<h1 style="text-align:center;">UHNW Millennials and Impact Investing</h1>The impact investing movement is gaining popularity across generations, and none more so than with millennials (individuals who were born in the early 1980s to 1995). Impact investing combines the best attributes of philanthropy and traditional investing. It operates under the philosophy of “doing well, by doing good”, wherein investors seek a double bottom line - financials returns and positive social impact.&nbsp;Impact investing covers a broad spectrum of financial offerings, from Environmental, Social and Governance (ESG) screened securities, to donor-advised-funds, to angel investing. While the current impact investing market is growing - with more than one out of every six dollars under professional management in the U.S. invested according to sustainable, responsible and impact investing strategies - this number is expected to exponentially increase in the near future.*We are on the verge of history’s largest transfer of wealth between generations. According to Boston College’s Center on Wealth and Philanthropy, an estimated $59 trillion will be transferred generationally in the U.S. between 2007 and 2061.** As younger generations take control of this wealth, impact investing will continue to grow in prominence, as suggested by the recent publication of several millennial-focused financial studies and reports.Proving Worth, one such study conducted by OppenheimerFunds, focused on answering several core questions concerning the world's (soon-to-be) wealthiest generation: 1) what ultra-high net worth (UHNW) millennials value most, 2) how wealthy millennials influence family decisions, and 3) what UHNW millennials want from a financial advisor.WHAT UHNW MILLENNIALS VALUE MOSTMillennials are dreamers and doers - they not only seek to make the world a better place, but also pursue activities that positively impact the world around them, be it philanthropy or value-based investments. It should come as no surprise then that “ninety-six percent of UHNW millennials who participated in the [OppenheimerFunds] study were interested, or very interested, in philanthropy. A respective 70% and 64% were interested, or very interested, in socially responsible investing (SRI) and impact investing.”***So, what do millennials value most when evaluating the impact of their philanthropic or investing efforts? According to Proving Worth, rather than focusing on the “feel good” factors, millennials are instead results-driven and look to the long-term. “When assessing different approaches, 96% of participants identified long-term returns as important/very important, while a respective 95% and 91% ranked accountability and sustainability as important/very important.”***As for millennials’ preferred areas of interest for impact investing, it comes down to basic human rights: education, gender equality, economic justice, water and the environment. Now, in terms of deciding which of the aforementioned areas to pursue, it seems that family and parents still have a considerable influence.<figure class="image image_resized" style="width:99.22%;"><img src="/uploads/millennial_blog_7bc91fb94c.jpg"><figcaption>Millennials from the Impact Angel Network</figcaption></figure>MILLENNIALS &amp; THEIR FAMILIESMillennials, both from the Proving Worth study and RENEW’s own Impact Angel Network, have noted the influence of parents and grandparents in shaping their viewpoints on the importance of preserving wealth and creating a positive legacy. Impact investing has therefore become a natural segue from the traditional charity of older generations, by combining the family values instilled in millennials at a young age with what they in turn value most - results and sustainability.That being said, millennials are not yet making the key decisions regarding their family’s wealth and investment strategies. While 59% are a committee or board member for their family’s wealth management, “only 18% of the study’s respondents make strategic decisions for their family’s overall wealth management.”*** The reason? Millennials lead extremely active lives that are typically centered on their careers. They are more likely to pursue their own interests before becoming heavily involved the family finances. It won’t be long though until millennials are running the portfolios of today, wherein we will see a dramatic shift towards impact investing.MILLENNIALS &amp; THEIR ADVISORSMillennials are some of the world’s most technologically driven individuals. So, when looking for sources of information on impact investing, many would naturally assume they would turn to social media or the Internet. Instead, topping the list of the most trusted sources of information are family, research, professional colleagues, business contacts, and advisors. According to the Proving Worth study UHNW millennials view advisors as “a source of knowledge and advice”, especially when a personal relationship has been established and the advisor demonstrates an understanding of their family and wealth goals.***The flip side to this coin is that the study also revealed “there is a considerable disconnect between the services millennials want from their advisors and the offerings that are currently available.”*** Millennials are looking for advisors who focus on wealth transfer and deal generation. They are not interested in cookie cutter financial solutions. Rather, as expressed by several participants in the study, millennials seek customized and high-touch financial solutions, a framework within which they can test out their ideas, and a partner that helps educate and develop said frameworks. Financial advisors and wealth management firms of today will need to quickly evolve in order to retain the assets of families that will soon be run by this next generation.RENEW recommends millennials work with their families and with their wealth managers to create an impact investment plan that all generations are part of building. Follow this <a href="../2014/part-3-impact-investing-transferring-wealth-wisdom-and-values-between-generations.html">LINK</a> for guided steps on how to get the process started.<hr><a href="http://www.ussif.org/sribasics">*U.S. SIF: SRI Basics</a> <a href="http://blogs.barrons.com/penta/2016/01/15/a-rising-tide-of-impact-investing/">**Barron's: A Rising Tide of Impact Investing</a>. <a href="https://www.oppenheimerfunds.com/private-banks/doc/Proving_Worth_The_Values_of_Affluent_Millennials_in_North_America.pdf?dig_asset_metrics=done">***OppenheimerFunds: Proving Worth: The Values of Affluent Millennials in North America</a>.

Expansive OppenheimerFunds study reveals what matters most to millennial investors.

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UHNW Millennials and Impact Investing

<h1 style="text-align:center;">We Used to Give to Africa?</h1>Recently, RENEW’s own Matt Davis sat down with <a href="http://www.forbes.com/sites/devinthorpe/2016/01/13/impact-investor-in-ethiopia-fills-financing-gap/#6836aaf850b3">Forbes contributor Devin Thorpe</a> to discuss how RENEW and the Impact Angel Network (IAN), one of the largest U.S.-based angel networks for Africa, are “filing the financing gap” in East Africa. The following is a summary of some of the topics covered during Matt and Devin's live chat, so be sure to watch the entire interview below.Since 2012, the IAN has invested in seven small to medium-sized enterprises (SMEs) in East Africa, making it one of the largest investors in Ethiopia on a deal volume basis. In doing so, RENEW and the IAN are not only addressing a development challenge, but a market challenge as well.Considered too large for micro-financial institutions, and too small for larger venture capital firms, SMEs make up what is commonly known as the “missing middle” of emerging economies. Investing in SMEs addresses the serious financial constraints these types of companies face in developing countries. It also addresses a market challenge commonly experienced by private equity firms - sourcing a pipeline of quality companies. By mentoring and shaping the SMEs of today into the market leaders of tomorrow, RENEW is able to provide larger venture capital firms with a steady stream of companies that are run by ethical and vigilant leaders.So, what is the ultimate goal of RENEW and the IAN’s work in Ethiopia? That one day our grandchildren will look back and ask us in bewilderment, "we used to GIVE to Africa?”<figure class="media"><oembed url="https://youtu.be/4olNft2kudM"></oembed></figure>

RENEW’s Matt Davis sits down with Forbes contributor Devin Thorpe to discuss filling the financing gap in Ethiopia.

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We Used to Give to Africa?

<h1 style="text-align:center;">Ethiopia and the Entrepreneurial Dream</h1><figure class="image image-style-align-left image_resized" style="width:37.99%;"><img src="/uploads/sadura_temp_logo_0_dea9ed0c09.png"></figure>The latest installment in our Q&amp;A series with the employees of RENEW’s portfolio companies takes a closer look at the entrepreneur who is behind the Impact Angel Network’s sixth investment in East Africa - an Ethiopian food and beverage company.Isaias Lemma was born in Addis Ababa and has lived in this city for almost his entire life, except for a brief interlude in London during his college years. Isaias sat down with me to talk about how his experiences and education to date have inspired him to pursue his dreams of running his own business in Ethiopia.When you were a child, what did you dream of doing for work or as a career, and how did this influence your decision to become an entrepreneur? As a child, I was always guided to follow the conventional career routes (like doctor, engineer, etc.) However, I was always fascinated by the entrepreneurial history of my grandfather and the transformation of my parents (particularly my mother) from professionals to business people. The accomplishments gained from creating a business from inception to fruition, the creation of job opportunities at different ranges and the freedom to make my own decisions are the main reasons I wanted to pursue entrepreneurship.What education and/or training have you received to date, and how has it helped you with your career? I have an MBA and have taken several entrepreneurial and management courses. My education has helped me to view business in a structural and conceptual method and that my business needs to be developed through a standardized system. Some of my trainings have also helped me understand my stakeholders and my environment more intimately.<figure class="image image_resized" style="width:99.68%;"><img src="/uploads/sadura_qa_2015_0_82895d31cd.jpg"></figure>Could you provide the background story of your family’s company - The Twins PLC? The Twins PLC started as a small business and has grown into a medium-sized business consortium in Ethiopia. It started with a small children’s shop and had expanded into the supermarket business, import and distribution, and now has a paper production factory. Our steady growth in the business environment has helped us become a successful production and distribution business here in Ethiopia, with a significant market share in our selected business sectors.As an entrepreneur, what inspired you to go out and create an entirely new business venture? It is evident that Ethiopia is one of the fastest-growing economies in Africa and that growth is creating a society with increasing disposable income. The manufacturing business environment here is at an infant stage and most products are imported. Thus, I am constantly inspired to create quality products that add value to raw materials available here and reduce the dependency on imported goods. Additionally, I believe through a new venture we can create jobs for the youth and directly contribute to the growth of the nation.What is your new Ethiopian Food and Beverage Company trying to achieve at the local, regional and international levels? My new business venture will focus on the production of food and beverage products. We will aspire to produce superior products for the local market, with potential growth in the East African region. Gradually, we would like our new business venture to become the leading fast moving consumer goods (FMCG) products company in Ethiopia and Africa.What will your new role be at the Ethiopian Food and Beverage Company? And, what life experiences have prepared you to take on this new role? I will be the General Manager of the company and will be managing the overall business, and guiding the company to achieve its goals and objectives. Since this project was one of my ambitions, I believe I have the passion, drive and experience to achieve the success I had envisioned.Why do you feel that the Ethiopian Food and Beverage Company will be a successful business venture? My family’s prior experience at The Twins PLC in importing related products, our current experience in the manufacturing process, our efficient distribution network, our close relationship with large and small local distributors and strategy to produce superior products gives me the confidence that our business venture will be successful.What do you hope to accomplish in partnering with RENEW LLC and working with members of the Impact Angel Network (IAN)? By partnering with RENEW LLC and the IAN, we hope to gradually grow our business and accomplish our goal of becoming one of the leading FMCG producing companies in Ethiopia. We also seek to vertically integrate into the supply chain to source our own raw materials through local farms, diversify into other products beyond the food and beverage industry sector, achieve major market share with our products, and export our products to neighboring African countries. With our experience in the local business environment and IAN’s support we believe we will accomplish these goals.

RENEW continues our Q&A series by speaking with the entrepreneur behind the IAN’s sixth investment.

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Ethiopia and the Entrepreneurial Dream

<h1 style="text-align:center;">Back to the Source: Coffee</h1>&nbsp;AN INTRODUCTION TO KAFFAKaffa, Ethiopia, from which the term “coffee” is derived, is the birthplace of coffee, according to many experts including <a href="http://www.ncausa.org/About-Coffee/History-of-Coffee">The National Coffee Association</a>. To this day, the Kaffa region in the southwestern part of Ethiopia remains one of the strongest coffee-producing regions in the country.The legend goes that Kaldi, an Ethiopian goat herder, first discovered coffee after he noticed his goats became energetic upon eating cherries from a certain tree. Kaldi shared this knowledge with the monks of a local monastery, who made a drink with the berries and enjoyed its invigorating properties. Soon, the findings of coffee spread from Ethiopia to the Arabian Peninsula and then on to Europe. The earliest credible evidence of either coffee drinking or knowledge of the coffee tree appears in the middle of the 15th century, in the Sufi monasteries of Yemen.(1) By the 16th century, coffee had reached the rest of the Middle East, Persia, Turkey and Northern Africa before spreading to Europe, Indonesia, and finally to the Americas.<figure class="image"><img src="/uploads/dsc_0854_4341a7fdef.jpg"></figure>As it has been since the 16th century, Ethiopia remains one of the largest producers of Arabica coffee beans in the world. RENEW and the Impact Angel Network (IAN) are proud to be a part of this important tradition through our investment in METAD Agricultural Development PLC (METAD), an Ethiopian specialty coffee company founded in 2012 by Aman Adinew. With a vision for crop-to-cup coffee, METAD aims to not only strengthen Ethiopia’s coffee reputation amongst sophisticated consumers in the international market, but also help local farmers improve the quality and value of their harvested crop. In pursuit of this vision, METAD seeks to become the leading specialty coffee brand by offering global and domestic consumers with the highest quality, 100% Ethiopian Arabica coffee.METAD’s coffee cultivation, harvesting and primary processing occurs at farm sites 75 kilometers beyond Yirgacheffe, deep in the heart of some of Ethiopia’s best coffee country. METAD’s 200-hectare Hambela and Gedeb farm and processing sites include washing stations, a dry mill, a huller, beds for sun drying, and warehouses for storage to handle all of the pre- and post-harvesting coffee activities.<figure class="image"><img src="/uploads/view_of_hambela_processing_site_0_5b205d80d6.jpg"></figure>COFFEE CULTIVATIONAs a whole, coffee's production process and value chain are very complex, much like viticulture. The two main species of coffee grown for coffee production today are Arabica and Robusta, with Arabica coffee being indigenous to the mountains of the southwestern highlands of Ethiopia.The Ethiopian coffee value chain starts with farms, like METAD, that grow and harvest red cherries - the coffee fruit and seed (see photo below). Farms either sell the harvested cherries to independent processors or process the crop themselves. A processor has two options: 1) select the highest quality red cherries and dry them on raised drying beds (what is called sun-dried, unwashed or natural coffee) and hull them on location, or 2) remove the pulp from the coffee cherries by using a wet mill and dry the coffee seeds, covered in their parchment. These two types of processing techniques, also known as primary processing, are crucial to the ultimate quality and character of the coffee.In Ethiopia, the processor then sells the dried coffee seeds (or beans) to exporters on the Ethiopia Commodity Exchange (ECX) platform. The exporter cleans, polishes, and bags the coffee beans for export shipping. Finally, an importer, broker or roaster imports the coffee beans into the consuming country, after which they will be roasted and be made ready for consumption.<figure class="image"><img src="/uploads/bts_metad_56d665a740.jpg"></figure>WHAT MAKES SPECIALTY COFFEE "SPECIAL"?Coffee can be broadly defined as specialty or commercial grade. Specialty coffee, a term first coined back in 1978 by Erna Knutsen of Knutsen Coffee Ltd., in the simplest definition refers to special geographic microclimates that produce beans with unique flavor profiles.(2) There is a fundamental understanding that specialty coffee beans will always be well prepared, freshly roasted, and properly brewed; one that the Specialty Coffee Association of American (SCAA) has standardized and enforced. The SCAA is considered to be the world’s coffee authority and the largest coffee trade association, with nearly 5,000 members located in more than 40 countries who represent every segment of the specialty coffee industry.The SCAA defines specialty coffee in its green stage as “coffee that is free of primary defects, has no “quakers” (under-ripe or under-developed attributes), is properly sized and dried, presents in the cup free of faults and taints and has distinctive attributes.”(3) In general terms, “specialty coffee is coffee from a known geographic origin that commands a premium price above commercial grade coffee due to its high quality and particular attributes that it possesses.”(4) In the case of METAD, the company produces Yirgacheffe specialty coffee, the quality of which METAD continually ensures at its coffee lab, the first and only private, state-of-the-art coffee quality control facility on the African continent that is <a href="http://www.prnewswire.com/news-releases/metadkabu-coffee-quality-laboratory-becomes-africas-first-private-specialty-coffee-association-of-america-certified-lab-208654311.html">certified by the SCAA</a>. Specialty coffee from this region is considered to be, by some, the highest quality in the world - an opinion that has been gaining popularity over the past several years.<figure class="image"><img src="/uploads/dsc_0739_1_998d048eb3.jpg"></figure>Demand for coffee is poised to hit a record in 2017, as people around the world and in developed markets are increasing their java consumption. Global coffee consumption is expected to grow by 1.2% over the upcoming year, leading to higher prices for coffee beans. “The price for Arabica coffee futures was up 20% in June 2016, marking the biggest monthly gain since February 2014.”(5) Citigroup even estimates that Arabica coffee prices could reach $1.50 per pound by the second half of 2017. To meet this increasing demand for high-quality coffee, international roasters are seeking out traceable and single-source producers in smaller sub-regions of the world. Similar to wine, consumers are willing to buy coffee at a premium if it’s from specific regions, is certified fair trade or organic, is naturally sun-dried, etc. According to a survey conducted by the National Coffee Association, the retail value of the U.S. coffee market alone is estimated to be $48 billion dollars with specialty comprising approximately 55% value share.(6) It is these overall trends that suggest sustained momentum for specialty coffee growth.BRINGING IT BACK TO THE SOURCEIt’s no wonder that with Ethiopia being the epicenter of Arabica coffee, and it ranking among some of the fastest-growing economies in the world, the country is quickly becoming a target for foreign investors seeking attractive returns in the coffee value-chain, as well as domestic and export market opportunities. In fact, coffee is one of Ethiopia’s largest export commodities, with over 55% of the coffee produced in the country sent outside its borders.(7)According to a <a href="https://d3n8a8pro7vhmx.cloudfront.net/eatradehub/pages/860/attachments/original/1433149069/Ethiopian_Coffee_Industry_Value_Chain_Analysis_2010.pdf?1433149069">USAID analysis</a> of the Ethiopian coffee value-chain, coffee generates “70 percent of Ethiopia‘s foreign exchange earnings and provides livelihoods for 15 million Ethiopian smallholder farmers.” The industry employs several hundred thousand workers in processing coffee cherries across hundreds of washing stations and hulling mills around the country.In Ethiopia, government institutions are responsible for the state coffee plantations with approximately 8,000 permanent employees and an estimated 50,000 seasonal jobs.(8) Coffee generates a considerable number of employment opportunities on farms, in the processing plants and in the transport sector. In Ethiopia, coffee constitutes a very important source of seasonal employment for many poor people and most agro-processing employees are women. Altogether, METAD employs 38 permanent staff and several-hundred seasonal staff, 70% or more of which are women. Additionally, they have purchased from, partnered with and/or supported more than 3,500 out growers to provide best practices on growing, harvesting and selling coffee. METAD also creates further social impact in the community surrounding the farm sites by sponsoring a school with over 600 children, constructing new community facilities (such as a school and community center) and working with development partners to build and install new wells.<figure class="image"><img src="/uploads/used_b2a1709f7c.jpg"></figure>Smallholder farmers, those whose plots are less than five hectares (ha), account for 95% of the country’s coffee output.(9) In fact, “average plot sizes do not exceed two ha,” wherein coffee yields remain stubbornly low compared to that of Colombia (1/3 their yield) and that of Costa Rica (1/4 their yield).(10) The country’s remaining 5% of output is produced by plantations, which average more than 50 ha in planted area, and which have been privatized by the government in recent years.”(11) However, because of the predominance of smallholders, the average yield per hectare for all cultivated land is no more than 700 to 800 kg.(12)According to the USDA Foreign Agricultural Service’s <a href="http://gain.fas.usda.gov/Recent GAIN Publications/Coffee Annual_Addis Ababa_Ethiopia_5-12-2014.pdf">2014 Ethiopia Coffee Annual Report</a>, the major reasons for the low coffee production are:<ol><li>Ethiopian coffee farm management system and agronomic practices are traditional and fail to inject new technologies into the country’s coffee production system. In addition, extension services provided to smallholder farmers are inadequate.</li><li>Inadequate use of improved seeds as the supply is limited to areas located near coffee research centers and universities in the country.”</li><li>Historically, there has been a lack of a designated government institution to provide technical support for coffee production. At one time, there was a specialized government agency supporting the production and marketing of coffee. However, it was “dissolved many years ago, leaving the sector with little institutional and technical support from the government.</li></ol>The Government of Ethiopia, though, has recently noted this problem and plans to restructure the coffee development sector by making it a priority value-chain under its Growth &amp; Transformation Plan II - increasing yields from 700 kg/ha to more than 1,100 kg/ha.(12)Ethiopia truly has the potential to increase coffee production and productivity as it has all the necessary “ingredients” including suitable elevation, temperature, soil fertility and sufficient rainfall in coffee growing regions of the country. With the right financial support and guidance, the country could become the number one coffee producer in the world. And METAD, with its clear vision and passionate entrepreneur, is uniquely positioned to become a market leader in Ethiopia’s specialty coffee industry.&nbsp;

Developing Ethiopia’s specialty
coffee sector.

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An analysis and overview of one of Ethiopia’s oldest and most lucrative value chains.

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 Back to the Source: Coffee

<h1 style="text-align:center;">RENEW Participates at the Wharton Club Africa 2016 Investment Summit</h1>Last week, the Wharton Club of Africa hosted the 2016 Investment Summit and CEO forum in Addis Ababa, Ethiopia. According to the WCA’s website, the event is a “premiere, global, and high impact Pan-African Executive Investment Summit” that features over 100 of the continent’s top investors, wealth managers, family offices and investors from 35 countries from across the globe.*Matt Davis, CEO of RENEW, joined Africa’s “leading regional and international investors, executive game-changers, Ministers, industry titans, and award-winning entrepreneurs” with the goal of brainstorming, collaborating and delivering “game-changing” industry intelligence on investing, investment operations, financial returns, business leadership and development on the continent.*<figure class="image image_resized" style="width:98.76%;"><img src="/uploads/wca_6954a77b6f.jpg"></figure>The following are Matt’s takeaways from his time at the event and as a speaker on the entrepreneurial leadership and impact investing panel:• I was impressed with the audience and speakers that the event attracted, which was a mix of investors and business people all interested or experienced in doing business and investing in Africa.• The chemistry on our panel was great thanks to: 1) a diverse group of people with different philosophies about impact investing, 2) people who have actually invested on the continent, and 3) a great facilitator who had deep experience in the impact investment industry and knew how to steer the discussion.• We also had a good audience that asked interesting questions: the most memorable being whether we had any investors reject a deal because the financial returns were too high - the audience member was working with an office that had rejected a deal on these grounds and they wondered if this was common. My response was that I personally had never experienced such a situation, nor had I heard of any investor rejecting an investment on the grounds that the financial returns were too high; however, this is an interesting problem in the impact investment space. As capital comes from a variety of sources (foundations, donor advised funds, private investment accounts, etc.) unique criteria arise that traditional investment managers may have not encountered before.• I emphasized that those in the industry should be open to a wide range of definitions about impact investing, because the space needs to grow and mature. But, investors and their managers should still be clear about how they individually define their impact investment philosophy and approach.• And, while a broad approach at the moment is appropriate, I also encouraged investors and managers to remember that in the end, impact investing is investing and needs to deliver a financial return. If the industry, which is garnering a lot of attention as of late, goes too long without these returns, we may see a correction; like what happened with the microfinance industry.• I ended by saying that RENEW is more keen on Africa's economic prospects - specifically Ethiopia – versus the broader growth of the impact investment space. In the end, for RENEW and our investors, impact investing is filling a gap in financial markets in countries like Ethiopia, between microfinance and larger private equity, and addressing the problem of the “missing middle”.Overall, I enjoyed the event and hearing the various perspectives from the fellow panelists. A special thanks to Aubrey Hruby, who chaired the panel. Aubrey is the Co-Founder of the Africa Expert Network. And to Lisa Lambie, who organized the whole conference.*<a href="http://www.wcaexecsummit2016.com/why-unique.html">WCA Executive Investment Summit &amp; CEO Forum 2016</a>

Partner Matt Davis speaks on an entrepreneurial leadership and impact investing panel.

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RENEW Participates at the Wharton Club Africa 2016 Investment Summit

<figure class="image image-style-align-center image_resized" style="width:52.3%;"><img src="/uploads/etat_feb_26_to_mar_4_2012_069_1_dbba254f5c.jpg"></figure><h1 style="text-align:center;">10 Things You Should Know About Ethiopia’s Business Environment</h1>The World Bank recently published its <a href="http://www.enterprisesurveys.org/data/exploreeconomies/2015/Ethiopia">2015 Enterprise Survey</a> on Ethiopia, which outlines some very interesting information about the biggest obstacles private sector companies face in Ethiopia. The survey summarizes “key factual indicators at the country and regional levels” for twelve business environment categories, including: corruption, crime, finance, firm characteristics, gender, informality, infrastructure, innovation and technology, performance, regulations and taxes, trade and workforce.*The RENEW team compiled 10 takeaways. We mainly focused our analysis on the outliers – indicators that were significantly&nbsp;different in Ethiopia as compared with the sub-Saharan Africa (SSA) region as a whole.1. Access to finance is the number one obstacle for Ethiopian firms: The World Bank asked 848 companies in Ethiopia to rank the most prevalent obstacles that they face while doing business in Ethiopia. From the list of 15 common obstacles presented, access to finance was identified as number one. This comes as no surprise. Ethiopia’s current financial services sector, like that in many developing economies, is simply not equipped to provide adequate financing options for growing small to medium sized enterprises (SMEs), which in turn creates a “missing middle” in the country’s economy. The good news is that companies like RENEW and the Impact Angel Network are stepping in to help <a href="http://www.forbes.com/sites/devinthorpe/2016/01/13/impact-investor-in-ethiopia-fills-financing-gap/#64f4de8e50b3">fill this financing gap</a> through private equity investments.2. Customs and foreign exchange are constraining growth: While it takes on average 19.2 days to clear import from customs, about 3 days longer than the SSA region’s average, the proportion of inputs and/or supplies that are of domestic origin are significantly higher than SSA - 82.5% versus 66.1%. This may be a result of forex issues and protectionist trade policies.3. Regulations and taxes are not as bad as we think: RENEW was surprised to find that, although the amount of time senior management spends dealing with the requirements of government regulations in Ethiopia is higher than that of SSA (11.9% versus 7.6%), the remaining indicators are all lower. Examples include the number of days it takes to acquire an operating license (5.4 versus 19.1), number of visits required to meet with tax officials (1.6 versus 2.2), the percentage of firms identifying tax rates as a major constraint (22.8% versus 33.2%).4. Productivity is low but growth is high: While capacity utilization and labor productivity are lower in Ethiopia than the SSA region, real sales and labor growth rates are higher. We see this as a good sign, since productivity can be can be improved with stronger management systems and training, along with investments in better technology and capital goods; both of which RENEW and the IAN address through our investments and portfolio management.5. International certifications could be a source of competitive advantage: Ethiopian firms are not doing well with gaining international quality certifications as compared to the SSA region: 4.3% versus 14.7%. This is another area where foreign investors assist Ethiopian companies in achieving the next level of business and economic development.6. Firms need more electricity and faster access to the grid: Generator use is much higher in Ethiopia than SSA (48.9% versus 26.5%), which is to be expected given that the country is quickly industrializing but in need of more power. In fact, electricity was listed as the second highest obstacle that firms face in Ethiopia. It takes companies 194.3 days to obtain an electrical connection upon application, versus the 33.0 days for the rest of SSA. On a positive note, roads are better in Ethiopia, which shows in the survey’s last indicator: percentage of firms identifying transportation as a major constraint is 8.3% versus 22.8% for the SSA region.7. Firms need to hire more women executives – especially CFOs(RENEW’s opinion): One indicator that stuck out to us is that only 4.5% of firms in Ethiopia have a female top manager. And while the country did better in other gender indicators than SSA, RENEW’s takeaway from the entire Gender section of the survey is that we, as outside investors, need to encourage Ethiopian companies to hire qualified women into senior management positions.8. Ethiopia’s business environment is still closed: The proportion of private domestic ownership in a firm versus the private foreign ownership in a firm (95.9% versus 3.8%) shows that RENEW and the IAN are part of a very small percentage of foreign investors doing business in Ethiopia. Private equity investment is still very much an unknown concept to business owners, an issue that RENEW sets out to address in each of the <a href="../2015/why-are-angel-investors-important.html">trainings</a> we provide on financing options to entrepreneurs, banks and government employees.9. Firms could leverage foreign investors as a source of capital: If you have a free moment, this is the section of the survey to spend some time on. To RENEW, all of the indicators point to a "financial anemia" of sorts. The main indicators that stood out to us concern how and where investments come from: 83.3% of investments were financed internally, versus 7.8% financed by banks, 0.3% financed by supplier credit, or 0.8% financed by equity of stock sales. Only 16.4% of firms in Ethiopia use banks for working capital loans, in comparison to the 21.8% of companies in SSA.10. Yes, there's corruption; but not as bad as some: While it is evident that corruption still occurs in Ethiopia, the survey’s indicators demonstrate that Ethiopia is doing better than the SSA region as a whole.Overall, we are encouraged by these survey results and remain bullish on Ethiopia.*<a href="http://www.enterprisesurveys.org/data/exploreeconomies/2015/Ethiopia">World Bank 2015 Enterprise Survey on Ethiopia</a>

RENEW analyzes the World Bank’s recent survey on Ethiopian enterprise and finds some surprises.

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10 Things You Should Know About Ethiopia’s Business Environment

<h1 style="text-align:center;">Stories of Impact &amp; Inspiration</h1>Last weekend, members and guests of the Impact Angel Network (IAN) joined us in Washington, D.C. to attend the second annual <a href="weekend-connections-discussion-and-positive-impact.html">National Gathering</a>. The goal of this event was to create opportunities for guests to connect with like-minded individuals and hear from thought leaders in the fields of impact investing, angel investing and global development.One of the goals for the weekend was to share real stories of impact and innovation (#WhatsYourStory), which culminated during the dinner portion of Friday evening’s event when four conscious capitalists stood up and shared their inspirations and personal experiences with the IAN in front of the group. These are their stories:JODI MORRIS, SAN FRANCISCO<figure class="image"><img src="/uploads/dscf2434_29708951873_o_3ca7714184.jpg"></figure>“Personally, I'm a global traveler. Professionally, I'm a <a href="https://www.linkedin.com/in/jodimorrissf">global investor</a>. I have a particular passion for emerging economies. I was introduced to RENEW by a long-time client of mine, a wealth manager with SignatureFD, David Fisher.I believe that global experiences change our perspective; that investing is a powerful tool for social change; that world-class entrepreneurs and businesses are everywhere.Currently, I work independently, investing my money, time, and talent in people and firms who share my beliefs, with a focus on Africa. Community is so important – I have so much to learn, but also lots to share. That's why I'm a member the RENEW's Impact Angel Network, and why I'm attending my second National Gathering.Just as my friend David introduced me to RENEW and this community, I wish to toast those here this weekend that have joined me - my husband Bob Morris and friends Victoria Odinotska, Amanda Arch and Adam Pisoni, and Lisa and Scott Halsted.”JOHN GARDNER, WASHINGTON DC<figure class="image"><img src="/uploads/dscf2439_29708950033_o_af4090fc69.jpg"></figure>“18 months ago, I was pleased and honored to attend this gathering as the guest of a remarkable woman, <a href="https://renewcapital.com/blog/2015/i-had-farm-africa">Whitney Ball</a>. Sadly, that was one of the last public events she attended, as she passed away from breast cancer last August.As the founder of Donors' Trust, she was deeply committed to both getting returns on investment and to helping the poor and underprivileged through economics - giving them a chance to participate in the economy, build businesses, and build societies committed to economic liberty. She invited me to this dinner, and to the possibility of investing here, because of these commitments. I was impressed by what I saw and am glad to say that <a href="https://www.linkedin.com/in/john-gardner-b499941">I have invested</a> in two projects that fulfill these goals.I honor her memory tonight and am glad that her legacy continues. Whitney, you were so sick that you could not enjoy a drink last year; I toast your memory now and thank your for 25 years of friendship.”SABEL MARQUETTE, MINNEAPOLIS<figure class="image"><img src="/uploads/dscf2445_30305229316_o_98849c0910.jpg"></figure>“I am here tonight with my parents, Beth &amp; Joel Marquette, who are members of the IAN advisory board. A few years ago, I spent 6 months living in Ethiopia with my family. During my time there, I made lifelong friends, experienced Ethiopia's welcoming culture, and learned many things. One of the most important things that I learned was to be accepting and open to experiencing new things.Tonight, I toast to my generation of Ethiopians; may the economic growth in your country bring you more opportunities.”DAVID GRIZZLE, WASHINGTON, DC<figure class="image"><img src="/uploads/dscf2448_29708948173_o_0ea45615ce.jpg"></figure>“I was in Addis Ababa visiting a missionary friend of mine who had been there for four years working with kids living in the sewers. He asked me if I wanted to meet an amazing American couple that was in Ethiopia doing social impact private equity investments. We went to a hotel to meet Matt and Laura. I remember that the hotel was very nice, but maybe it was just nice in comparison to the sewers we’d been traipsing around in.Matt and Laura spent about 30 minutes explaining what they were doing, and I was sold. <a href="https://www.linkedin.com/in/davidgrizzle">My son and I</a> and our family foundation have now made more than five investments and more to come.I’d like to offer a toast to divinely appointed encounters that can change our lives and maybe even the world.”RENEW is proud to have such inspiring individuals as members of the Impact Angel Network.

#WhatsYourStory toasts at the 2016 National Gathering recognize community, divinely appointed encounters and the legacy of a very special woman.

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Stories of Impact & Inspiration

<h1 style="text-align:center;">Mark Your Calendars!</h1>Matt and Laura Davis, partners of RENEW, will be heading from Ethiopia back to the U.S. to meet with investors across the States and Canada from mid-March through April. They will be traveling to the cities of Washington D.C., New York, Toronto, Vancouver, Seattle, San Francisco, Salt Lake City and Denver.We will be hosting informal gatherings in New York, Seattle, San Francisco, Salt Lake City and Denver. The purpose of RENEW’s multi-city visit is to meet with existing members of the Impact Angel Network, foster new connections with potential members and provide an opportunity for members to walk through several of our upcoming investment pipeline deals with the partners.RENEW, along with the members of the Impact Angel Network (IAN), share a vision for changing the way investors view Africa, and the vehicles in which they use to invest in its emerging markets. Many of our members were referred to RENEW and the IAN via word-of-mouth by a trusted friend or colleague, who have in turn shared their experience with others who share in our vision. We are proud of the progress we've made so far, but we're just getting started!Continued growth of our investment pipeline and our investor community go hand-in-hand. If you have time to meet Matt and Laura, or know other like-minded investors in these cities who would be interested in learning more about RENEW, the IAN or our upcoming deals, then please reach out and let us know. We hope to see many of you in the coming weeks!<figure class="image"><img src="/uploads/2017_roadshow_2dd8ec2fed.jpg"></figure>

RENEW partners Matt and Laura Davis will be traveling across the U.S. and Canada to meet with investors.

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Mark Your Calendars!

<h1 style="text-align:center;">Angels Descend on Addis!</h1>2017 has already proven to be a busy year, with RENEW hosting an Econ-Tourism Trip for members of the Impact Angel Network from Delaware, Colorado and the United Kingdom this past week. The group met with Ethiopian entrepreneurs, from both RENEW’s portfolio and investment pipeline, and visited a number of businesses in and around Addis Ababa.The investors were introduced to companies spanning multiple sectors – from commodities and food manufacturing to textiles and consumer goods several of which are being considered for upcoming investments. The group also visited current <a href="../../marketplace/portfolio.html">portfolio investments</a> of the IAN, including Desta, Mama Fresh, METAD and our Ethiopian sesame company.<figure class="image"><img src="/uploads/econ_tourism_feb_20172_582382b4de.jpg"></figure>One of the many highlights of the trip was the first ever SME pitch session hosted by RENEW at <a href="https://www.renewcapital.com/companies">The Exchange,</a> wherein carefully selected entrepreneurs presented their companies to the participating angel investors. This event made the company visits that occurred later in the week by the investors more productive and provided them with them background required to ask the right questions. This, in turn, engendered interest and confidence in investors’ minds regarding the potential financial and social impact of the opportunities. The pitch event was followed by a happy hour and networking event at the Exchange with development partners and members of the Addis Ababa business community.<figure class="image"><img src="/uploads/econ_tourism_feb_20171_6f33f487d4.jpg"></figure>Throughout the trip, the group experienced Ethiopia’s rich history, culture and delicious cuisine. During the first day, the entire group went on a sightseeing tour of Addis Ababa, took a look back in history with a stop at the National Museum of Ethiopia, home of the infamous <a href="https://en.wikipedia.org/wiki/Lucy_(Australopithecus)">Lucy skeleton</a>, and went on a food and drink tour with local food guides from <a href="http://goaddistours.com/">Go Addis Tours</a>. Later in the week, Mama Fresh hosted the investors for lunch at their visitor’s center and several members also spent some time exploring <a href="http://whc.unesco.org/en/list/18">Lalibela’s</a> famous 11 monolithic rock-hewn churches.<figure class="image"><img src="/uploads/econ_tourism_feb_2017_f040b8e0a3.jpg"></figure>RENEW is in the midst of planning the next Econ-Tourism Trip, which is slated for September 17-22, 2017. Contact us to learn more about participating in an upcoming Econ-Tourism Trip!

Members of RENEW’s Impact Angel Network visit Ethiopia to review investment opportunities.

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