<h1 style="text-align:center;">&nbsp;#10YearsInvested: Impact Investing Then &amp; Now</h1>This month, we continue our celebration of operating in Ethiopia for 10 years with a special focus on impact investing and where the field has come in the last 10 years. In case you missed previous posts in the series, you can find them here:<ul><li><a href="https://www.renewcapital.com/resources/blogs/Photo%20Journey%20%20Ethiopia%20Then%20%20%20Now%20%20A%20Tribute%20to%20a%20Cooking%20Pot">Photo Journey: Ethiopia Then &amp; Now. A Tribute to a Cooking Pot </a>(March 2022)</li><li><a href="https://www.renewcapital.com/resources/blogs/10%20Years%20of%20Changes%20in%20Ethiopia%20%20What%20Do%20the%20Numbers%20Tell%20Us%20">10 Years of Changes in Ethiopia. What Do the Numbers Tell Us? </a>(April 2022)</li><li><a href="https://www.renewcapital.com/resources/blogs/10%20Years%20of%20Blended%20Finance">10 Years of Blended Finance</a> (May 2022)</li></ul>When RENEW found its home in Ethiopia in 2012, ‘impact investing’ was considered a $46 billion industry. Only a handful of practitioners had started to tackle the complex challenge of deploying capital to achieve both financial and social returns. Only a few people and organizations were even familiar with the concept.&nbsp;Fast forward to today, estimates suggest that the impact investing industry will surpass $1 trillion in assets under management (AUM) by the end of 2022. While this still only represents around 2% of global AUM, impact investing is becoming increasingly mainstream as investors are demanding that their capital is deployed to achieve good, and institutions are responding.The industry’s growth over the past decade is exciting, and the world has welcomed many new practitioners to the field. At the same time, the global social and environmental challenges are becoming increasingly urgent. Climate change, natural disasters, political discord and human conflict are highlighting the fragility of our existence and the imminent need to act. Furthermore, if we are to achieve the United Nations’ Sustainable Development Goals by 2030, there is an estimated $4.2 trillion in annual unmet financing needs for developing countries.&nbsp;It is evident that the development and aid community cannot fill this gap alone. The private sector has the opportunity and the responsibility to substantially increase its sustainable financing commitments and be accountable for the actual social and environmental impacts of their investments. Enter Impact Investing.<figure class="image"><img src="/uploads/pasted_image_0_2_d9ac2d8e9b.png"></figure>Context and HistoryWhile the term “impact investing” is relatively new, it falls under the broader concept of socially responsible investing that has existed in different forms for centuries. For example, 18th century Methodist and Quaker groups in the United States banned all investment in slavery, war and other “sinful” industries. In the 20th century, the World Bank established the International Finance Corporation to promote sustainable development through private sector investments. Financing became a lever for ending the Vietnam War and South Africa’s Apartheid system, as well as saving the environment.These efforts focused largely on exclusion of harmful activities from portfolios. Falling short of true impact investing, they are more aligned with Environmental, Social, and Governance or “ESG”&nbsp; investing, a term coined in 2005 by UN General Secretary Kofi Annan to create a framework for incorporating values into capital markets. In addition to screening out harmful investments, ESG focuses on the identification and mitigation of environmental, social and governance risks that have a material effect on the business.Another industry that helped shape impact investing is microfinance. Emerging in the 1970s, microfinance set out to drive positive non-financial outcomes through small, high-risk investments. The primary goal of microfinance is the social impact, and as such, it does not seek out the same combined financial and social returns that define impact investing.&nbsp;Such socially-minded investment strategies continued to evolve, but it was not until 2007 that the term “impact investing” was introduced by the Rockefeller Foundation as “investments made with the intention of generating both financial return and social and/or environmental impact.”Soon after, the <a href="https://thegiin.org">Global Impact Investing Network (GIIN)</a> was founded to convene market practitioners and relevant stakeholders. Such early steps were important for the industry, but as noted at the outset, impact investing was very much in its nascency in 2012.&nbsp;A Decade of Growth and MaturationThe defining theme of the impact investing industry over the last decade has been its tremendous growth. <a href="https://thegiin.org/research/publication/impinv-survey-2020">GIIN’s 2020 Investor Survey </a>estimates that there was over $715 billion impact investing AUM in 2019. The estimated total AUM over $1 trillion by the end of this year represents a more than 20x increase from ten years ago.&nbsp;The number of impact investors has similarly proliferated, estimated to have reached 1,720 strong in 2019, including numerous mainstream institutions. In just the last few years, notable entrants launching impact initiatives include traditional private equity firms such as Apollo and KKR and corporate initiatives such as the Citi Impact Fund and Salesforce Ventures Impact.&nbsp;However, the field remains diverse by investor type, ranging from family offices to large pension funds. Development finance institutions (DFIs) manage more than one-third (36%) of AUM, while 1,200 asset managers account for just over half (54%). Allocation also ranges widely across industries and markets. Of the investors sampled in GIIN’s report, 59% of capital in 2019 was allocated to emerging markets, with Sub Saharan Africa (SSA) capturing the largest portion at 21%.&nbsp;<figure class="image"><img src="/uploads/pasted_image_0_3_c82e14cd66.png"></figure>Many factors have propelled impact investing’s takeoff in recent years, including rising awareness of global challenges, shifting investor preferences and a generally supportive economic backdrop. The industry’s growing track record of achieving competitive financial returns and demonstrable impact outcomes has helped attract additional capital. One of the most crucial developments, however, has been the establishment of market standards and frameworks to help safeguard against concerns of “impact washing.”Similar to prior “greenwashing” concerns around the environmental movement, “impact washing” refers to investment practices that claim to generate positive social or environmental outcomes but lack supporting evidence for those assertions. These types of reputation-laundering marketing practices rightfully engender suspicion about the industry.To its credit, the impact investing community has recognized and is continuously making steps to mitigate this risk by promoting transparency and accountability through iterative initiatives. For example, in 2016, the <a href="https://impactmanagementproject.com/">Impact Management Project</a> was established, bringing together more than 2,000 enterprises, investors and practitioners to facilitate collaboration and consensus-building on impact best practices.&nbsp;In 2019, the GIIN released its updated <a href="https://iris.thegiin.org">IRIS+ system</a> which provides common metrics for investors to measure and manage their impact. <a href="https://www.impactprinciples.org/">The Operating Principles for Impact Management</a>, a framework for integrating impact throughout the investment process, was launched in the same year.&nbsp;Such frameworks and tools help protect the impact investing market’s integrity by defining standards and best practices that investors should adhere to when claiming the impact label. GIIN’s 2020 report noted that “in the first edition of the Annual Survey (2010), 85% of respondents used their own proprietary [Impact Measurement and Management] systems. One decade later, 89% use external systems, tools and frameworks for IMM.” Regulatory action such as the European Union’s Sustainable Finance Disclosure Requirements and the U.S. Security and Exchange Commission’s proposed guidance on ESG and impact categorization are welcome developments to bring further accountability to the industry.Of course, more work needs to be done. Transparency and accountability to demonstrable impact outcomes are central to the industry’s future, and all market practitioners have an on-going responsibility to help substantiate impact investing’s potential.&nbsp;Advancing&nbsp; Impact Investing in AfricaRENEW is proud to have been an early advocate in the impact investing space and all that we have achieved on our journey. We are inspired by the number of lives we have been able to touch, yet we recognize that impact investing remains substantially underutilized in East Africa. Our team is driven by the opportunity we have to continue leading this movement, constantly pushing boundaries to learn how capitalism can be re-imagined and harnessed to drive positive outcomes for Africa, transforming the continent’s narrative from a place of giving to a place of investing. &nbsp;

Impact Investing: a reflection on the past decade and the industries development 

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 10 Years of Impact Investing and How it Came to Be

Renew Capital joined USAID’s Women Economic Empowerment Fund and members of the 2X Collaborative to develop and launch the SG2X Playbook: a gender-smart investment toolkit for fund managers and SMEs operating in Africa.

<h1 style="text-align:center;">What is the SG2X Playbook?</h1><a href="https://sg2x.squarespace.com/entrepreneurs" target="_blank" rel="noopener noreferrer">Download the SG2X Playbook Now!</a>Small- and medium-sized enterprises (SMEs) are the largest segment of the African economy and yet &nbsp;African SMEs as a business and investment class are under-performing and are rarely gender smart. They do not currently perform well enough to justify the associated transaction and portfolio management costs that would be incurred by investors, and they do not have the resources or capacity to fully support women’s economic empowerment. So, what are SME investors to do? To address the need for improved portfolio and impact results, USAID, RENEW, and a consortium of leading gender lens investing (GLI) initiatives, including members of the 2X Challenge, set out to support the creation of GLI success stories in Africa.The underlying assumptions for the 18-month project supported by the USAID Gender Equality and Women’s Economic Empowerment Hub were threefold: 1) Gender-balanced executive teams deliver superior performance than single-gender dominated teams; 2) fund managers need quick and simple tools to share with SME managers to help them run successful companies; and 3) these tools can be gender sensitized to drive gender equality and SME performance.<figure class="image"><img src="/uploads/image_1_e9531f7199.png"></figure>Keeping these assumptions in mind, the project team created the SME Gender Growth Acceleration (SG2X) Playbook, a gender-smart investment toolkit for fund managers and SMEs operating in Africa, designed to help them build gender-smart SMEs with gender-balanced executive teams that deliver attractive financial and impact results.Now, we understand and fully recognize that there is a lot of great activity already occurring within the GLI space. The internet is full of amazing reports, case studies, and tools for GLI investing, some even targeted specifically for SMEs.Unfortunately, most SME fund managers do not have a lot of time or resources to search, read, extract, and use these tools, which can be hundreds of pages in length and difficult to parse out. SME fund managers and the managers in their portfolio companies need quick, easy to access tools designed to achieve dual objectives: financial and impact results.So, how is the SG2X Playbook different from other GLI resources? The SG2X Playbook builds on these existing resources (i.e., we don’t want to reinvent the wheel, but rather strengthen it) and provides a systematic, replicable, and tested approach in the form of a “Playbook” designed to help grow SMEs into gender-smart success stories that deliver competitive financial and impact results and demand attention from larger private sector investors. In short, the SG2X Playbook outlines a fund manager’s investment game plan, including gender-smart policies, tools, trainings, and best practices to maximize portfolio results. The SG2X Playbook is comprised of the following components:Policies: The Playbook includes a comprehensive Employee Handbook that presents SME entrepreneurs, executives, and managers with standardized, gender-smart policy templates and language they can tailor to the needs and reality of their business.Materials &amp; Standard Operating Procedures: The Playbook includes a module-based narrative outlining the key subject areas of the Playbook, providing best practices for execution and overall instruction on how to use the Playbook through Standard Operating Procedures (SOPs).Gender-Smart Exec’s Training Program: The Playbook includes a curriculum, instructional videos, and presentation materials of the Gender-Smart Exec’s Program — a module-based executive capacity building training program that helps SME executives broaden their skill sets across nine critical topics. This program serves as the main training for Playbook implementation within SMEs.Tools, Resources, Templates, etc.: The Playbook includes a suite of more than 45 practical tools that will aid in the execution of the Gender-Smart Exec’s Program and implementation of the Playbook’s guidance. These resources include, but are not limited to, HR tools (e.g., interview templates, performance review templates, etc.), financial tools (e.g., budget templates, cash flow management templates, accounting and finance manuals, etc.), and management planning tools (e.g. annual management plan; mission, vision, and long-term statements, impact thesis).&nbsp;&nbsp;&nbsp;<a href="https://sg2x.squarespace.com/entrepreneurs" target="_blank" rel="noopener noreferrer">Get your free copy of the Playbook now.</a>

RENEW breaks down the various components of the SG2X Playbook and explains how it is unique from other Gender Lens Investing resources.


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What is the SG2X Playbook?

<h1 style="text-align:center;">10 Years of Blended Finance</h1>This month, we continue our celebration of operating in Ethiopia for 10 years with a special focus on lessons learned from our blended finance model. In case you missed previous posts in the series, you can find them here:<ul><li><a href="https://www.renewcapital.com/resources/blogs/Photo%20Journey%20%20Ethiopia%20Then%20%20%20Now%20%20A%20Tribute%20to%20a%20Cooking%20Pot">Photo Journey: Ethiopia Then &amp; Now. A Tribute to a Cooking Pot </a>(March 2022)</li><li><a href="https://www.renewcapital.com/resources/blogs/10%20Years%20of%20Changes%20in%20Ethiopia%20%20What%20Do%20the%20Numbers%20Tell%20Us%20">10 Years of Changes in Ethiopia. What Do the Numbers Tell Us? </a>(April 2022)</li></ul><figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_05_12_at_10_19_18_AM_de03a9629b.png"></figure>RENEW operates what’s called a blended finance (BF) model, which involves the private sector partnering with donors to address a development challenge that has commercial potential. In RENEW’s case, we aim to accelerate the formation of capital for growth-oriented small and medium enterprises (GO-SMEs) and strengthen the investment ecosystem in Africa. Our partners include groups like Global Affairs Canada (GAC) and USAID among others. In each project we take on, we aim to achieve leverage, which means attracting more private capital than donor funding that was used to support the project. We also aim to strengthen the investment ecosystems by developing pipeline for investors, organizing local capital, and improving the investment environment. We also work on women's economic empowerment and climate-change by helping companies become climate and gender-smart. After 10 years of working on our model in Ethiopia, we’re happy to say we’re rapidly expanding into the region. Looking back, we wanted to share the eight biggest lessons we learned from implementing our blended finance model in Ethiopia.&nbsp;<ol><li>FIND A BALANCE WITH MONITORING AND EVALUATION AND REPORTING: With BF projects, implementers will serve two masters that require robust and specific reporting. Obtaining timely and accurate financial statements from portfolio companies and other non-investee SMEs was a challenge. &nbsp;Lesson Learned: During the project planning stage, be careful what you sign up for in terms of reporting. Try to create as much alignment and overlap between the reporting requirements for your different clients to lessen the burden.</li><li>PERSIST ON THE OUTCOMES, BE FLEXIBLE ON THE ACTIVITIES AND OUTPUTS: Investing in Africa is relatively new for Western governments and investors. We’re learning that some approaches that worked for one country could be unsuccessful in another. &nbsp;Lesson Learned: Make sure your donor partner and your investors are flexible and allow you to pivot as you begin implementation and apply lessons learned throughout the project, even if that means adjusting how you get there. Further, be diligent in documenting your failures and reviewing them to extract lessons learned. For many investors right now in Africa – the early ones like those supported by blended finance – this can be extremely valuable for the larger community and can catalyze more capital.</li><li>DON’T BE AFRAID TO TRY SOMETHING RADICALLY NEW: Building on the idea of flexibility, be willing to try something totally radical. One component of the project from the planning phase to expand our reach in Ethiopia was “investment hubs” in larger cities outside of Addis Ababa to educate SMEs on investing, sourcing deals, and creating valuable business networks. Due to unrest, logistics and a lack of local partners in these cities, there was little traction. Instead of continuing down a failed path, someone came to a more radical idea to reach the masses; an edutainment show – Chigign Tobiya, which is like Shark Tank or Dragon’s Den meets American Idol, customized for Ethiopian culture. We soon went from minimal touchpoints in four cities outside of Addis with only a few stakeholders, to a reported 40 million viewers that raised excitement for entrepreneurship and the formation of local angel networks. Lesson Learned: Be open to trying something radical if the status quo is not working and you may just end up unlocking impact at a larger scale than you thought possible.</li><li>MONEY TALKS WITH POLICY REFORM: Due to the sheer volume of SME transactions we closed in Ethiopia, we became a de facto expert on investing in a country where this is very hard to do. This gained us credibility and a seat at the table when the Ethiopian government was updating their investment code. Our track record of bringing FDI into the country allowed us to help influence several changes that will have a significant impact on the investment and entrepreneurial ecosystem.</li><li>STAY THE COURSE, DON’T GET PULLED AWAY FROM YOUR SWEET SPOT: It’s tempting to chase grant dollars and get pulled into work beyond your sweet spot, or your general good investment sense. For example, it’s easy to become infatuated with social enterprises that have a compelling story, but no real investment case. Lesson Learned: Be disciplined with your investment model and don’t sacrifice longer-term sustainability of the business for near-term soft funding and praise.</li><li>EXTEND THE TIMELINE: SMEs take a long time to realize impact and growth from investments. You might invest in a company in year four of a five-year project and, as a donor, never see the benefits of that initiative. The market and the country are also very dynamic, and the entire private sector might be in an economic slump right at the end of your project, which hurts your numbers. &nbsp;Lesson Learned: Work with your donor to find ways to either extend the project or the reporting period to get a truer sense of the long-term positive impact of a blended finance model.</li><li>80/20 RULE: FOCUS ON A FEW GROWTH COMPANIES, VERSUS TRY TO HELP EVERYONE: Not everyone is meant to be an entrepreneur, and blended finance interventions need to realize this. You’ll figure out quickly which entrepreneurs have the capacity to take on financing. &nbsp;Lesson Learned: 80% of the impact and the results will come from 20% of the SMEs you support under the model. Focus on the 20% and those who are equipped to grow and create impact at scale.</li><li>BE PREPARED TO EDUCATE ALL STAKEHOLDERS, MULTIPLE TIMES – YOU’RE LIVING IN THE “MIDDLE”: Some of the reporting, forms and requests we received made no sense in the greater context in which the project operated. Some, in the donor community, have said we are only making rich people richer. Some SMEs thought we were grantmakers and approached us as such. Many investors are ignorant to Ethiopia’s private sector potential. The bottom line: you must constantly educate because development is so conditioned to fall in line with specific expectations. Lesson Learned: Be prepared to be a project manager and an educator to all program beneficiaries involved – all the time.</li></ol>To read more lessons learned from other key stakeholders in our blended finance model, including investors, donors and entrepreneurs, download our <a href="https://latest-api.renewcapital.com/uploads/ABG_Program_Overview_and_Lessons_Learned_3ebb258c22.pdf">Accelerating Business Growth Project Report.</a> &nbsp;

8 Lessons learned from implementing a blended finance model in Ethiopia

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10 Years of Blended Finance

<h1 style="text-align:center;">White Paper: Current State of Ethiopia’s Angel Investing Landscape&nbsp;</h1>As a legal professional supporting RENEW’s investment practice in Ethiopia for five years now, I keep a close pulse on commercial, tax and economic related regulations that impact private equity investors including angel investors. I recently prepared a white paper to help you understand the opportunities that are on the horizon for local and foreign angel investors and the crucial work that must be undertaken by my government to increase the attractiveness of early-stage investing and the startup ecosystem in Ethiopia in the years to come.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_05_12_at_11_13_40_AM_1d149622f5.png"></figure>I am hopeful that the Homegrown Economic Reform, the Digital Transformation Strategy, the Capital Markets Proclamation, and the draft Startup Proclamation will help set the stage for increased economic prosperity for Ethiopians and support for the private sector, but much work must still be done to ensure the legal frameworks are effectively implemented in support of an optimal environment for startups, angel investors and the private sector in general.&nbsp;&nbsp;As the famous quote by Walter Wriston says, “Capital goes where it is welcome and stays where it is well treated.” As I see it, the Ethiopian government has an important opportunity to ensure that more angel capital flows to Ethiopian startups through the following efforts:<ol><li>Coordinating the enactment of subordinate legislations&nbsp;</li><li>Broadening the label “startup”&nbsp;&nbsp;</li><li>Building a strong institutional backing&nbsp;</li><li>Providing a waiver for the sector restriction for angels&nbsp;</li><li>Easing the work permit and residence ID acquisition process</li><li>Reducing regulatory burdens&nbsp;</li></ol>To read more about my recommendations, download the white paper: <a href="https://latest-api.renewcapital.com/uploads/2022_05_2022_FINAL_Angel_Investing_Landscape_52783c12e3.pdf">LINK</a> &nbsp;

Ethiopia’s opportunities to increase early-stage investing

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The Current State of Ethiopia’s Angel Investing Landscape, A White Paper

<h1 style="text-align:center;">10 Years of Changes in Ethiopia. What Do the Numbers Tell Us?</h1>&nbsp;RENEW is celebrating our 10th year of operating in Ethiopia. Read our March blog here: <a href="https://www.renewcapital.com/resources/blogs/Photo%20Journey%20%20Ethiopia%20Then%20%20%20Now%20%20A%20Tribute%20to%20a%20Cooking%20Pot">Photo Journey: Ethiopia Then &amp; Now. A Tribute to a Cooking Pot</a><figure class="image image_resized" style="width:100%;"><img src="/uploads/IMG_6706_7aa2e8c866.jpg"></figure>In the spirit of continuing our celebration of RENEW’s 10th year in Ethiopia, we have compiled the economic developments of the country when we opened in 2012 (or the year just prior) and the current year (or the most recent reported). The following information is based on data provided by the National Bank of Ethiopia. Figures may vary slightly from other publically reported sources.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_23_44_PM_ca851c6db6.png"></figure>Ethiopia is currently home to the second largest population in Africa (next to Nigeria) and the 12th largest population in the world. The natural rate of population increase is 2.1%, which makes the country one of the fastest-growing populations in the world. Ethiopia is also one of the youngest countries in the world with a median age of 18 years old. As a result, the government has positioned Ethiopia to be a destination for labor-intensive manufacturing sectors like textile. However, the textile sector’s future is uncertain due to the recent suspension of Ethiopia’s status as an AGOA country and other factors. Because of the suspension, Ethiopia currently does not have duty-free access to the U.S. market for certain goods and services manufactured in Ethiopia, such as textiles. The government is putting all its efforts into finding alternative markets, one of which is the African Continental Free Trade Area.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_26_34_PM_b16d114be6.png"></figure>During the past decade, Ethiopia has recorded one of the fastest rates of economic growth in the world. Although the country’s development has slowed down during the past couple of years due to the outbreak of COVID-19 and internal conflicts, the country still managed to grow at the rate of 6.3% in 2021 according to reports from the country’s central bank.The main drivers of GDP growth for the past 10 years have been public capital investments and population growth. In 2020/21 alone, the construction industry registered 6.6% expansion with a 72.2% share in industrial output of which construction of roads, railways, dams and residential houses played a significant role.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_27_06_PM_ece572d4a6.png"></figure>The overall economic growth in Ethiopia is highly associated with the performance of the agriculture and service sectors. However, the Ethiopian economy, which previously was highly dominated by the agricultural and service sectors, is showing progress towards industrialization. The share of agriculture in the GDP is specifically declining, whereas, the share of the industrial sector almost tripled within the past 10 years.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_27_47_PM_76038c0337.png"></figure>The GDP per capita, which is a proxy to measure wealth, has tripled in the last 10 years. However, due to recent sanctions and the war in Ukraine, food inflation has recently spiked, a factor which is putting significant economic strain on the poor.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_28_20_PM_eb59b436e7.png"></figure>Ethiopia’s balance of trade shows consistent deficits mainly attributed to the imbalance in merchandise trade. Small production and quality of exportable goods and logistic difficulties are major contributors to this issue.&nbsp;Focusing on merchandise trade, the main export items from Ethiopia are coffee, gold, flower and oilseeds, although the share of oilseed exports is expected to decline significantly as a result of the war in the northern part of the country which is the agricultural center for oilseeds. The major destination for Ethiopian products is Europe with 41.3% of Ethiopia's total export of goods, with Switzerland being the major destination with 45.4% of the total export to Europe. Asia is the second largest destination with 31% of the total export of goods, of which Saudi Arabia holds the major share with 18.7% of the total exports to Asia, followed by U.A.E, India and Japan. Exports of goods to Africa currently represent only 17.4% of the total export. This, however, is expected to increase following the operationalization of the African Continental Free Trade Area. Ethiopia’s exports to the Americas constitute 9.4% of total exports of which 7.6% is destined for the U.S., which is expected to be significantly impacted as a result of Ethiopia’s suspension from AGOA.&nbsp;&nbsp;The main import items to Ethiopia on the other hand are consumer goods, accounting for 38.5% of the total imports, capital goods accounting for 27.2%, and fuel, which accounted for 13.6%. The imports mainly originate from Asia with 61.3% of the total imports originating from the continent. China and India are the major contributors with 22.86% and 12.32%, respectively. European-originated items represent 22% of the total imports, of which 2.8% is from Ukraine, which is expected to be affected by the recent Russia-Ukraine war.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_29_19_PM_d633a10583.png"></figure>Inflation in Ethiopia has soared during the second half of 2021. This is mainly attributed to the war in the northern part of the country and the widening difference in the foreign exchange market between the official exchange rate and the parallel market. <a href="https://www.renewcapital.com/resources/blogs/What%E2%80%99s%20Behind%20the%20Soaring%20Inflation%20in%20Ethiopia%3F">Read RENEW’s blog </a>about the different measures taken by the government during the past nine months in order to control inflation.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_30_12_PM_049b6bdde8.png"></figure>In 2017, the central bank raised the minimum interest rate on savings and time deposits from 5% to 7%, leaving the lending interest rate on loans and advances to be determined by commercial banks freely. However, the skyrocketing inflation has kept the real rate of interest at -16.6% on savings and -10.35% on lending.&nbsp;&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_30_58_PM_06c3a3ca91.png"></figure>The ETB has largely been controlled by the Ethiopian central bank. While the exchange rate has generally devalued, the parallel/black market rate, which often represents a more accurate real rate, is much higher today, near a 25% difference from the formal market. This is largely due to a weak manufacturing base and export market for the country. The government has also drained foreign reserves to pay for the Grand Ethiopian Renaissance Dam. As a result, the country has only 2.2 months of foreign currency reserve.&nbsp;

As we celebrate our 10th year operating in Ethiopia, we plan to take time each month to bring your attention to interesting data, stories, partnerships or other analysis of the changes and journey of RENEW. 

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10 Years of Changes in Ethiopia. What Do the Numbers Tell Us?

<h1 style="text-align:center;">From Enterprising Adventurer to Adventurous Enterprises</h1>I come from a family of adventurers. They gave me both a passion for new experiences and, from an early age, the privilege and opportunity to travel broadly. It was these adventures to distant lands that brought me close to people.At five years old, I played with joyful Shuar children on the banks of the Rio Upano in Ecuador and, at eight, sat in a field overnight through an earthquake with frightened families in Turkey. It was experiences like these that showed me that no matter where we are from or what our situation, we have more in common with each other than not. I also came to realize the power of connecting with another human being, of trying to understand each other, and the gift of shared laughter.<figure class="image"><img src="/uploads/Screen_Shot_2022_03_07_at_12_26_35_PM_1e774fe22f.png"></figure>Through these adventures, I have learned what it means to be a global citizen and the responsibility that entails. While we are more alike than different, we are not all born into equitable circumstances and provided with the same share of opportunities. These experiences also showed me that we can learn the most when we are willing to step into the unknown, when we are prepared to listen rather than speak, to learn with humility, and laugh at ourselves when we fall down.&nbsp;This passion and curiosity has fueled my journey. It has led me down many delightful paths I could never have imagined, and ultimately, brought me here, to RENEW. With all that the world and its people have given me so far, it is my hope to lead a life of empowering others to chase their own adventures and reach for their own dreams, and maybe even fall into a puddle or two and roll out with a smile on their face.A persistent theme throughout my endeavors to address inequities is the limitations imposed by lack of capital, whether that be monetary or human. We can dream as big as we want and work as hard as we can, but without the right resources and support, only a fortunate fraction of us will succeed, no matter our brilliance or drive. Recognizing this led me to the field of impact investing, to put capitalism to work for good.While in graduate school, I developed a regional expertise and focused my research on Ethiopia and the greater Horn of Africa. Looking beyond the great coffee, phenomenal food, and wonderful people, which is reason enough, I chose this concentration because I truly believe in the country’s potential to be a driving force for economic and political development in the region.Graduating in the onslaught of the pandemic, I was fortunate to be offered a position at a Europe-based impact investment firm focused on agricultural SMEs in the most underdeveloped countries. This gave me the hands-on impact investing experience I sought but left me yearning to put boots on the ground -&nbsp; and ideally, breathing in the mountain air of Addis Ababa every morning.&nbsp; On a crisp October morning in 2021, this became a reality as I stepped off Ethiopian Flight 575 and took the first deep breath of my next adventure. I haven’t missed a morning buna since.

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From Enterprising Adventurer to Adventurous Enterprises

<h1 style="text-align:center;">A Globetrotter Who Found Her Way Back to Uganda</h1>I recently celebrated my one-year anniversary at RENEW. The journey has been a rollercoaster, in a positive way.&nbsp;A few months before joining RENEW, I completed my MBA at Warwick Business School. Going back to business school full-time was challenging initially, as I had spent years working in the SME investing field and developed a passion and increased desire for investing and transforming businesses to achieve their long-time vision, and I took a break to embark on an educational adventure. The reason I say it was an adventure is because for the last thirteen years, my life had been a series of adventures, where I called different places home and had a lot of introspection and exposure to different cultures.&nbsp;<figure class="image"><img src="/uploads/Diana_76e9ca7187.png"></figure>I was born and raised in Kenya, and I would classify myself as someone that is really patriotic and proud of my roots. After seventeen years growing up in Kenya, I moved to Canada for my final year of high school and that is when my journey of being a global citizen began. It was here that I was initially exposed to an environment that was incredibly diverse with students from Canada, Kazakhstan, China, Nigeria, to mention but a few. As a naturally curious person, I was fascinated by the divergence in values, perceptions of the world and desires of different individuals. However, one thing that was clear was despite our differences there was a general understanding as to what makes us human and the priorities of different nations, including economic empowerment. Soon after completing high school, I moved to Rutgers University in New Jersey, U.S.A. to pursue a bachelors of science in finance. While at Rutgers, which again was an incredibly diverse environment, I gained key tools that have formed the foundation of who I am. It was during this adventure that I believe I began to find my purpose. Upon graduating from Rutgers, I was itching to put into practice what I had learned. It was clear to me that my desire was to play a significant role in the development impact and economic empowerment of Kenya. The question was, how could I play a significant role, at the time when there was a wave of economic and social change. It is this passionate desire and indebtedness to my homeland that led me to move back home to Kenya, after living abroad for five years.After a challenging but active job search, the opportunity to join Pearl Capital Partners (PCP) presented itself and it seemed like the perfect fit because it focused on African emerging markets, Kenya included, and they were attracting a great degree of private equity and venture capital funding. Additionally, it tied into my long-term goal as the firm’s investment thesis was to invest in businesses that would generate social and environmental impact alongside a healthy financial return. Thus, getting a foot in the door at my age would open vast opportunities. While at PCP, I was immersed into substantial work from the beginning and was exposed to investment opportunities across eastern and southern Africa. I was fortunate enough to not only be involved on the investment side, but also got to represent the fund on different boards and be part of a team that was driving companies to become robust businesses that could scale.&nbsp;In February 2017, I moved to the Uganda office after being promoted to senior investment analyst and transitioned to the role of investment team lead. The general assumption is that Uganda and Kenya, given that they share a border, have cultures that are more or less similar. However, I was shocked to realize that while our cultures have similarities, there are certain cultural nuances that differentiate Kenyans. I soon realized that I had to tame my initial “aggression” or zeal to close investments in Uganda and had to initially take some time to appreciate and learn the country. As I flashback to July 2018, when I closed my first investment as a deal lead, I recall the feeling of euphoria and sense of self-actualisation that was awakened. The due diligence process and approval process was tough as the fund’s investment committee scrutinized the investment to detail. This accomplishment validated my long-term vision and inspired me to pursue my long-term goal of obtaining my MBA.In 2018, I began the long and grueling process to go back to business school. While it was tough, I was focused on the fact that my long-term career goal was to be a senior leader in the SME investing field and to have the ability to invest in businesses that could catalyze growth in Sub-Saharan Africa. To achieve this goal, it was essential that I develop strong soft skills such as managerial and leadership skills and to widen my network. My MBA experience at Warwick was a transformative and amazing experience. The challenging, yet scintillating, multicultural learning experience, provided the ideal environment to broaden my perspectives, whilst providing the perfect platform to share insights. Further, the expected differences of the students in the cohort were a hallmark of my experience and provided the opportunity (despite the COVID-19 pandemic) to unify the student cohort through thoughtful, honest and genuine intellectual forums.Fast forward to the end of the MBA program, I wasn’t sure where my career would take me - London, Nairobi, Paris or Kampala. As fate would have it, the opportunity to join RENEW presented itself, and it was clear that there was a reason that I needed to move back to Kampala. During the onboarding process in Addis, I felt at home knowing that I was part of a team that shared the same values. That is the desire to address the missing middle and support SMEs in Africa in order to scale and be regional champions. The multi-faceted approach that RENEW takes from the Exchange, to the Asset Management Division and finally the Shared Growth Services team fascinated me and I knew that I was part of a team that had a compelling vision and took a pragmatic approach in investing.&nbsp;People ask me what I’m most proud of on this journey. The answer is simple: my constant evolution and growth as an individual while staying true to my long-term vision and values. While the journey has led me back to Kampala, I can say with confidence that I’m excited about the adventure ahead, wherever it will lead me.&nbsp;&nbsp;

Uganda

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A Globetrotter Who Found Her Way Back to Uganda 

<h1 style="text-align:center;">Enabling Rockstars in East Africa!&nbsp;</h1>Though 59 universities produce fresh graduates every year in Ethiopia, a lack of business etiquette and job skills is seen among many of those who aim to enter the workforce. Even if these graduates have the right academic scores, they often lack mentorships and apprenticeships to prepare for the corporate world.&nbsp;One of the focuses of the Government of Ethiopia with regards to its higher education system is to improve the quality and employability of university graduates. RENEW has designed an internship program, launched first in Ethiopia, with the goal of enabling and preparing fresh university graduates for success in their career paths. Our internship program targets fresh graduates from all regions in Ethiopia giving equal opportunity through a diversity conscious and gender smart selection process. Our aim is that interns at RENEW grow as people and professionally through proper guidance in the right career path.&nbsp;“I am proud of how far I have come. I have met talented, easy going, fun, genuine professionals and a great mentor who wants to help me grow at work as well as my life. I am so grateful for my beautiful and new experience here at RENEW.” – Abigael&nbsp;<figure class="image image_resized" style="width:97.32%;"><img src="/uploads/intern_picture_8a9f4ea213.jpg"></figure> Led by a program coordinator, the internship program takes 6 months, shortlisting 10 excellent candidates from marketing, business and economics, legal, and project management studies every year from universities around Ethiopia. Selected interns are provided with onboarding training, business skill development training (communication, negotiation, presentation, work ethic, professional conduct, etc.). This is coupled with technical or project based “on the job training” according to their fields of study and interest, special mentorship sessions with experienced professionals, team outings and CSR activity participation and dynamic research project assignments for different divisions. Other benefits offered to them are appropriate stipends and medical insurances.“When I saw RENEW's flyer for an internship, my gut feeling told me to apply. It has now been more than 4 months since I joined the program, and I have gotten amazing mentorship from senior members of the team and familiarized myself with the professional space.” – Hermela&nbsp;Interns also get a chance to take The Exec’s Program at The Exchange. They are periodically assessed based on KPIs like implementing disciplines, the progress they made in various areas, qualities of their deliverables and the initiative they show to manage up for the team.&nbsp;“For a new graduate, having a chance to get an internship at RENEW has a special meaning. I got the chance to have a practical outlook on the concepts I learned theoretically in my economics studies at the university. It also enabled me to understand more about my strengths and weaknesses that I should keep and improve for my future career.” - SolomonAs RENEW expands to other countries in Africa, we look forward to seeing our internship program enable and empower the youth to be competitive and confident candidates as well as create further job opportunities by collaborating with reputable local universities.&nbsp;&nbsp;

RENEW has designed an internship program, launched first in Ethiopia, with the goal of enabling and preparing fresh university graduates for success in their career paths.

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Enabling Rockstars in East Africa! 

<h1 style="text-align:center;">ANDE Helps RENEW-Backed Company Become Gender-Smart</h1>&nbsp;On December 15, 2021, ANDE announced the winners of the Gender-Smart Investing Capacity Building Facility funds, an activity under the ANDE Gender Equality Initiative (AGEI). RENEW, along with four other organizations, were picked to advance their gender lens investing strategies. The funds, provided by the United States Agency for International Development (USAID), targets investors who are committed to advancing gender equality through investments into SGBs. Each of the five organizations are slated to receive up to $30,000 and support SGBs operating in India, Brazil or the East and Southeast Asia, Andean or Eastern African regions.&nbsp;Learn more about this announcement in ANDE’s recent press release: <a href="https://www.aspeninstitute.org/news/press-release/ande-gender-smart-investing/">ANDE Announces Winners of the Gender-Smart Investing Capacity Building Facility</a>.<figure class="image image_resized" style="width:100%;"><img src="/uploads/desta_713214ebe3.jpeg"></figure>

On December 15, 2021, ANDE announced the winners of the Gender-Smart Investing Capacity Building Facility