<h1>Press Release: Quest Digital Finance Connects the Unbanked to Formal Credit Systems</h1>Renew Capital Angels invests in the firm’s Akellobanker platform for financial inclusion and agricultural growth&nbsp;<a href="https://latest-api.renewcapital.com/uploads/FINAL_Press_Release_Akellobanker_0c77041f0e.pdf">Download the Full Press Release</a>&nbsp; Kampala, Uganda, October 14, 2022 – Uganda is home to 25 commercial banks, four microfinance deposit-taking institutions (MDIs), three credit institutions and more than 300 non-deposit-taking microfinance institutions (MFIs). However, according to the 2018 Finscope Survey, which is published by the think tank&nbsp;Financial Sector Deepening Uganda, an estimated 89% of the adult population is still “unbanked,” meaning that they don’t have an account with a formal banking institution. Not only that, the economic data collection website Trading Economics estimates that 74.45% of Uganda’s 45.7 million inhabitants live in rural areas.<figure class="image"><img src="/uploads/273131299_789512975326040_4991063558167214495_n_715387d09e.jpg"></figure>Lacking access to banks and the credit they offer hinder these populations’ ability to access the basic commodities and resources needed to build successful businesses. And yet, these days smallholder farmers and other entrepreneurs in rural and periurban Uganda are finding it’s not the plow, but rather the smartphone, that goes before the horse. Quest Digital Finance, a Ugandan tech company, is changing that by placing the power of banking and service delivery in the palms of the farmers and entrepreneurs using its digital platforms.&nbsp;The platform enables SACCOS (Savings and Credit Cooperatives) and micro-finance institutions to achieve end-to-end digital transformation and hence, improve reporting and accountability which derisks these entities. Consequently, they are able to access credit from financial institutions. Akellobanker hopes to eventually deliver bundled products and services to farmers and entrepreneurs and other value chain actors on credit.&nbsp;Renew Capital, an impact investment firm growing small and medium-sized businesses in East Africa through its Renew Capital Angels investor network, is now furthering that effort by providing the funds Akellobanker needs to expand its reach to more than 100 cooperatives serving over 100,000 farmers and micro, small, and medium enterprises (MSMEs) in Uganda. Akellobanker will focus on its digitization agenda of integrating over 350,000 farmers and entrepreneurs into the digital economy and using data to deliver desired products and services on credit.&nbsp;“If you look at finance 10 years ago, commercial banks were the owners of financial inclusion. But five years ago, fintech—small financial technology companies—came over and showed banks that we were able to break through places they weren’t reaching,” says Jean Onyait, Akellobanker’s team lead. “That’s breaking a monopoly and creating healthy competition, which goes a long way in reducing prices and making services much more affordable for the local communities.”“The market potential and long-term commercial viability of Akellobanker attracted Renew Capital, particularly as the need to access finance increases,” says Renew Capital Head of Shared Growth Services JC Oelofse. “Developing a digital platform that aggregates financial data generated by the unbanked to provide easy access to credit is a key lever of growth in the informal sector. This credit from financial institutions facilitates sales of inputs to grow the informal economy and brings a well-defined impact case.”&nbsp;&nbsp;About Renew CapitalRenew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. With a presence in Ethiopia, Rwanda and Uganda, Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. Since the establishment of the network in 2012, the Angels have been actively investing in the region, mobilizing millions of dollars into Africa's middle market.&nbsp; &nbsp;

Renew Capital Angels invests in the firm’s Akellobanker platform for financial inclusion and agricultural growth 

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Press Release: Quest Digital Finance Connects the Unbanked to Formal Credit Systems

<h1>Press Release: Inputi Receives an Investment to Grow Smart Technology for Food Security</h1>Renew Capital Angels want to see the private sector put more food on African tables.&nbsp;<a href="https://latest-api.renewcapital.com/uploads/FINAL_Press_Release_Inputi_00cfaad0fb.pdf">Download the Full Press Release</a>KAMPALA, Uganda, October 11, 2022 —Food security. It’s a challenge in many parts of the world, especially as global supply chains break down and environmental imbalances leave lands barren. The Ugandan tech company Inputi is improving the odds in its region with funding from Renew Capital, an impact investment firm growing small and medium-sized businesses in East Africa through its network of investors, Renew Capital Angels.&nbsp;Inputi is an online marketplace, aggregator and distributor for farm inputs. Through versatile digital platforms, it delivers quality crop and livestock inputs such as fertilizers and pesticides to 1,000 rural agro shops, 20 dairy cooperatives and 12 meat cooperatives, sending them directly to buyers or to regional agro and vet shops at a fixed transportation cost. Inputi is projecting 50% growth in the coming year and, with the Renew Capital investment, it hopes to profile and aggregate input dealers, farmers and farmer groups to provide linkages in trade and to financial institutions and insurance firms.<figure class="image"><img src="/uploads/INPUTI_IMAGES_24_2000px_f11f0a57a9.jpg" alt="Two farmers offloading fresh agricultural produce from a lorry in Kampala, Uganda, showcasing local farming practices and food distribution."></figure>“We cannot eliminate famine caused by climate change, but we can mitigate that by improving food distribution systems,” says Inputi chief executive officer David Lukwago. “The private sector plays a critical role in building efficient, effective and sustainable means to move food from one point to another point where the food is needed. Sustainability can be achieved if the private sector is fully empowered and brought to the table of food security.”&nbsp;“We are excited about the end-to-end value chain connectivity solution for crop and livestock farmers that Inputi is building. This solution delivers agri inputs to the farmer at an affordable cost while providing farmer-centric training to create a thriving agricultural ecosystem sustainably,” says Renew Capital Head of Shared Growth Services JC Oelofse.

Renew Capital invests in Inputi, a Ugandan agritech startup enhancing food security by connecting farmers with vital agricultural inputs through an innovative online marketplace.

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Press Release: Inputi Receives an Investment to Grow Smart Technology for Food Security

<h1 style="text-align:center;">Press Release: Easy Matatu Expands its Ridesharing Minibus Services in Uganda</h1>Renew Capital Angels invest in Easy Matatu's vision to disrupt Ugandan transport.<a href="https://latest-api.renewcapital.com/uploads/FINAL_Press_Release_Easy_Matatu_881ec88bbe.pdf" download="download">Download the Full Press Release</a>KAMPALA, Uganda, October 4, 2022 – In Kampala, a bustling city of 3.6 million people, commuting can be fraught with challenges. An estimated 80% of Kampala's transportation system is matatus—local minibuses which are often dirty, overcrowded, poorly maintained and a major contributor to the city's carbon monoxide pollution. Many matatu drivers are also underpaid, lack formal training and operate congested and time-consuming routes.But Easy Matatu, a minibus ridesharing service, is leading the charge to reform such conditions with an investment from Renew Capital, an impact investment firm growing small and medium-sized businesses in Africa through its network of investors, the Renew Capital Angels. The investment will help Easy Matatu to grow its already successful end-to-end technological platform in which riders reserve a seat on a well-maintained and refurbished matatu through a smart phone app, and once aboard, their highly trained, competitively paid drivers take them on a faster, safer and more comfortable commute. Some of the matatus even come with refreshments and Wi-Fi.&nbsp;<figure class="image"><img src="/uploads/Renew_Strategies_Easy_Matatu_6_0ae6f34755.jpg" alt="An Easy Matatu-branded public transportation bus navigating a busy street in Kampala, Uganda, filled with commuters."></figure>“We realized that beyond just building an app that connects people from Point A to Point B, public transportation in African cities needed to be reformed or disrupted, and technology really presented the best tool to do that,” says Easy Matatu co-founder Carl Andrew Lema.Thanks to this investment, Easy Matatu will grow its fleet of vehicles and increase its capacity to handle more than 200,000 monthly rides. Moving forward, Easy Matatu hopes to scale its platform to provide safe, clean and reliable transportation in other African cities.“Public transport in Africa is broken. Every day, 50 million commuters on the continent struggle to get to work, home or move around. We want to be part of the solution that fixes that,” Lema added.&nbsp;"Commuters in Kampala, where I live, and many cities across the region, face huge challenges simply getting to and from work. The current mobility solutions are not sufficient. The problem is even more acute for women commuters,” says Renew Capital Senior Investment Manager for Uganda, Diana Njuguna. “Easy Matatu is not only revolutionizing the transport sector by making it safer for commuters, but also by using data and analytics to create optimized routes that increase efficiency. In addition, Easy Matatu offers a properly serviced fleet, cutting down on emissions and pollution. It's a great company for these many reasons, and for the fact that it’s playing a pivotal role in driving infrastructure development. We're proud to add them to our expanding Uganda portfolio."For more information on Renew Capital visit&nbsp;<a href="http://www.renewcapital.com/">www.renewcapital.com</a>.About Renew CapitalRenew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. With a presence in Ethiopia, Rwanda and Uganda, Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. Since the establishment of the network in 2012, the Angels have been actively investing in the region, mobilizing millions of dollars into Africa's middle market.

Easy Matatu enhances transport in Kampala with innovative ridesharing solutions backed by Renew Capital, providing safer and more efficient commuting options.

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Press Release: Easy Matatu Expands its Ridesharing Minibus Services in Uganda

<h1>Ethiopia’s Trucking and Logistics Sector is Ripe for Tech Optimization and Disruption</h1>Five reasons why we believe strategic investment in Ethiopia's trucking, transportation and logistics sector could unlock the country for major growth:&nbsp;<ul><li style="text-align:justify;">Implementation of technology has dramatically decreased trucking costs in other East African countries, specifically Kenya.</li><li style="text-align:justify;">Investing in transportation, trucking and logistics in Ethiopia can increase the country’s international competitiveness.</li><li style="text-align:justify;">The sector is ripe for technological optimization with solutions including route optimization, vehicle space optimization, matching supply and demand, price transparency and delivery time predictions.</li><li style="text-align:justify;">The Ethiopian government is interested in engaging private investment in this sector.</li><li style="text-align:justify;">While there is a 49/51 majority Ethiopian ownership requirement for all shipping and freight forwarding agency services, trucking within Ethiopia is 100% open to foreign company ownership for loads over 25 tons.</li></ul><figure class="image image-style-align-center"><img src="/uploads/BHA_Truck_photo_TT_and_L_917cca23b1.jpeg" alt="Image of Two Large Trucks in the Logistics Transportation Sector: Two large trucks parked at a logistics hub in Ethiopia, showcasing the potential for technology integration in the trucking industry."></figure><hr>From late 2020 through February 2021, the <a href="https://www.usaid.gov/who-we-are/organization/bureaus/bureau-humanitarian-assistance">United States Agency for International Development, Bureau of Humanitarian Assistance</a> (USAID BHA) conducted a <a href="https://pdf.usaid.gov/pdf_docs/PA00XFMD.pdf">Private Sector Landscape Assessment (PSLA)</a> to identify areas of aligned interest between USAID BHA priorities and the private sector operating in Ethiopia in order to create more resilient, sustainable, and inclusive programs in Ethiopia. From this research, USAID BHA identified Ethiopia’s trucking, transportation, and logistics sector and the promotion of urban to rural linkages for the country’s rural business ecosystem as high impact opportunities for development and growth.To build on the findings of the PSLA, USAID BHA partnered with RENEW to conduct a three phase project covering a 12-month period. The first phase of the project, which was completed in June 2022 included a market assessment on the current state of Ethiopia’s transportation, trucking and logistics sector, with recommendations for private sector engagement and assistance opportunities. In phase two of the project, which kicks off in Q3 of 2022, RENEW will test and pilot project ideas in the field. Phase three will focus on scaling successful pilot interventions.&nbsp;&nbsp;Below, RENEW has summarized what the project team views as exciting opportunities based on our Phase I market assessment findings regarding Ethiopia’s transportation, trucking and logistics sector.<figure class="image image-style-align-center"><img src="/uploads/Screen_Shot_2022_08_24_at_10_57_16_AM_a741b4327d.png" alt="Image of Ethiopia Map with Comparisons to India, Pakistan, and China: Map of Ethiopia highlighting key transportation routes, with comparative logistics cost statistics against India, Pakistan and China."></figure>In 2016, Ethiopia scored 2.37 out of 5 in the World Bank’s Logistics Performance Index – significantly lower than neighboring and similar countries. The stakeholders most impacted by persisting barriers in the transportation, trucking and logistics sector are local SMEs, exporters, end consumers and humanitarian organizations. For example, while Ethiopia’s textile labor costs have been comparable to labor costs in southeast Asia, the transportation of a 20-foot container of garments from Ethiopia to Germany costs 247% more than from Vietnam and 72% more than from Bangladesh. Similarly, when comparing Ethiopia’s logistics costs with those in other parts of the world, RENEW found that while shipping in Ethiopia costs $0.11 USD per ton per km, it costs just $0.02 USD in India and Pakistan, and $0.05 USD in China. This underscores the untapped potential for Ethiopia’s industries if transportation costs are reduced and optimized. Logistics and transportation costs are similarly high throughout East Africa. Moreover, in a study conducted by the Boston Consulting Group (BCG) in 2021, the cost of moving a product from a factory to the consumer in Africa adds an average of 320% to the manufactured good’s cost, which can lead to a markup as high as 700%.&nbsp;Unlocking Ethiopia’s and Africa’s potential is dependent on the reduction of these costs and provides a significant opportunity for the private sector to invest in technologies that will reduce trucking costs and position East Africa as an international competitor.Overall, research indicated that poor infrastructure, limited applications of technology, and a shortage of vehicles were key barriers to efficiency and growth in the sector. For context, industry experts estimate that Ethiopia currently has 16,000 vehicles, while Kenya (with less than half the population compared to Ethiopia) has over 100,000 vehicles. Moreover, 44.6% of trucks in Ethiopia are more than 10 years old. To make matters worse, 50% of trucks are below their maximum operational capacity.That being said, the Ethiopian government has indicated that it is eager to promote private sector engagement and innovation in the transportation, trucking and logistics sector. For example, Minister of Transport, H.E. Dagmawit Moges indicated in a 2020 op-ed that “the transport and logistics service has for too long been traditional, overly [centralized] and rigidly controlled,” and utilizing innovative technologies to meet the “immediate demands and needs of citizens should be the focus.”Considering these factors, the project team believes the sector is on the cusp of explosive growth that would be hastened with the introduction of emerging logistics technologies, greater transparency and increased competition, all of which could be accomplished through a well-coordinated effort by humanitarian organizations and private sector actors.To inform our strategy, the project team has conceptualized the trucking, transportation, and logistics sector as two separate operating environments as demonstrated by the graphic below:<figure class="image image_resized" style="width:88.27%;"><img src="/uploads/Screen_Shot_2022_08_24_at_10_57_37_AM_ccfa386f97.png" alt="Graphic showing Ethiopia's trucking sector: the monopolized segment by ESLSE and the private sector 'opportunity zone' for innovation."></figure>First, A-B transit, which is controlled by the government-owned Ethiopian Shipping and Logistics Services Enterprise (ESLSE), does not provide a significant opportunity for successful intervention investment. Additionally, non-profit organizations including TradeMark East Africa, have already signed MOUs with the Ethiopian government to address challenges facing this part of the process. Rather, RENEW believes there is a compelling consideration for private sector engagement and investment in technological tools supporting the B-C-D portion of the process. We term this “the opportunity zone.” Currently, truck owners and companies operating in the opportunity zone are not sufficiently tech-enabled and contracts are controlled by middlemen and commission agents, which increase costs for consumers and humanitarian organizations. To sum it up, B-C-D trucking is a de facto “gig economy” controlled by brokers with cell phones, manually distributing jobs amongst their contacts. In our estimation, technological tools could greatly decrease inefficiencies and costs. Through conversations with industry experts, the project team has determined that the below technological interventions are needed in order to optimize B-C-D logistics in Ethiopia:<ul><li>Cargo tracking to predict arrival times</li><li>Price transparency tools</li><li>Route optimization for speed and fuel efficiency</li><li>Vehicle space optimization</li><li>Vehicle supply and cargo owner shipping demand matching to activate idle vehicles</li></ul>Importantly, technological disruptions have been successful in other East African countries. For example, in 2016, a private logi-tech company called Lori Systems, developed a tech-enabled platform to optimize Kenya’s trucking sector. Since 2016, the company has reported that it has reduced trucking costs by up to 20% just by implementing technology. By developing a targeted tech-enabled investment approach, we believe the same could be true for Ethiopia.&nbsp;Just as important, emerging logi-tech companies with visions and ideas for implementing these solutions already exist in Addis Ababa. Given the current context, RENEW believes that private sector engagement and interventions that focus on technology and avoid purchasing and/or financing asset-heavy trucks (due to limited forex to purchase spare parts, high relative cost of fuel, and limited skilled labor to service vehicles) is a strategy worth considering. From here, the project team plans to build on findings of this market assessment and determine if capital can be mobilized to benefit Ethiopia’s trucking, transportation and logistics companies operating in the opportunity zone. In doing so, Ethiopia’s domestic, regional and international trade potential could be unlocked.&nbsp;

Five reasons why we believe strategic investment in Ethiopia's trucking, transportation and logistics sector could unlock the country for major growth

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Ethiopia’s Trucking and Logistics Sector is Ripe for Tech Optimization and Disruption

<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. 