<a href="https://latest-api.renewcapital.com/uploads/Press_Release_Rwanda_Final_e91a7d55e4.pdf">Download the Full Press Release</a>&nbsp;<hr><h1 style="text-align:center;">RENEW Enters Rwanda Market</h1>Denver, CO and Kigali, Rwanda, April 29, 2021 -- RENEW, an impact investment firm, announces its expansion into its third African country, Rwanda. RENEW Investment Advisors Ltd. was officially registered with the Rwanda Development Board on April 19, 2021. RENEW also welcomes Lincoln Ford Linguyeneza to the team, as the firm’s Rwandan Legal Counsel.<figure class="image"><img src="/uploads/kigali_fotor_e488f89abb_9736ceced7.jpg"></figure>RENEW’s partners first traveled to Rwanda in 2006 and have been closely watching the county’s growth and improving investment and business climate, while building up the firm’s investment practice in Ethiopia and Uganda.“Now is a good time to establish a presence in Rwanda,” says Matthew Davis, CEO and partner at RENEW. “Investors are moving out of saturated markets in the region to find better valuation in secondary markets. We believe RENEW and our investors can find and build up strong companies led by passionate and visionary Rwandans that can attract larger investments. While Rwanda is small, other countries around the world have proven that when capital is respected and cared for, size doesn’t matter. Rwanda has consistently made it easier for investors to do business and that is something very attractive to RENEW and our investors.”Rwanda has experienced strong growth with a GDP of $10.53 billion and a GDP growth of 9.45% (2019 est.). Several factors make it an attractive destination for RENEW and the Impact Angel Network (IAN), including a growing population (currently estimated at 12.3 million), a rising middle class with a per capita GNI of $2,250 and little to no restrictions on foreign investors. Rwanda is also ranked by the World Bank as the second best country in Africa to do business in and 38th in the world.&nbsp;RENEW first entered East Africa in 2012, when it opened an office in Ethiopia, becoming the second private equity firm in the country. Since then, with the IAN, RENEW has become one of the most active SME investors in East Africa. RENEW and the IAN work in partnership with the development community and impact investors to build vibrant investment and entrepreneurial ecosystems in the countries where RENEW operates. RENEW focuses on SMEs, which globally are the main providers of jobs, but in Africa are trapped in the “missing middle” - an area in the capital market between microenterprises and larger, bankable deals where little capital exists. RENEW is focused on job creation and women’s economic empowerment by building gender-smart management teams in the SMEs it backs.“We believe SMEs can be the engines of job creation and women’s empowerment, and deliver strong returns for investors,” says Laura Davis, RENEW partner and co-founder of the IAN. “We see a lot of opportunity and plenty of deal flow in Rwanda.”###About the Impact Angel Network and RENEWRENEW’s Impact Angel Network (IAN) is one of the most active private equity investors in Ethiopia. Its members seek to achieve both significant positive social impact and financial returns through investments in small and medium enterprises (SMEs) in Africa, a proven engine of economic growth and job creation which often lack capital and management capacity due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, the most effective and sustainable way to reduce poverty. RENEW, with its largest office in Addis Ababa, Ethiopia, manages the IAN’s investment operations and provides investment advisory and consulting services in support of its investments. RENEW’s work in Ethiopia was piloted with USAID and is currently undertaken with financial support from the Government of Canada provided through Global Affairs Canada. The project, Accelerating Business Growth, aims to promote sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.###To find out more, please visit <a href="https://renewcapital.com/">www.renewcapital.com</a>.

RENEW Announces its Expansion into Third African Country, Rwanda

Rwanda

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RENEW Enters Rwanda Market

<h1 style="text-align:center;">RENEW Attends GenderSmart Investing Summit</h1>From February 1 to 11, RENEW is grateful to attend the virtual <a href="https://www.gendersmartinvesting.com/">GenderSmart Investing Summit</a>. The GenderSmart summit is an invitation-only forum bringing together more than 600 people interested in unlocking gender-smart capital at scale and connecting leaders and experts in gender finance. The theme this year is “crisis as catalyst” and the team is expertly connecting individuals and organizations and working to marshal efforts in support of gender finance around the world.Given RENEW’s mission to turn SMEs into gender-smart companies with gender-balanced management teams, this conference provides deep resources to learn and contribute. This year, the summit focuses include: From Niche to Normal (which includes discussions on how gender lens investing is becoming "just smart investing"); Building a Better Toolkit; Systems and Levers; Investing for Recovery and Resiliency; and Climate &amp; Gender.If you’re interested in learning more about the GenderSmart Investing Summit, we encourage you to check out their <a href="https://www.gendersmartinvesting.com/">website</a>, their educational resources on their <a href="https://www.gendersmartinvesting.com/blog">blog</a>, and their <a href="https://www.gendersmartinvesting.com/2020-partners-and-supporters">partners and supporters</a>.&nbsp;<figure class="image"><img src="/uploads/gendersmart_0_448b60299d.jpg"></figure>&nbsp;&nbsp;

Gender Equality

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RENEW Attends GenderSmart Investing Summit

<h1 style="text-align:center;">It’s That Time of Year... For Financial Optimization</h1>During the last quarter of each year, many around the world spend time preparing for the Christmas holiday and tax season! If you are in the United States, there’s an option to optimize your impact investing with a vehicle called a donor-advised fund (DAF).According to a recent article in Axios (<a href="https://www.axios.com/covid-19-spurs-generosity-among-holders-of-donor-advised-funds-7894b4f9-04c5-4b00-87f1-2b52df090e0a.html?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosdeepdives&amp;stream=top">COVID-19 spurs generosity among holders of donor-advised funds</a>) more than $120B sits in DAFs and in 2020 at Vanguard Charitable, donors made $1.3B in grants, which was about 25% higher than 2019.Accredited, entrepreneurial-minded givers from the United States can invest in companies in East Africa with RENEW from a DAF which would have the potential of earning a return on their charitable capital. It may be helpful to think of a DAF as a philanthropic checkbook. A donor transfers assets (e.g., cash, securities, other rights or assets) into a DAF account with a non-profit organization (like divisions of <a href="https://www.schwab.com/donor-advised-fund">Charles Schwab</a> and <a href="https://www.fidelitycharitable.org/open-account.html">Fidelity</a>, <a href="https://www.impactassets.org/our_products/donor-advised-fund">ImpactAssets</a>, the <a href="https://www.ncfgiving.com/open/">National Christian Foundation</a> and <a href="https://impactfoundation.org/open-an-account">ImpactFoundation</a>) that is set up to manage DAFs and facilitate transfers into and out of DAFs in line with IRS rules. Donors then receive a charitable deduction in the amount of the value of the assets transferred to the DAF in the year in which they make the deposit. The funds sit in the account until the donor is ready to make grants to charitable entities or to make impact investments. Any returns earned on the investments are returned to the DAF and can be reinvested or donated.&nbsp;<figure class="image image_resized" style="width:97.28%;"><img src="/uploads/sunset_ethiopia_0_1eef1006e0.jpg"></figure>To make impact investments using a DAF, you’ll need to work with an intermediary like ImpactAssets or Impact Foundation, organizations that specialize in the work necessary to diligence and make an investment using a DAF. This is possible, even if your DAF is held at Schwab or another institution.ImpactAssets is an independent public charity first launched in 2001 by Calvert Foundation. The primary tool of ImpactAssets is known as the Giving Fund, an enhanced DAF that facilitates investments of $25,000 or more and provides socially responsible and impact investment options – enabling philanthropists to both “give and invest for the greater good.”Impact Foundation is an intermediary that can facilitate charitable investments of $100,000 or more. Impact Foundation was founded to provide a streamlined way to fund transformational businesses, make loans to charity, and grow the amount you have to give away. Impact Foundation has a working partnership with the National Christian Foundation to assist NCF donors in making private equity and venture capital investments.Want to learn more? Here are some more resources:<ul><li><a href="https://renewstrategies.formstack.com/forms/daf_for_impact_investing">Download an Interview with Sally Boulter of ImpactAssets</a></li><li><a href="https://drive.google.com/file/d/1JF7QJfASnwqf31gWmkWX8wQfWhgvCFPx/view">Download RENEW’s DAF Q&amp;A</a></li></ul>Contact us at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> if you have questions. And if you aren’t already a member, we invite you to <a href="https://renewstrategies.formstack.com/forms/renew_investor_accreditation_form">apply to join the Impact Angel Network</a>.*The information contained in this blog and the resources linked above is for informational purposes only and no representation is made that the information is accurate or complete, nor should it be relied upon as such. In addition, this information is not intended as legal or tax advice. For such advice, please consult your attorney or tax advisor.

For U.S. Investors: Should a DAF be part of your impact investing planning?

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It’s That Time of Year... For Financial Optimization

<h1 style="text-align:center;">It Just Got A Lot Better for Investors in Ethiopia…If You Export</h1>In an effort to incentivize exports from Ethiopia and replenish the desperately low hard currency reserves that have held back the country’s growth for years, the National Bank of Ethiopia (NBE) has issued a directive allowing exporters and recipients of inward remittance to open a foreign exchange retention account at the bank of their preference. But not every foreign exchange remittance entitles a company or individual to open a remittance account. The directive is focused on: resident companies, institutions, individuals and government organizations, other than a diplomatic mission, who receive foreign exchange regularly from abroad. This is good news for a lot of exporters. Here’s how it works:There are two types of foreign exchange retention accounts, i.e. “Foreign Exchange Retention Account A” and “Foreign Exchange Retention Account B”. These accounts will be credited from the export of goods and services and incoming transfer made for inward remittance. Of the total foreign exchange earnings, 30% of the account balance will be deposited in Retention Account A for an indefinite period of time and 70% of the account balance will be credited to Retention Account B for up to 28 days. At the end of the 28 days, the balance will automatically be converted into the local currency, Ethiopian Birr (ETB). The funds in Account A and B can only be used to finance direct business-related and current payments, the details of which are listed in the directive.&nbsp;<figure class="image image_resized" style="width:72.66%;"><img src="/uploads/addis_city_fotor_d30a657494.jpg"></figure>&nbsp;Before this directive, this was not the case. Most exporters used their influence at banks to finance their other import businesses. This, through time, distorted the export sector and created something called commodity dumping. Here, exporters buy up anything they can export (sesame, mung beans, coffee) and sell it on the international market for below-average prices and quality, simply to get access to their forex. Next, they use their influence at the banks to open up letters of credit to purchase items like flat-screen TVs, mobile phones, computers, etc., which is where they generate their real profits. The imports handsomely compensate for any losses they realized on their exports. This ultimately came to the detriment of the country’s reputation in the international markets. Because exporters only cared about the forex they generated, their quality and reputation for the products they sold were second to closing the deal. The millions of farmers that were at the start of that value chain also suffered, as they did not always get the best prices and also had the long-term impact of bad branding which hurt their future development and growth. Also, the forex generated wasn’t regularly used for tractors and machines, new seeds and fertilizer that could improve the commodities which these exporters sold. Rather, it was used to import luxury goods that most Ethiopians never get to buy.[<a href="https://www.renewcapital.com/blog/2020/it-just-got-lot-better-investors-ethiopia-if-you-export#item1">1</a>}The new NBE Directive No. FXD/66/2020, which repealed Directive No. FXD/48/2017, seems to balance the strict regulations of the past with practical current realities and falls somewhere in between. According to the new directive, exporters who have a balance in Retention Account A, in addition to financing their export business, can also use their foreign exchange to import pharmaceuticals and pharmaceutical products, agricultural inputs and pieces of machinery amongst other items. The details surrounding these imports are exhaustively listed in the new directive. These items are given priority in the allocation of foreign exchange by the government. Hence, if properly implemented, the government will be able to incentivize proper exporters, while simultaneously managing the foreign exchange needs of those sectors, which are not being directly financed by export retained earnings but are actually necessities.The manner of utilizing the foreign exchange in Retention Account B remains unchanged. This account can only be used to finance direct business-related and current payments like the import of goods and related services. In addition, it can be used to settle external loans and supplier’s credit, and to settle service payments.Another unchanged item from the previous directive is that companies with retained earnings can freely negotiate with their banks and sell their foreign exchange at a price that is not exceeding the selling exchange rate prevalent on the date. Currently, as a rule, the NBE sets the daily buying rate of foreign exchange for banks (i.e., the price at which banks are allowed to buy foreign exchange). However, banks do have the liberty to decide the selling exchange rate but cannot exceed a 2% margin from the buying rate set by the NBE. The retention directive puts an exception to this rule and allows banks to freely negotiate with exporters who have foreign exchange in their retention account. It allows banks to buy the exporters’ foreign exchange at a favorable price rather than using the daily buying rate set by the NBE. They will still need to remain within the 2% margin since that is the selling rate cap. This incentivizes exporters who have more than enough foreign exchange in their accounts to meet their import needs.The new directive seems to have two overarching purposes. The first one, as discussed above, is to incentivize exporters by allowing for favorable use to meet their import needs and to also get higher exchange rates if they decide to convert their foreign exchange to Birr. Secondly, this helps in channeling the foreign exchange earned from exports to priority areas. Even though the repealed directive had a similar arrangement with even stricter regulations, it was not effective when it came to enforcement. The new directive, if supported with proper enforcement mechanisms, will provide a certain degree of flexibility and channeling of foreign exchange into key import areas such as materials required for export packing and labeling; service payments; settlement of external loans; import of agricultural inputs and pieces of machinery; manufacturing inputs; and machinery and equipment.Overall, this is a good step in the right direction for Ethiopia and for those looking to invest here. Any efforts to increase the country’s foreign currency reserves are welcomed advances. We hope, and may see, further reforms on the horizon.For more information on RENEW or to speak with one of our investment analysts, please visit <a href="https://renewcapital.com/">www.renewcapital.com</a> or email us at <a href="mailto:info@renewcapital.com">info@renewcapital.com</a>. RENEW also holds monthly calls for members of the Impact Angel Network (IAN), which is an educational network for investors seeking to make financial returns and a positive social impact by investing in SMEs in Africa. If you’re interested in applying to the network, you can fill out the IAN application form <a href="https://renewstrategies.formstack.com/forms/renew_investor_accreditation_form">here</a>.&nbsp;1. According to the Minister of the Ministry of Trade and Industry in an interview with Ezega available at: <a href="https://www.ezega.com/News/NewsDetails/7345/Ethiopia-Introduces-New-Directive-to-Halt-Fraud-in-Export-Business">https://www.ezega.com/News/NewsDetails/7345/Ethiopia-Introduces-New-Directive-to-Halt-Fraud-in-Export-Business</a>

A look at the new National Bank of Ethiopia export directive

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It Just Got A Lot Better for Investors in Ethiopia…If You Export

<h1>Book Review: Prosperity Paradox</h1>Why do some countries develop in a generation and others languish in poverty and dust for hundreds of years? No book or perspective can ever tell the whole story, but as an investor who has dedicated the last 10 years of my life to building the private sector in East Africa, I found great hope, helpful insights and a practical framework from Clayton Christensen’s book Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. How satisfying that the book, published in 2019 and co-authored by Efosa Ojomo and Karen Dillion, has an ORANGE cover? Orange is my signature color and one of the primary colors of RENEW’s brand, so I was immediately drawn to the book! In this case, you can judge the book by its cover.&nbsp;<figure class="image"><img src="/uploads/ppnew2_84c669a3d4.jpg"></figure>&nbsp;The book details a framework that challenges many preconceived notions of development and could revolutionize the economic situations for millions across the continent of Africa if entrepreneurs, development organizations, philanthropists, government officials and investors were to implement this framework.I would distill the framework down into three key takeaways. This is my personal summary - you might discover more:<ul><li>Use “Disruptive” Innovations - Other innovations that Christensen has defined throughout his career at Harvard like efficiency innovations and sustaining innovations are good, but not great for an economy. Efficiency innovations free up cash flows but rarely create new jobs. This is the nature of resource-related innovations. Sustaining innovations ensure a company continues to maintain its market, often by adding bells and whistles to make sure the product maintains its competitive edge in the light of new market entrants. But disruptive innovations create new markets, making non-consumers into consumers, creating employment and giving cause for forward and backward integration that often positively impacts infrastructure and policy. My take - don’t just copy and paste models that work in the East or West, in Africa. Rather, start by asking what will it take to create a market here?</li><li>Focus on Turning Non-Consumers into Consumers - Speaking of market creations, Christensen spends a fair amount of the book detailing case studies from companies like Singer, Kodak, Bank of Italy, Ford, Sony, Indomie and the like that build companies that produce products and services that don’t try to steal consumers from other companies, but rather bring new consumers into the market because of the value of their creation. The end of the book also includes an encouraging list of companies around the world that are creating markets by building disruptive innovations. My take - instead of looking at business as fighting for a bigger piece of a fixed-sized pie, ask how can we build something that makes the pie even bigger.</li><li>Ask if We are Solving the Jobs to Be Done - Does the product or service solve the problem for which the company was hired to do? It’s not always as clear as an entrepreneur might like to think. The authors provide the example of a newspaper in an airport. Does a passenger buy the newspaper ahead of the flight to find out the latest news or as an insurance policy in case he or she is seated next to a pesky passenger he or she doesn’t want to speak to? My take - many times a successful product or service that works in one market falls on its face in Africa. The job to be done here might be different - a well dug in one location to help prevent women from having to carry heavy jugs multiple kilometers might have eliminated their bonding time with peers, so it never gets used. Ask, what's the job the customer needs to be done here in Africa? Not, here's what we did in other countries, so it should work here.</li></ul>Christensen and his colleagues also provide some specific advice for each stakeholder intermingled throughout the great case studies and stories in the book. Here I try to summarize a few of the things the book highlights for each stakeholder group.For Entrepreneurs<ul><li>Look for opportunities to create new markets. Be sure to focus on creating markets by creating products that address the needs of non-consumers. Identify pockets of non-consumption by looking at skill, time, wealth, access, etc. and know that existing data does not predict non-consumption.</li><li>Don’t fight against bad policies, lack of infrastructure and corruption...use them. From the book and my own experience in Ethiopia, I know that is a losing battle that consumes way too much energy. The book says to focus first on your market-creating (disruptive) innovation, and if you are committed, the other things will likely follow. In some cases, you will end up building the infrastructure, supply chain, etc. yourself.</li><li>Know what job your customers are hiring you for. It’s not always as clear cut as you might think. Ask yourself, does the product or service solve a job my customers need to get done? And if you don't know what that is, start to build up a very strong primary research function within your due diligence team. The information you're looking for is likely not available. Long conversations over tea and coffee will be the best way to understand that job before investing millions into an idea that might not be what the customer wants (almost every well drilling NGO should read that again).</li></ul>For Development Professionals and Philanthropists<ul><li>Stop drilling wells - We all know friends and organizations that have been heartbroken by the terrible issues surrounding lack of infrastructures such as access to power and clean water across Africa. But rarely does it work over the long term to address those problems from a philanthropic perspective. We end up keeping people in uninhabitable places and/or wasting resources because infrastructure is not owned and maintained by the community. Thousands of wells dug with well-intentioned grant dollars lie in ruin across Africa. Christensen’s answer: Let the private sector create a market-disrupting innovation that pulls non-consumers into a marketplace and addresses the issues with a private-sector solution. This isn’t an overnight solution, but perhaps it is time to put more resources towards investing with the private sector vs. flushing grant dollars down wells and toilets. As I like to say, every decent job we create through investment in a local company provides more access to clean water and healthcare.</li><li>Support cultural changes rather than institutional changes - This is hard to do. I get it. But start with the end in mind, and support initiatives that you think will get you there. I wish the book spent more time focusing on what this could/should look like.</li></ul>For Policy Makers<ul><li>Let innovations pull the right policies and infrastructure in place - The authors share stories from developing countries across the world we’d like to forget. We’ve all seen those well-intentioned infrastructure projects that go nowhere because they aren’t in line with what the private sector and the community needs or will use. Rather, is there a way to focus on innovations and let necessary infrastructure and policies follow? The book goes into great detail about how the United States and other countries were before market innovations like Henry Ford’s affordable Model T, which helped pull America’s highway system into existence. This story is well known, and the authors go into many other unknown and overlooked examples of market innovations pulling infrastructure and proper policy into existence.</li><li>Remember good laws are not enough - Christensen opines that institutions reflect what people value, and therefore leaders and policymakers should focus on changing culture where necessary in order to impact institutions. He puts it another way “institutions are a reflection of the culture, behavior and norms.” His advice? Whether you are a policymaker, investor, entrepreneur, or development professional, don’t wait to get institutions right; rather focus on innovation. In the end, most successful institutions grow from culture.</li></ul>For InvestorsThe following are from the book, but it’s slightly difficult to know where the book’s perspective ends and my own begins.<ul><li>You must take a long term approach - If you think you are entering a developing country to make a quick buck, maybe look elsewhere. I know firsthand that building markets take determination and grit, and the book supports that.</li><li>It’s not for lack of resources - Resources already exist in Ethiopia and across Africa. They just need to be developed and properly utilized. Money, natural resources, human resources, you name it, they exist but have a plan to develop them.</li><li>Be prepared to build your own supply chain - Have a strategic plan for where you start investing and know that you can’t just build a hospital. You need to build the infrastructure to make the hospital run, a healthcare worker training school, a patient education and outreach team...you get the idea.</li><li>Look for market-creating innovations (disruptive innovations) - Not that other investments shouldn’t be done, but if/when you find market-creating innovations, and you have the stomach to see them through, you’ll likely find the legacy building financial returns and social impact you crave.</li></ul>In summary, disruptive innovations create new markets by making non-consumers into consumers. The book gave me great hope that building 100M USD companies in Africa is well within reach for RENEW and for entrepreneurs across the continent.If you haven’t read the book, you should.

A must-read for policymakers, entrepreneurs, development professionals, philanthropists and investors in emerging markets

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Book Review: Prosperity Paradox

<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

Ethiopia

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

Investing in Africa