<h1 style="text-align:center;">5 Reasons We Remain Long on Ethiopia</h1>When considering investing in Ethiopia, it is impossible to overlook the country's recent challenges including the outbreak of the desert locust (<a href="https://www.theguardian.com/global-development/2020/nov/16/war-ethiopia-locust-swarm">LINK</a>), COVID-19, regional tensions over the Grand Ethiopian Renaissance Dam (GERD) (<a href="https://foreignpolicy.com/2020/12/03/ethiopia-needs-united-states-honest-broker-blue-nile-dam-dispute-gerd-egypt-sudan/">LINK</a>) and the unrest that has occurred in 2020, especially the latest conflict and war in the northern parts of the country between the federal government and the Tigray People's Liberation Front (TPLF) (<a href="https://www.washingtonpost.com/world/africa/ethiopia-tigray-war-aiby/2020/12/04/98b1b95e-35a8-11eb-9699-00d311f13d2d_story.html">LINK</a>). But it’s important to look beyond the headlines and recognize the progress that’s been made since RENEW opened an office in 2012. Here are our top five reasons why we remain long in Ethiopia.&nbsp;<figure class="image image-style-align-center image_resized" style="width:87.84%;"><img src="/uploads/skyline_5_9e9c12f56a.jpg"></figure>1. Investment Law ReformIn 2019, Ethiopia began to implement a new economic policy reform (the Homegrown Economic Reform Agenda). The major goal of the reform program is to open the country’s market for the private sector and to make the country more business-friendly (read our analysis on this reform <a href="https://www.renewcapital.com/resources/blogs/The%20Ethiopian%20Business%20Environment%20in%20Light%20of%20the%20Homegrown%20Economic%20Reform%20Program">here</a>). The Ethiopian government plans to undertake measures that will allow the private sector to take the wheel in leading the economy and includes measures to improve the country’s ranking in the World Bank’s <a href="https://www.doingbusiness.org/en/rankings">Ease of Doing Business</a> ranking.Under the Ease of Doing Business initiative, the government took steps to change its investment laws (the Investment Proclamation and Investment Regulation), which were in effect since 2012. The new investment laws lifted the majority of the sector restrictions that were imposed on foreign investors, improved administrative complications and introduced dispute settlement mechanisms. By way of example, the new investment laws saw the opening of transport services, education, health, cement manufacturing, and wholesale and retail trades via electronic commerce, among others. The new investment law also adopted a negative listing approach; it lists 33 areas that are reserved for domestic investors and anything outside of these areas are now open to foreign investors.2. Improving InfrastructureDuring the last decade, Ethiopia has invested in infrastructure improvements. Having nine major rivers with several tributaries, the country holds one of the highest hydropower potentials in Africa. Based on that, the government has invested in hydroelectric power generation projects such as the GERD, which will be the largest hydroelectric power dam in Africa once it’s fully functional.In addition to power generation, the government has been involved in other infrastructure development projects, including the Addis Ababa-Djibouti railway project, the industrial zone development projects that are being undertaken across the country and the road projects that connect Ethiopia with neighboring countries. As Ethiopia is a landlocked country, the railway line and the road projects connecting the country to Djibouti and other ports will increase the accessibility of Ethiopian products to the international market.3. Privatization of Key SectorsOne part of the Homegrown Economic Reform Agenda is the privatization of some government enterprises, which had a monopoly in controlling the country’s markets. Ethio Telecom, which is the only telecom operator in the country, is a government-owned enterprise that is currently selling part of its membership interest to international operators. In addition to selling part of Ethio Telecom, the government also issued two new licenses for telecom operators. Different international operators have shown an interest to participate in the bid for these newly issued licenses. This will increase the addressability of telecom services to the unconnected portion of the population. In total, the Government of Ethiopia aims to raise at least $7.5 billion USD from selling assets from the sugar industry, telecom, railroads and other infrastructures.[1]The other sector that is currently experiencing a change in control is the financial sector. The financial sector has historically remained closed to foreign nationals, regardless of their origin. However, a few months after the new administration took power, the sector was opened up to foreign nationals of Ethiopian origin (diasporas). Going forward, the government has pledged to take measures to open the financial sector to foreign investors.4. Regional Integrations and AfCFTAOn March 21, 2018, the African Union member states signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda in order to boost trade, economic growth and integration among African countries. The Agreement established a free trade area, a protocol on trade in goods, and a protocol in trade in service. Ethiopia ratified the agreement and deposited the ratification document on April 10, 2019.The agreement gives free access to the market of member countries. Member states are obliged to progressively eliminate tariffs or charges on goods and services originating from member states. As a result, products originating from Ethiopia will have access to the markets of the countries that have ratified the agreement. As of 2020, 28 African countries have ratified the agreement, including: Ghana, Kenya, Rwanda, Niger, Chad, Congo Republic, Djibouti, Guinea, Swaziland, Mali, Mauritania, Namibia, South Africa, Uganda, Ivory Coast (Côte d’Ivoire), Senegal, Togo, Egypt, Ethiopia, The Gambia, Sierra Leone, Sahrawi Republic, Zimbabwe, Burkina Faso, São Tomé and Príncipe, Gabon, Equatorial Guinea and Mauritius. Protocols which relate to intellectual property rights, investment and competition policy are underway.From the regional integration perspective, Prime Minister Dr. Abiy Ahmed brokered a peace deal with Eritrea, which ended the Ethio-Eritrea border conflict that lasted for more than two decades. This resulted in the opening of borders between the two countries and ensured the free movement of people and goods. In addition, the Eritrean ports are now one of the main outlets for Ethiopian products. This resulted in Prime Minister Abiy receiving the <a href="https://www.nobelprize.org/prizes/peace/2019/press-release/">2019 Nobel Peace Prize</a>.5. Macroeconomic TrendsAnother reason to remain long on Ethiopia is the country’s track record for being one of the fastest-growing economies in the world. As per the World Bank Report, the Ethiopian economy has experienced a strong, broad-based growth averaging 9.9% growth from 2007/08 – 2017/18.[2] When compared to the regional average of 5.4%, the Ethiopian economy has been growing exponentially. Though the growth rate will inevitably slow as a result of the pandemic and the conflict, there are signs that the growth rate may still be positive.In terms of population, Ethiopia is the second-most populous nation in Africa with a population of 110,000 million people. Sixty percent of the population is of working age, entailing the availability of an inexpensive labor force. In addition, with the growing population, there is also an increase in the middle-income population. This is expected to increase the domestic demand for goods and services.Ethiopia is also endowed with fertile land suitable for the production of coffee, pulses, oilseeds, cereals, flowers and various fruits and vegetables. Coffee holds the biggest share of Ethiopian agricultural products sold to the international market, and Ethiopia is currently Africa’s largest producer of coffee.Overall, with these development trends, Ethiopia aims to achieve the status of a lower-middle-income country by 2025, joining countries like India, Bangladesh and Vietnam.[3] Of course, there are still a number of bottlenecks that the government is expected to tackle in order to achieve that status, but we remain hopeful.

Looking beyond the 2020 challenges at the investment opportunity

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5 Reasons We Remain Long on Ethiopia

<h1 style="text-align:center;">2020 in Review</h1>As we start a new year, it’s one of our traditions at RENEW to look back and remember the high points of the last 12 months. Here are some of the highlights of 2020:<ul><li>January - We hit the ground running in January with a trip to the UK to meet with investors while our East Africa team prepared companies to meet Impact Angel Network (IAN) members during the February Econ-Tourism trip to Ethiopia and Uganda.</li><li>February - Members of the IAN traveled to Ethiopia and Uganda on RENEW’s <a href="https://www.renewcapital.com/resources/blogs/Econ-Tourism%20Trip%202020">Econ-Tourism Trip</a> where they met with 16 entrepreneurs.</li><li>March - We celebrated International Women’s Day with a look at RENEW’s <a href="https://www.renewcapital.com/resources/blogs/RENEW%E2%80%99s%20Gender%20Equality%20Report%20Card">Gender Equality Report Card</a> and a blog authored by four women who work at RENEW.</li><li>April - When the first case of COVID-19 showed up in Ethiopia at the end of March, we began to work with our portfolio companies to develop contingency plans in the event of a prolonged economic slowdown. We shifted from looking at deals during our monthly <a href="https://www.renewcapital.com/apply">Members’ Call</a> to keeping investors abreast of the emerging situation across East Africa.</li><li>May - In response to a growing need to help companies beyond our pipeline and portfolio to make it through COVID-19, we launched a Telegram channel, <a href="https://t.me/OrangeBusinessNetwork">Orange Business Network</a>, and began to produce and share critical resources like training videos, tools and information for the East Africa business community. We also took our <a href="https://latest-api.renewcapital.com/uploads/RENEW_LLC_Investment_Seminar_Series_cbf868ea76.pdf">investment workshops</a> online to help curb the spread of COVID-19 and to expand our reach to more businesses in need of support. At the end of the month, members of the <a href="https://www.renewcapital.com/what-we-do/investing">Impact Angel Network</a> funded a third investment in Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a>, which continues to play a critical role in slowing the spread of the virus, and has become one of the largest e-commerce companies in Ethiopia.</li><li>June - We published our <a href="https://www.renewcapital.com/resources/blogs/Celebrating%20our%20Impact">2019-2020 Impact Report</a>! This year's report was a photographic journey through a year of investing with RENEW in East Africa. Thousands of people around the world enjoyed seeing pictures of impact and investing in East Africa.</li></ul><figure class="image image_resized" style="width:100%;"><img src="/uploads/ezgif_com_gif_maker_6f6b429047.gif"></figure><ul><li>July - Political unrest sparked by the assassination of a political activist put the country on stand-still as the government turned off the internet and left millions in the dark and disconnected from the rest of the world. Despite this, companies like Deliver Addis pivoted and many companies found ways to continue to do business and weather the political unrest.</li><li>August - the Internet was restored and our team began to line up some excellent investment opportunities that would consume our work for the second half of the year as RENEW and the IAN began a new investment strategy that focused on building stronger middle management teams across our portfolio companies.</li><li>September - After five months of running contingency planning webinars for entrepreneurs, we analyzed poll data from these workshops, taking a deeper look into the effects COVID-19 has had on Ethiopian SMEs. We learned valuable insights into how female and male managers and owners responded differently to crises like COVID-19. These underscored the importance of building gender-balanced executive teams in companies - which is part of RENEW and the IAN’s new investment strategy.</li><li>October - We <a href="https://www.renewcapital.com/about/teams">grew our team</a> by bringing on Paul Reynolds as head of asset management, and Kirsten Newman was promoted to RENEW’s general counsel.</li><li>November - RENEW’s Matthew &amp; Laura Davis, and Dagmawit Shiferaw were featured on <a href="https://youtu.be/rb4aFE6Ukww">EBS’s Ethio-Business Show</a>, talking about RENEW’s investments in Ethiopia and the critical importance of the development community ecosystem that is supporting the private sector in Ethiopia. We also announced an investment into Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a>, despite the global pandemic and domestic challenges.</li><li>December - We closed the year by building a pipeline of companies for potential investments in 2021, and began expanding out of Ethiopia into the region; adding members to our Uganda team and building a new investment team in Rwanda.</li></ul>February 2021 will mark nine years RENEW and the Impact Angel Network have been in East Africa. The IAN is the most active SME investment group in Ethiopia and continues to expand and invest in new companies across East Africa. Despite the challenges of 2020, we believe we learned a lot, made it through with our heads held high and we’re better off because of the many lessons we learned.We are most grateful to our partners at Global Affairs Canada and USAID who make our work in Ethiopia, Uganda and Rwanda possible. Both have charged into the world of blended finance and are helping to develop new, more sustainable ways to create leverage and impact in Africa. We are also grateful for our fearless and dedicated investors who continue to believe in the potential of the continent and in entrepreneurship to drive positive change. We are grateful to our entrepreneurs, who have shown perseverance through an unbelievably challenging year in an already challenging environment. And lastly, but not least, our team at RENEW - you remain loyal to our clients and our companies working tirelessly to help plant the seeds for a vibrant economy in the decades and centuries to come.Happy New Year...now let’s get back to investing!The RENEW Team<a href="https://www.linkedin.com/in/matthew-davis-a948772/">Matthew Davis</a>, <a href="https://www.linkedin.com/in/paulreynolds5/">Paul Reynolds</a>, <a href="https://www.linkedin.com/in/laura-davis-25764430/">Laura Davis</a>, <a href="https://www.linkedin.com/in/justin-reesor-019a942a/">Justin Reesor</a>, <a href="https://www.linkedin.com/in/eziethen/">Emily Ziethen</a>, <a href="https://www.linkedin.com/in/tsegamlak-solomon-921175a2/">Tsegamlak Solomon</a>, <a href="https://www.linkedin.com/in/kirsten-newman-10301aa7/">Kirsten Newman</a>, <a href="https://renewcapital.com/team/teddy-fantahun">Teddy Fantahun</a>, <a href="https://www.linkedin.com/in/dagmawit-shiferaw-8665943b/">Dagmawit Shiferaw</a>, <a href="https://www.linkedin.com/in/filseta-asrat-4b5615158/">Filseta Asrat</a>, <a href="https://www.linkedin.com/in/mary-adoi-0317b0b8/">Mary Adoi</a>, <a href="https://www.linkedin.com/in/tamirubelayneh/">Tamiru Belayneh</a>, <a href="https://www.linkedin.com/in/ca-shail-bhandari-272484128/">Shail Bhandari</a>&nbsp;

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2020 in Review

<h1 style="text-align:center;">RENEW's 2020-2021 Impact Report</h1><a href="https://latest-api.renewcapital.com/uploads/RENEW_2020_2021_Impact_Report_web_5e1a98866d.pdf">Read our 2020-2021 Impact Report</a>RENEW announces our 2020-2021 Impact Report. This document is shareable and documents RENEW and the Impact Angel Network’s investment journey through 2020, the pandemic, and how our entrepreneurs responded and stood their ground.Please share this with anyone who might be interested in what we’re doing in Africa.&nbsp;<figure class="image"><a href="https://latest-api.renewcapital.com/uploads/RENEW_2020_2021_Impact_Report_web_5e1a98866d.pdf"><img src="/uploads/RENEW_IR_2021_social_IG_khaki_big_map_58a726bf84.png"></a></figure>&nbsp;

RENEW and the Impact Angel Network’s Investment Journey Through 2020

Impact Investing

5 Reasons We Remain Long on Ethiopia

2020 in Review

RENEW's 2020-2021 Impact Report