My major responsibility focuses on supporting the post investment work at our portfolio companies. Prior to RENEW, I had worked as a consultant helping research and write business plans for companies, but I wanted more. I wanted to get in deeper and experience the power of the private sector, and I believed that working at an investment firm would give me that experience. As a portfolio manager, my job is to help the companies generate a return on investment while also creating an impact. One of our key measurements for impact is the number of jobs created, which is the backbone of any developing country.
RENEW strives to help grow SMEs and turn them into a market leader by focusing on four elements, which we firmly believe are the keys to success: Governance, Financial Management, Sales and Marketing and Recruitment.
According to research done by the International Labor Organization, SMEs play a key role in job creation, providing two-thirds of all formal jobs in developing countries and up to 80% in low-income countries
There are many instances when someone asks us why we invest in SMEs since they are riskier and take a lot of energy when you can just invest in larger, more established companies. Our response to this is even though investing in SMEs is a lot riskier and takes a lot of energy and patience, if it is done well, the end result is significantly more rewarding. Personally, seeing the companies at the pre-investment stage and the changes during post-investment is the exciting part of my work. Knowing the money that came through the IAN coupled with the work we do has the capacity to change a company’s reality is something I enjoy seeing.
Growing up in Addis, the capital of Ethiopia, I have experienced the recent changes and the shift of the labor force from rural areas to urban cities in search of a better life. Currently, there is a large number of youth migrating from the rural areas to the city to work in the construction, textile, and other manufacturing industries.
Being Desta’s portfolio manager, I get to have a first-hand look at how one SME can impact the lives of more than 650 employees. The factory workers are mostly women who are from the outskirts of Addis or rural areas. Desta provides job opportunities for these women, but they also engage in soft and hard skills training to help them become experts in what they do and to improve their lives. For an outside customer, the main concern might be the quality of the garment and timely completion of orders or price of an order. But when you visit the factory, there is much more than a quality shirt with an affordable price tag. You see each and every individual working away to be able to support their family. Many have come a long way from their original homes to be able to experience the city life and improve their family’s livelihood. The Desta team helps them realize their dreams and support them as much as possible. They do this by providing transportation service to work and back and on the job training that can help them improve their skills. Desta also provides the opportunity for growth. We have seen several of the factory workers who joined the company at entry level grow and get promoted to become line supervisors at the factory. These are loyal and driven employees who are inspirations to other women.
Although my role as the portfolio manager of the company limits me to high-level activities related to finance, governance, and management support, once in a while after our Board meetings, I take a sneak peek around the factory to see the workers and products. That is when I experience a deep feeling of contentment and accomplishment. Although my work might not directly impact individual workers, I know I am a part of the story. I see the quality of the products and know these are the type of clothes we normally import from abroad, but we have the capability to make them in Ethiopia, and my heart swells with pride. I am proud to see the “Made in Ethiopia” tags on the garments and to know that RENEW and the IAN is part of one of the largest indigenous garment factories in Ethiopia.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.

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