Dust burns our eyes as we survey the city of Herat, Afghanistan from the rooftop of our hotel (read about the project). The streets below are humming with signs of a country coming back to life after 30 years of war. Shopkeepers hawking products, motorcycles weaving in and out of heavy traffic, couriers moving good from shop to shop, and cafes peppered with shrewd businessmen working deals with soft voices.
For over five years the RENEW team has been implementing market-based strategies to accelerate the development of economies in emerging markets. Our role to connect investors to businesses opportunities in the developing world is growing in demand as investors and philanthropists alike seek to create greater impact from their capital.
Promising small- to medium-size enterprises (SMEs), ripe for investment, exist in countries all over the world like Uganda, Rwanda, Afghanistan, Mozambique, and many other countries. Yet, despite their amazing ability to exist in some of the most challenging business conditions imaginable, their growth often stalls at a critical point in their life cycle. Why? When many entrepreneurs in the U.S. and Europe get a loan from a local bank, access to affordable growth capital for SMEs in developing countries is almost impossible to find.
Entrepreneurs running SMEs struggle to get the collateral needed to qualify for an affordable bank loan needed to buy equipment, floor space, land or other capital assets to expand their operations. As a result, they stay small. And this is why many developing economies have a distorted economic pyramid; at the top are large infrastructure projects financed by foreign governments (roads, dams, trade zones), and at the bottom are micro-businesses getting small loans from micro-finance organizations (artisanal shops, small farmers, etc.) In the middle, the numbers of SMEs are proportionately fewer. This "missing middle” is where RENEW sets out to engage the global investment community.
SMEs are becoming known for their ability to accelerate and stabilize the growth of an economy, as they have in China (Read Bamboo Capitalism).
RENEW finds these SMEs and connects them to investors. Our goal is to make investing in a business in Uganda as straightforward to a person in Minneapolis as buying their second home – of course, adding an amazing experience in a far away place that home buying doesn’t offer.
RENEW and our partners at IBM and The Clearing have recently been asked by the U.S. Government to help stimulate the middle market of Afghanistan using the same market-based model we have used in many countries across Africa.
After being on the ground here, it’s amazing what stories are NOT being told about Afghanistan in the international media. We hope you stay connected with us as we continue to work here and in other regions of the world. We also want to thank you for your continued support. Please follow us as we document our progress in Afghanistan.
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.