<h1 style="text-align:center;">Gender Equality and Women in the Workforce Mini-Series: Blog 2</h1>Blogging is not my favorite thing in the world, much less talking about topics to which I feel like I have not dedicated enough time to fully develop a compelling position. So with that as a caveat, I will own it. I do have something to say about my own journey as a female entrepreneur in the male dominated space of private equity. I sit at the intersection of a lot of spaces: private equity, economic development, impact investing, angel investing, Africa, and entrepreneurship. I’ve seen efforts that align with my sense of true north related to female economic empowerment and equality and also efforts I find infuriating, such as well-meaning but poorly branded development efforts that lump female and youth entrepreneurs together, for example. What the hell? As if I, a female, can’t have a world changing, scalable idea. Offense aside, let’s focus on the opportunity side of being a female entrepreneur and maximizing our unique strengths in the private equity space.United States to Afghanistan to Ethiopia – I’ve learned so much about the role of women and economic empowerment within the context of these very diverse cultural situations. In the United States, we have a tendency to see the genders as equal and the same. In Afghanistan, it was, unfortunately, clear that the struggle is often a belief that the genders are different and unequal. Some females there encouraged me to flaunt my Western freedoms. But I had a job to do, so I decided to do my best to adopt the cultural norms. Here in Ethiopia, at least among the educated, it feels like the prevailing thought is more aligned with my own belief about gender: We are different and equal. That being said, I am not naïve enough to think that this would be my reality if I was a rural female farmer in Ethiopia. No matter the prevailing cultural norms, my advice is to respect the cultural context and choose your battles wisely.<figure class="image"><img src="/uploads/dsc_0157_chada_2_b6ba1d7979.jpg"></figure>“You don’t know what she’s going through.” – Once, as I was lamenting a female entrepreneur falling off our radar (discontinuing responding to emails and calls), someone here in Ethiopia warned that I had “no idea the circumstances that might be on the entrepreneur’s shoulders”, and that I should give her another chance. I think she was right. Here in Ethiopia, and frankly in most parts of the world, certain family obligations fall more completely on the shoulders of wives and daughters, and it is our duty to keep these cultural nuances in mind as we conduct business internationally. I still think about this encounter, and hope this plucky, gutsy young female entrepreneur comes back on my radar. I think she may have what it takes to be a world changer.Focus on the advantages – It’s so easy as humans, no matter our gender, to dwell on our disadvantages. My own experience as a female entrepreneur has proven we provide certain advantages that men in this industry generally struggle with. For example, entrepreneurs initially tend to be more comfortable sharing about their businesses with me than some of my male counterparts. Another is that my “female intuition” is usually spot on when it comes to assessing a person, or situation, or investment opportunity. Us women just have that sixth sense, if you know what I mean. However, some days I can still get discouraged in the unique challenges I face as a woman, but when I can stop myself and persist through the challenges, the outcomes our powerful and rewarding. I plan to continue leveraging my voice for all it is worth. Regardless of gender, that’s what winners do!<figure class="image"><img src="/uploads/img_e9230_6cfe23d931.jpg"></figure>In summary, finding a position and supporting efforts that support gender equality and female economic empowerment are great. But in my opinion, we all walk a fine line in developing efforts that bring dignity and enlarging the issues we are trying to overcome. I am not sure we have it quite right yet, but some of our current efforts at RENEW include:<ul><li>Establishing a quarterly Women in Finance Roundtable in Ethiopia! Read about our first. I was so inspired by our guest, Berhane Demissie.</li><li>We are supporting 1,523 female jobs across our portfolio, which is 73% of the total.</li><li>Our first cohort of CFO100 consisted of 13 females, good for 54% of the group. We are aiming for similar numbers for our second group beginning in 2018.</li><li>We encourage our executives to pursue a diverse leadership team. Currently, 50% of our portfolio companies are partly owned by women.</li></ul>

A female partner’s position: different and equal

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Gender Equality and Women in the Workforce Mini-Series: Blog 2

<h1 style="text-align:center;">June Investor Trip</h1>In June, RENEW partners Matt &amp; Laura Davis packed their bags and took off for a week-long investor trip to the Midwest, with stops in Minneapolis, Chicago and Grand Rapids. It was a busy week filled with a number of meetings and two lunch events. The trip was a great opportunity for the partners to visit with Impact Angel Network members and others interested in RENEW's work in Ethiopia.<figure class="image"><img src="/uploads/investortrip_88a1bb0328.jpg"></figure>Here are some of the trip highlights:<ul><li>The first stop on the week-long trip was Minneapolis. RENEW hosted an informative lunch event at the Oceanaire Seafood Room, supported by IAN Member Beth Marquette, and RENEW supporter Kelsey Rahm. The lunch spurred a lively question and answer period and allowed us to share some great information about investing in Ethiopia.</li><li>Also in Minneapolis, we were able to meet with 3 of our Minneapolis-based IAN Members. It was great to catch up and we enjoyed all your input at our event!</li><li>In Chicago, we hosted our second lunch event of the trip and had a great turnout! The lunch was hosted at 312 Chicago, a restaurant in the Theatre District of Chicago. It was a great opportunity to share about RENEW’s Impact Angel Network and the work we’re doing in Africa. A big thanks to IAN Members Jeff Turi, Jodi Morris and John Trapnell for their support with this event.</li></ul>Thank you to everyone who has helped make our June trip so successful! We’re currently planning our fall trips, so keep your eyes peeled for the dates and locations in the upcoming month.

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June Investor Trip

<h1 style="text-align:center;">2017 is Over? Enjoy Some of Our Favorite Photos</h1>As we stand on the brink of a new year, it’s one of our habits at RENEW to look back at the milestones we passed over the last 12 months. So with a nod towards the challenges inherent in our work and a grateful acknowledgment to our team for their dedication to being trailblazers, here are some of the highlight for RENEW in 2017.<ul><li>January –&nbsp;We started the year with our annual partners planning&nbsp;session&nbsp;in Colorado. It was a snowy and productive time in the mountains.</li><li>February –&nbsp;We had&nbsp;a great Econ-Tourism Trip in Ethiopia. We also traveled to Gheralta to experience Ethiopia's ancient&nbsp;ruins, and conducted a private equity seminar in Mekele. If you haven’t been to Gheralta, put it on your list!</li><li>March –&nbsp;We met with investors in&nbsp;New York City, Toronto, and&nbsp;Vancouver to share about impact investing and helping SMEs access finance in Ethiopia through The Exchange.&nbsp;The Ethiopia team also conducted a private equity seminar in Dire Dawa.</li><li>April –&nbsp;We traveled&nbsp;to Seattle, SFO, Denver&nbsp;and&nbsp;Delaware for more meetings with investors. Phew, we spend a lot of time on planes. Several members of RENEW’s international team got their feet wet with on the ground work in Ethiopia.</li><li>May –&nbsp;We started two training programs that were a long time in the making. We rolled out our first cohorts for the CFO100 and The Exec’s Program. Each ran for three months. Additionally, throughout the year, we trained around 250 companies on private equity in Addis and other cities. A new cohort for CFO100 starts in January 2018, so let us know if you are interested.</li><li>June –&nbsp;We did a lot of training and portfolio management work.</li><li>July –&nbsp;RENEW’s Impact Angel Network crossed the 100-member mark!</li><li>August –&nbsp;We finished the CFO100 and The Exec's Program.</li><li>September –&nbsp;We hosted another great group for an Econ-Tourism Trip.</li><li>October&nbsp;–&nbsp;Was our third National Gathering! This year it was held at the Embassy of Canada in DC with special guest Marcus Samuellson.</li><li>November –&nbsp;RENEW and the IAN became the most active private equity investor in&nbsp;Ethiopia,&nbsp;when we closed our 9th investment in our 8th company: Roadrunner Technologies, a partner to Deliver Addis. Go Feleg! The Ethiopia team also conducted a private equity seminar in Dire Dawa.</li><li>December –&nbsp;We finished the year the way we started it, with a snowy planning session in Colorado and gearing up for a big 2018. We also celebrated with some distributions from companies and a lot of annual planning work across our portfolio.</li></ul>Overall, we saw growth in our portfolio, and our companies supported more than 2,000 jobs. Throughout the year, we enjoyed connecting with members of the Impact Angel Network in Ethiopia and around the world.&nbsp;We are grateful to our partners in Ethiopia and the Government of Canada who make&nbsp;our work in Ethiopia possible, and to the inspirational entrepreneurs leading our companies. &nbsp;We raise a toast to our investors, our partners, our entrepreneurs, our team…and to our vision where people see Africa as a land of opportunities (not problems). Here's to a big 2018.Matthew Davis, Tom Scriven, Laura Davis, Tristan Pelham-Webb, Justin Reesor, Erin O’Connor, Neteesh Dohare, Prasoon Raghuwanshi, Sandy Hung, Lulit Negash, Teshager Demissie, Renata Makhoul , Yoseph Getachew, Tsegamlak Solomon<figure class="image"><img src="/uploads/dsc_0685_animation_2_8f8ef58d76.gif"></figure>

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2017 is Over? Enjoy Some of Our Favorite Photos

<h1 style="text-align:center;">Why Deliver Addis is Becoming the Go-To Ordering System in Addis</h1>Over the last month, Deliver Addis has been rolling out a number of new features for their customers. Even though I’m on the front line, and know when things are launching, I keep getting pleasantly surprised by these new features and the quality of service the company is providing.<figure class="image"><img src="/uploads/dsc_0041_ffe2958934.jpg"></figure>One thing I’ve noticed is that Deliver Addis is always striving to make improvements to its customer experience. A number of their new features have been big wins that definitely set them apart from competitors. A few of their new features include:<ul><li>Real-time Dispatch and Delivery Time Tracking – If your delivery is running late, a Deliver Addis representative gives you a call with an update.</li><li>Credit Card Payments – This just adds another level of convenience. Being one of those people who doesn’t always have change (especially when ATM outages are common in Addis), being able to pay online with my credit card is a life saver when I’m hungry! They’re of course using state of the art technology to secure all credit card information.</li><li>Rewards Points – Maybe my new favorite addition! Every time you order, you get points on your account that count towards a free meal. It’s a little token of appreciation for my on-going loyalty. I haven’t actually cashed mine in yet, but I am definitely looking forward to a free delivery sometime soon!</li></ul><figure class="image"><img src="/uploads/dsc_0166_0_9594965d03.jpg"></figure>One thing I love about Deliver Addis is the service is reliable, whether I need catering delivered to a meeting or if I need an extra cake for a friend's gathering. I am always pressed for time with the demands of my job and the service allows me a few extra minutes and convenience. Their service also allows me to spend an extra hour or two with the people I care about, rather than being stuck in traffic trying to pick up some food.I’m still on the hunt for my favorite restaurant on the Deliver Addis map. I haven’t been able to commit to one just yet since there is always something new to try. As someone who loves different foods, this has opened up so many different options to me, all from the comfort of my desk (or couch).I know my opinion might be slightly biased, but, as the Senior Portfolio Manager at RENEW, I am probably also one of their biggest critics (in a constructive way). In a rapidly growing city like Addis where new challenges come about every day, reliability is no easy task. Hats off to the Deliver Addis team!

Highlighting New Features for the Delivery Company.

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Why Deliver Addis is Becoming the Go-To Ordering System in Addis

<h1 style="text-align:center;">Visiting Addis 5 Years Later</h1>Guest Blog:This is a guest blog by Isabel Marquette whose family is a member and investor in the Impact Angel Network.I lived in Ethiopia with my family for six months when I was 14 years old, back in 2014. This was during the early years of RENEW and my first time experiencing a culture outside of the United States. I stayed for six months and left with many new friends and a longing to return.<figure class="image"><img src="/uploads/Blog_3_b3e2355785.png"></figure>Five years later, I returned to Addis this summer to spend time reconnecting with friends and to visit some of the companies in which my family has invested. I spent time all over the city and from my perspective, a lot has changed, but some things are the same five years later. The Edna Mall appears mostly unchanged, businesses such as the bakery we frequented have moved locations, marking small changes and incremental growth. In the community where my friends live, their simple homes are much the same and the roads remain unpaved years later. The train is one of the biggest additions to the city. Infrastructure and various buildings are improving. The things I loved most about Ethiopia, thankfully remained unchanged. Once again, I experienced the friendly people, welcoming communities, and delicious food.Not only did I spend time with old friends, but I also made new friends while I was there. I met up with friends who I knew from my first trip, from the neighborhood in which my family stayed previously. Most of them grew up together and continue to live simply, spending most of their free time hanging out or playing soccer on the street. I also met a new cohort of young people who are my age and being educated globally, but return to Addis for the summer. The common theme among all of them is a general optimism about the direction of the country. They would say the economic growth and opportunities, as well as the new political leadership is slowly opening doors for more people. Many young people still struggle with unemployment or underemployment, so it’ll be great to see how this new leadership changes the economy in the years to come.<figure class="image"><img src="/uploads/screen_shot_2018_07_19_at_2_fotor_5b938bc51a.png"></figure>The slow and incremental changes I observed on a macro level is also true about the businesses that my parents have invested in. You can see first-hand that things change and grow but it takes time, and sometimes takes longer than expected. While in Addis, I had the chance to visit eight different businesses, four of which are companies my parents are invested in. My favorite part about visiting the different companies was meeting the entrepreneurs and hearing their stories. One of the highlights was meeting engineers who had finished their studies and were working at dVentus, the Impact Angel Network’s first investment. It was inspiring because I am currently pursuing an engineering degree as well. I witnessed them going through some of the same processes that I have studied such as preforming tests on meters. It was great to see some of the principles and processes I’m learning in a real-world setting. Another business that stood out to me was Krotaj. During the visit, we had the chance to walk through each step of the manufacturing process. I could see the raw materials and even had the chance to taste some of the finished tahini – delicious! &nbsp;

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Visiting Addis 5 Years Later

<h1 style="text-align:center;">RENEW’s 2018 Winter Investor Trip</h1>In January, RENEW partners Matt &amp; Laura Davis were in the U.S. for some visits with Impact Angel Network members and others interested in RENEW’s work in Ethiopia. The trip included visits to Texas, Atlanta, and New York City. They had a great trip speaking with investors, connectors, entrepreneurs and advocates about investing in Africa! &nbsp;Here are some of the trip highlights:<ul><li>First, we were hosted by the Allen’s in Texas! Longtime members of the IAN…</li><li>After that, it was off to Dallas, Texas where we co-hosted two events. The first, was an evening networking event with <a href="https://www.linkedin.com/in/dan-glanville-29588137/">Dan Glanville</a> and the second was an intimate lunch event with IAN member, <a href="https://www.linkedin.com/in/frank-roby-60a16910/">Frank Roby</a>. Thank you for all the time you put in to pull these events together – we couldn’t have done it without you!</li><li>In Atlanta, we had a packed scheduled – meeting with IAN members, businesses, and individuals interested in investing in Africa. We closed off our Atlanta dates with an event co-hosted with <a href="https://www.linkedin.com/in/bscottsadler/">Scott Sadler</a> from <a href="http://www.boardwalkcm.com/">Boardwalk Capital Management</a>. We had a great turn out and it’s clear the interest in a different discourse about Africa as a place of opportunity rather than problems is starting to take hold in the U.S.</li><li>Our last stop for this trip was New York City! One highlight was a lunch session hosted at <a href="http://www.columbiaimpactinvesting.org/">Columbia University’s CI3</a> (Columbia Impact Investing Initiative) where we spoke about impacting investing in East Arica: turning small and medium enterprises into market leaders. With over 50 people in attendance, we had the opportunity to answer some great questions, and see what is currently happening on campus.</li></ul>Thank you to everyone who helped make this winter trip a huge success! The partners are also starting to plan their spring trips for the U.S. and Canada! Are you located in Delaware, Washington D.C., Charlottesville, New York City, Toronto, Ottawa or Montreal and want to meet with RENEW? <a href="mailto:eoconnor@renewcapital.com">Contact us today</a> for more information.<figure class="image"><img src="/uploads/winterinvestortrip_a472479246.jpg"></figure>

Highlights from Texas, Atlanta and New York City.

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RENEW’s 2018 Winter Investor Trip

<h1 style="text-align:center;">CFO100 and the Exec’s Program: Round 2!</h1>Here at RENEW, we know CEOs and CFOs are among the most important positions in an organization. That’s why we designed two unique programs, The <a href="https://renewcapital.com/the-exchange/cfo-100-program target=">CFO100</a> and <a href="https://renewcapital.com/the-exchange/executives-program target=">The Exec’s Program</a>, to support and strengthen these key individuals in Ethiopia’s growing private sectors.Last year in 2017, RENEW had 11 business leaders graduate from the Exec’s Program and 24 CFOs out of CFO100. After reviewing feedback, we are finished the preparation to run these courses again in 2018. On&nbsp;Tuesday, February 6, 2018, RENEW will launch the second round of training for both programs.The Exec’s Program helps form the habits of market leaders.&nbsp;The program focuses on the battle rhythms of effective businesses including strategic and annual planning, key financial management tools, corporate governance, company reports, management teams, reporting and finance for execs, marketing mastery, sales and customer service. In addition to the in-person classes, a number of one-on-one coaching sessions take place with <a href="https://www.linkedin.com/in/matthew-davis-a948772/">Matthew Davis</a> and the CEOs. These sessions end up being extremely helpful and more focused on the specifics of the business the CEO is leading.<figure class="image"><img src="/uploads/img_20171115_162428291_1_344a2d946b.jpg"></figure>In terms of CFO100, we focus on practical skills to help finance professionals become the strategic advisors (CFOs) needed in market leading companies. Costing, building and using a budget, excel for CFOs, financial analysis and presentations of financials, and running a finance department are some of the major topics of CF0100.&nbsp;In less than a week the first class of 2018 will be held - and we couldn’t be more excited to see what this group of CFOs and CEOs will bring to the table! &nbsp;

The second round of training begins February 6, 2018.

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CFO100 and the Exec’s Program: Round 2!

<h1 style="text-align:center;">Only 4 Months...</h1>In mid-February 2018 amid increased protest and unrest in Ethiopia, the then sitting prime minister, Hailemariam Desalegn, announced his gracious and surprising resignation. On April 2, 2018, Dr. Abiy Ahmed was confirmed and sworn in by Ethiopian parliament as the new Prime Minister of Ethiopia.Dr. Abiy is now the chairman of both the ruling EPRDF (Ethiopian Peoples’ Revolutionary Democratic Front) and the OPDO (Oromo Peoples' Democratic Organization), which is one of the four coalition parties of the EPRDF.The new prime minister is just 42 years old and the youngest head of government in Africa. Since April, the world has been watching in fascination as he worked to address the country’s challenges head on. Challenges remain, but here at RENEW, we are grateful for the changes we see, and the increasingly positive impact on the business environment.Some of the highlights from the last four months include:<ul><li>Acceptance Speech – Dr. Abiy’s acceptance speech sparked optimism and received an overwhelmingly positive reaction from the Ethiopian public including some opposition groups inside and outside Ethiopia. - <a href="http://www.allthingsethiopia.com/ethiopia-news/2760/">Full English Transcript of Ethiopian Prime Minister Abiy Ahmed’s Inaugural Speech </a>(All Things Ethiopia - April 2, 2018).</li><li>Charm Offensive - In the weeks after his inauguration, Dr. Abiy launched a “charm offensive” in an effort to defuse tensions; he toured the country, freed prisoners, visited the main regions where protests have erupted, restored internet access in the restive Oromiya region and shut down one of the most infamous prisons where dissidents were jailed. - <a href="https://www.france24.com/en/20180730-abiy-ahmed-spreads-hope-reform-ethiopia">Abiy Ahmed: Ethiopia's first Oromo PM spreads hope of reform</a> (France24)</li></ul><figure class="image"><img src="/uploads/screen_shot_2018_09_04_at_3_25_29_pm_a9771d765b.png"></figure><ul><li>Reducing Trade Barriers - He is working to lower trade barriers with Djibouti, Ethiopia, Kenya and Sudan. - <a href="http://www.africanews.com/2018/05/14/ethiopia-ready-to-ratify-africa-free-trade-deal-after-keyna-ghana-pm/">Ethiopia ready to ratify Africa free trade deal after Kenya, Ghana</a> (Africanews.com - May 14, 2018)</li><li>Ending State of Emergency – On June 5, 2018, he ended the state of Emergency. – <a href="https://www.cnn.com/2018/06/05/africa/ethiopia-lifts-state-of-emergency/index.html">Ethiopia Lifts State of Emergency Two Months Early</a> (CNN - June 5, 2018 )</li><li>Egypt Relations - The PM was in Egypt this week holding talks with President Sisi. The talks appear to have gone well and eased tensions. President Sisi asked Dr. Abiy to swear to God that the dam will not hurt Egypt - “I swear to God, we will never harm you,” was how Dr. Abiy responded. <a href="https://www.reuters.com/article/us-egypt-ethiopia/egypt-ethiopia-agree-to-settle-differences-over-nile-mega-dam-idUSKBN1J60YL">Egypt, Ethiopia Agree to Settle Differences over Nile Mega-Dam</a> (Reuters – June 10, 2018)</li><li>Oil - Ethiopia is to start extracting the first ever crude oil deposit from Ethio-Somali Region as of tomorrow, The Reporter learned. To recap what happened back in March, 2018: Poly-GCL, a Chinese company engaged in oil and gas exploration and development project in the Ethio-Somali Regional State, discovered oil and natural gas deposits. The amount of gas reserve discovered by Poly-GCL is estimated to be 6 to 8 Trillion Cubic Feet. <a href="https://www.thereporterethiopia.com/article/ethiopia-start-extract-natural-gas-tomorrow">Ethiopia to Start Extracting Crude Oil</a> (The Reporter – June 27, 2018)</li><li>Opening its Economy - In a major policy shift, the government is set to loosen its monopoly on several key economic sectors, including aviation and telecoms. The government will also allow “outright full privatization” in several other sectors; such as logistics and printing. Ethiopia's move to open its markets has been hailed as a seismic policy shift, but analysts say the new government had little choice after years of tight control took a toll on the economy.</li><li>Eritrea and Ethiopia Make Peace - The Ethiopian PM traveled to Eritrea to make peace. Since then, Ethiopian Airlines flights have been restored and the Eritrean Embassy in Addis has reopened. <a href="https://www.economist.com/the-economist-explains/2018/07/17/how-ethiopia-and-eritrea-made-peace">How Ethiopia and Eritrea Made Peace</a> (The Economist – July 17, 2018)</li><li>FOREX - Dr. Abiy is getting very creative with trying to attract forex from remittances into the country. First, he has offered an attractive deal for diaspora that will come to Ethiopia between August and September. Second, he has set an Ethiopian Diaspora Trust Fund they will use for development. <a href="https://www.bloomberg.com/news/articles/2018-07-26/ethiopia-s-premier-to-woo-diaspora-investors-as-he-visits-u-s">Ethiopia's Premier to Woo Diaspora Investors as He Visits U.S.</a> (Bloomberg – July 26, 2018) and <a href="https://www.ethioembassy.org.uk/ethiopian-diaspora-trust-fund-account-officially-operational/">Ethiopian Diaspora Trust Fund Account Officially Operational</a> (Ethiopian Embassy – UK – July 18, 2018)</li><li>Diaspora - Dr. Abiy recently conducted a roadshow across the US - and was very well received by the Diaspora. <a href="https://www.theatlantic.com/entertainment/archive/2018/08/abiy-ahmed-meets-the-ethiopian-diaspora/566591/">Abiy Ahmed Meets the Ethiopian Diaspora</a> (The Atlantic – August 4, 2018)</li></ul><figure class="image"><img src="/uploads/screen_shot_2018_09_04_at_3_29_11_pm_46009b22f2.png"></figure>The challenges ahead of Ethiopia and Dr. Abiy include managing foreign exchange and inflation amidst a growing economy, managing international relations with Ethiopia’s neighbors, and controlling internal resistance from former leaders resistant to change. At RENEW, we remain bullish on the investment potential of Ethiopia and its long term growth.First Image Source: France24: <a href="https://www.france24.com/en/20180730-abiy-ahmed-spreads-hope-reform-ethiopia">Abiy Ahmed: Ethiopia's first Oromo PM spreads hope of reform</a>Second Image Source: The Atlantic: <a href="https://www.theatlantic.com/entertainment/archive/2018/08/abiy-ahmed-meets-the-ethiopian-diaspora/566591/">Abiy Ahmed Meets the Ethiopian Diaspora</a> &nbsp;&nbsp;

The New Prime Minister Takes Ethiopia by Storm.

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Only 4 Months...

<h1 style="text-align:center;">What's Behind the Soaring Inflation in Ethiopia?</h1>Co-authored by Yoseph Getachew and Tsegamlak SolomonInflation in Ethiopia hit a near-decade high of 26.4% (32% in food and 19% in non-food) in July 2021. Following that problematic high and the widening difference in the foreign exchange market between the official exchange rate and the parallel market (also known as the black market), the Ethiopian government has taken several strong regulatory measures aimed at curbing illegal foreign exchange trading and reducing the local currency supply circulating in the economy. At its high, the difference between the official and parallel market rates reached almost 50%, before eventually narrowing to today’s rate difference of approximately 25%, following the policy measures taken by the government. The major measures that have been taken by the Ethiopian government chronologically include:<figure class="image"><img src="/uploads/Screen_Shot_2021_09_08_at_6_28_50_PM_4e2dd8d43f.png"></figure><ol><li style="text-align:justify;">August 7 - Following an increase in the difference between the official FOREX market rate and the parallel market rate, which ranged from 28% to 48%, it has been reported by the government that the Tigray People's Liberation Front (TPLF), which is currently fighting with the Federal Government, is using illicit financial networks to finance its activities and that is resulting in a sharp price rise. As a result, the government has taken police action against the alleged black market.&nbsp;</li><li style="text-align:justify;">August 11 - Through a text message circulated to all commercial banks, the central bank of the country ordered all commercial banks to suspend all collateral-based loans for an indefinite period. The suspension included the dispersion of already approved loans. As reported, the decision was made to curtail economic sabotage. The government believes that supporters of the TPLF are using their assets to take out loans from commercial banks and use that money to fund their illicit foreign exchange market. Drying up that source of funds has helped narrow the gap between the official and parallel exchange rates.&nbsp;</li><li style="text-align:justify;">August 25 - The central bank suspended all commercial banks from providing loan guarantee services effective August 25.&nbsp;</li><li style="text-align:justify;">August 30 - The central bank adopted a restrictive monetary policy in order to restrict the liquidity of banks and reduce the amount of money in circulation, including:&nbsp;<ol><li style="text-align:justify;">The reserve requirement for commercial banks was doubled from the original 5% to 10% in hopes of sucking up money circulating in the economy. When there is more money circulating in the market, the demand for goods and services increases as consumers have more money to spend. Sucking some of that money out of the economy will help reduce price escalation. The new reserve requirement went into effect as of September 1st.&nbsp;</li><li style="text-align:justify;">The interest rate at which commercial banks can borrow directly from the central bank in order to sort their short-term liquidity problem has been increased from 13% to 16%.</li><li style="text-align:justify;">The central bank also increased the amount of foreign currency commercial banks must remit. All commercial banks are mandated to transfer 50% of their foreign exchange holdings to the central bank, up from 30%. The central bank also terminated the surrender requirement of foreign currency generated by commercial banks from foreign direct investment and diaspora foreign currency deposit accounts and also bumped the retention of forex by foreign exchange generators from 31.5% to 40%. This is intended to better benefit foreign currency generating customers, and in effect, increase the foreign currency remittance by these customers. This is expected to encourage these customers to import essential food items using their retained foreign currency earnings.&nbsp;</li><li style="text-align:justify;">The central bank also introduced a new mandatory rule that demands commercial banks invest at least 1% of their annual loan disbursement and that insurance companies allocate 15% of their net annual income to purchase bonds from the Development Bank of Ethiopia (DBE), which is the state policy bank. The government uses DBE to finance some of the mega government projects, MSMEs and some priority sectors.</li></ol></li><li style="text-align:justify;">August 30 - NBE lifted the freeze on loans for bank credits provided against vehicles. The central bank reiterated that the freeze on all other loan disbursements will continue until further notice.</li><li style="text-align:justify;">September 3 - The Federal Government has designated edible oil, sugar, wheat and rice as tax-exempt consumer goods. In addition, the value-added tax levied on food products like eggs and pasta was also lifted. VAT applied on these goods was 15%.&nbsp;</li><li style="text-align:justify;">September 4 - The central bank eased a loan freeze on importers and manufacturers of edible oil. Edible oil manufacturers are allowed to take on any form of loan from banks. However, importers are only allowed to borrow when their letter of credit is approved to make the payment.</li></ol>The Ethiopian central bank took these short and long-term policy changes in the hopes of controlling inflation, reducing the gap between the official and parallel rates and controlling illicit activities. Some of the policy changes such as banning all collateral-based loans will likely have a deep adverse impact on the economy as many businesses are reliant upon funding from the banking sector but the bans are thought to be short-term measures and are expected to be lifted soon.

A timeline on the government’s efforts to curb inflation

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