<h1 style="text-align:center;">An Impact Investment in an African SME, from Start to Exit</h1>A wise investor once gave me a piece of advice. To paraphrase, he said, “Any idiot can invest money, but few know how to get it back.” When I started investing, I used to get excited about closing deals and reaching the point where capital exchanged hands. After working for months (sometimes even years) on a deal that ended with signed legal agreements and wired funds, I felt like we had finally accomplished something, and as such, would make a big deal about this moment. Thinking that this was the ultimate indicator of success, we’d pour ourselves drinks, take selfies, and issue a press release to mark the momentous occasion! But, in the back of my mind as we were celebrating, the wise investors’ advice still rang true. Soon after the close, we would get swept into portfolio management, the roller coaster of entrepreneurship and doing business in frontier markets: a game not for the faint of heart, especially if you invest in startups and early-stage companies like the ones we back in Africa. Now, seven years later and on the other side of the investment equation with a lot more grey hair and wrinkles around my eyes, we had our first exits. Reflecting on the journey, I thought it might be helpful to share a few observations from our experience investing in a small and medium enterprise (SME) from start to exit.The first observation is about clarifying the importance of exits. Most investors plan their exits before they invest, using tools like put options, drag-along and tag-along rights, etc. But many of the companies we meet, screen and train in our Investing 101 for companies do not understand exits or why their investment partners might want to exit - even larger companies who are already in discussions with serious investors. We have found that while planning for an exit is important, explaining an exit is critical - and not just to the target company, but to their lawyer, their accountant, their family members, government stakeholders, and pretty much everyone that is within earshot of the deal.The challenge is that most stakeholders get excited about closing, as I used to. Government agencies report deals closed and FDI attracted in Africa as an indicator of economic growth and success. The development community, also a significant stakeholder which hires firms like RENEW to help educate and invest in SMEs in Africa, love seeing capital come into local businesses. And these are important indicators to measure and track, but so few projects last long enough for the real magic moment, which is usually five years down the road when it happens and not immediately at closing. And thus we are left with a situation where many companies in Africa, especially social entrepreneurs and SMEs that struggle to attract capital, do not understand the true importance of an exit. So let’s explain.If closing an investment is akin to the start of the game, an exit is when you actually score a goal. I have found that the misunderstandings around exits hurt companies and countries, most notably when the critical time comes to begin exiting an investment. Often this is because the business of investing is a bit of a mystery. I believe there should be an entire training for non-finance stakeholders just on the importance of exits. While the idea that investors seek to make money is intuitive to most, the way an equity fund works is relatively new. It is an unfamiliar concept to many that a fund manager has a fixed period of time to find and invest the money they raised into good companies, and then recover that money in a fixed amount of time with a great return. And, while I believe a closed-end equity fund structure in Africa isn’t the best structure for the investment landscape of frontier markets, it is a common structure for equity investors, and one that stakeholders need to understand so they can work with it and attract more funding to their country. The more equity a country and a company attracts, often the better positioned it is for growth.<figure class="image"><img src="/uploads/exit_image_0_18a85873a9.png"></figure>Why are exits good? A good investor that builds a track record of successful exits attracts more capital and can make more investments. Companies in which investors exit often attract more capital, grow, create more jobs, pay more taxes, and provide greater value to customers. Countries where investors realize exits attract more capital because investors see that others have done it and local businesses benefit from this reputation.So exits are not just something that needs to be planned before you close an investment, but something that needs to be discussed regularly with multiple stakeholders throughout the life of the investment and, just as much, projects that seek to leverage private investment to achieve development objectives like the Sustainable Development Goals (SDGs).Entrepreneurs should understand that an exit by an investor is not a divorce but a graduation; hopefully a hand-off to the next level, be it to a larger investor, a strategic partner, or back to the owners themselves. Parties should be thrown for exits. Governments should know that an exit from their country is an indicator that their country is conducive to sustainable investing. They should give out awards to funds that exit their investments, because that event alone will attract the interest of serious investors more than any roadshow they do around the world. And development partners should design private sector development projects with timeframes long enough to see exits and chalk those up as major wins that resulted from their support.Since 2012, RENEW has been operating in East Africa, testing and perfecting an investment model that gets capital into SMEs trapped in the missing middle, helps them scale up and then gets that capital out with a good financial and social return for investors. After seven years of investing in the East African region, I am pleased to say that SME investing can be successful and exits are possible. I hope we see many more exits in the months and years to come, and I hope all stakeholders cheer, not just investors, when an exit happens. It’s the real score in the sport of investing and also enables the impact we are also seeking to achieve as success begets more investments targeting such goals as job creation by SMEs in East Africa.About the Impact Angel Network and RENEWMembers of the Impact Angel Network seek to realize both social impact and financial returns through investments in small and medium enterprises (SMEs) that are engines of economic growth and job creation in Africa but that often lack capital due to their size. IAN members believe that targeting employment through SMEs, dollar-for-dollar, can help reduce poverty in a more sustainable way than charity.RENEW, with its largest office in Addis Ababa, Ethiopia, manages the IAN’s investment operations and provides investment advisory and consulting services in support of its investments. RENEW’s work in Ethiopia was piloted with USAID and is currently undertaken with financial support from the Government of Canada provided through Global Affairs Canada for a project entitled Accelerating Business Growth (ABG). This project targets sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.

A few observations from our experience investing in a small and medium enterprise (SME).

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An Impact Investment in an African SME, from Start to Exit

<h1 style="text-align:center;">2019 ABG Check-In</h1>In 2016, RENEW signed a collaboration agreement with the development arm of the Canadian federal government, Global Affairs Canada, for a project known as Accelerating Business Growth (ABG). The ABG project aims to support high potential, responsible small and medium enterprises (SMEs) in Ethiopia so they can attract and efficiently use finance to scale up, enabling them to play a stronger role in the Ethiopian economy. The project addresses the gap found in the capital markets in Ethiopia and in many other countries in Africa, called the “missing middle”. This missing middle limits the ability of SMEs to access finance to grow their businesses and create sustainable jobs.The project’s ultimate outcome is to increase employment and generate income opportunities for men, women and young adults from Ethiopia’s small and medium enterprises sector and related value chains. Specifically, RENEW is aiming to support a total of 5,000 jobs and help Ethiopian SMEs attract $52.5M (CAD) of financing to help scale their companies by the time the project concludes in May 2021.<figure class="image image_resized" style="width:100%;"><img src="/uploads/abg2_7d4fbe5c3d.png"></figure>With three years completed, RENEW has made significant progress on both metrics, now supporting 3,944 jobs through the program (79% of target) and having helped Ethiopian SMEs attract $47.5M CAD (91% of target). A sampling of other project targets and current results are as follows:<ul><li>Target: Train 650 SMEs on finance. Current result: 529 (81%).</li><li>Target: Train 100 resource providers (banks, chambers of commerce, accounting and legal firms, financing institutions, etc.) on finance. Current result: 74 (74%).</li><li>Target: Annual sales growth rate increase of 10% achieved by companies who participate in The Exec’s Program. Current result: 13.50% (exceeding target).</li><li>Target: Graduate 50 individuals from The Exec’s Program. Current result: 46** (92%).</li><li>Target: Graduate 100 finance executives from the CFO100 Program. Current result: 51 (51%).</li><li>Target: Grow the Impact Angel Network (IAN) by 175 individuals and families. Current result: 73 (42%).</li></ul><figure class="image image_resized" style="width:100%;"><img src="/uploads/chigign_98d5028b3a.png"></figure>Throughout the project, the team has also developed unique initiatives that directly support the project’s goals and have contributed to the achievements listed above to date, including:Chigign ‘Tobiya: In partnership with Tonetor Multimedia, RENEW launched Chigign ‘Tobiya, a business pitching TV series broadcast on national television (FANA TV) which aims to raise awareness and build interest in entrepreneurship locally in Ethiopia. The initiative also aims to build out a local Ethiopian angel investor network for SMEs. Two seasons have been fully aired attracting a reported 40M viewers, with season three production now in the final stages. Eleven companies that pitched on the show have advanced to the diligence stage, and RENEW anticipates multiple closings in these companies during 2019.Women in Finance: RENEW launched the “The Women in Finance” series in 2017 aimed at empowering and inspiring female finance professionals in Ethiopia. Four sessions have since been held in partnership with local banks and organizations, with glowing reviews and results. Guest speakers have been invited and productive discussions have been held related to the unique challenges that women face in the finance industry in Ethiopia. The 5th edition of the program is scheduled for Q4 of 2019.Women’s Mini-fund: The mini-fund is an investment vehicle that pools funds for investment in multiple (women-owned) companies. The RENEW team wanted to be creative in forming a vehicle that would address the unique constraints faced by women entrepreneurs. More details about the mini-fund can be found in our Press Release from May, as well as in the Press Releases for RENEW’s two new portfolio companies, a company that supports <a href="https://travelethiopia.com/">tourism in Ethiopia</a> and a <a href="https://kijanionline.com/">Ugandan diaper company.</a>For more information on the ABG project, <a href="https://www.renewcapital.com/resources/blogs/An%20Update%20on%20the%20ABG%20Project">read the blog</a> we published in November of 2016 shortly after the project launch.<figure class="image"><img src="/uploads/canada_3_1_c404b1a690.png"></figure>The Accelerating Business Growth (ABG) program is undertaken with support from the Government of Canada provided through Global Affairs Canada. The Impact Angel Network (IAN) is one of the largest North American-based angel networks dedicated to investing in Africa. RENEW is an impact investment firm working in Ethiopia that manages the IAN and provides professional investment advisory and consulting services in support of its investments.**46 includes our Spring 2019 class who have not yet received their certificates, but who have completed all required coursework and assignments.

**46 includes our Spring 2019 class who have not yet received their certificates, but who have completed all required coursework and assignments.

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2019 ABG Check-In

<h1 style="text-align:center;">Having Skin in the Game Can Help with Investment Reform</h1>In 2012, partners of the RENEW team ventured into a country most said would be one of the most challenging places to invest in all of Africa: Ethiopia. At the time, the investment code was extremely restrictive, few knew about private equity, the government was adversarial (at best) with the private sector, and the largest companies were state-owned. Almost eight years later and having become one of the most active investment firms in the country, we’re pleased to say a lot has changed and even more change is on the horizon. But how did all of this come about – what some are calling a private sector renaissance?When we arrived in February 2012, the question everyone asked was, “Can you get your money out?” Most companies didn’t know about private equity; they understood debt and grants and a few that did understand it were cautious, always wary of foreigners coming into their country and their companies. But we were committed to learning about Ethiopia and how to tap into its huge potential.We started by learning the different organizations involved with investing. We interviewed many (many!) lawyers all with different opinions of how something worked – all very confident in their answers. We then started investing and painstakingly mapping out the 100+ steps to investing in a company in Ethiopia. After each deal we’d go back to the file and update the steps. The first few deals were challenging, and then we started to learn the acronyms, learned what to expect when we put forward a document for a stamp at XYZ agency, anticipated the requests, and started to streamline the process. We built systems to collect changes from each government agency on a regular basis and changed our attitudes from frustrated to curious and grateful. Now, in partnership with RENEW’s Impact Angel Network, we have made 13 investments in 11 companies. We recently were invited to weigh-in on the upcoming investment reform agenda and did so in a white paper (<a href="https://latest-api.renewcapital.com/uploads/RENEW_LLC_Investment_Law_Reform_White_Paper_3b22c23669.pdf">LINK</a>). We are pleased to learn that a number of our suggestions, along with many other investment actors’ suggestions, are being considered.<figure class="image"><img src="/uploads/skyline_1_019dbfeffb.png"></figure>Had we charged in and demanded changes eight years ago, or come in now offering suggestions about how others do it, we might not have seen this level of change. But by actually investing and putting real skin in the game, we got a much deeper and richer view of investing. We applaud the government of Ethiopia for being open to change and for not just having consultants inform their policy reform, but for reaching out to the private sector – those in the trenches – and asking for their input. We are grateful to be operating in a country where the actors are doing their best to do what’s best for the country, the people and the economy.Here are some of the highlights we have learned are coming with the revised investment law, likely to go in effect later this year:<ul><li>A change from the positive listing of areas open for foreign investors to a negative listing approach, in which only sectors that are not open for foreign investment will be listed. Many sectors are expected to be opened for foreign investors!</li><li>The minimum capital requirement remained the same but may not apply for institutional investors focusing on SMEs. The definition of institutional investors is not fully clear yet, but be on the lookout for this change.</li><li>A private sector representative will have a seat on the Ethiopia Investment Board (EIB) which is chaired by the Prime Minister of Ethiopia, Abiy Ahmed.</li><li>Any grievance between foreign investors and domestic investors can be taken to the arbitration tribunal, a reputable organization with a long history in Ethiopia.</li><li>The different regulations, directives and even board decisions of the EIB will be made available to the public.</li><li>The proposed law includes plans to loosen regulation in relation to investment licensing, suspension and revocation.</li><li>The requirement to have a business proposal for investment registration will no longer apply.</li><li>The one-stop shop service for foreign investors at the EIC will continue to be available after an investor gets a business license. In the past, oversight was turned over to Ministry of Trade causing some service inconsistencies.</li></ul>We look forward to the investment law reforms on the horizon, and we encourage practitioner-led private sector development. We hope we can replicate this story in more countries in East Africa and across the continent.<figure class="image"><img src="/uploads/grow_build_leaveorange_a69d83d8cc.png"></figure>

Playing the long game is paying off in Ethiopia.

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Having Skin in the Game Can Help with Investment Reform

<h1 style="text-align:center;">High-Impact Giving: Grow a Company. Build a Nation. Leave a Legacy.</h1>Prior to joining RENEW, I helped launch a firm which evaluated poverty alleviation initiatives in terms of their social return on investment. The analysis measured the increased wages and other measurable benefits that beneficiaries realized and the government spending saved per dollar spent on the evaluated program. After evaluating dozens of organizations and causes and looking at third-party assessments of many more, I concluded that the most effective way to tackle poverty is through investing in SMEs in frontier markets. I was impressed by studies showing that, for every dollar invested in an SME in a frontier market, the local economy realized 12 dollars, with benefits reaching multiple stakeholders, including employees and their families, other businesses, and taxpayers, as beneficiaries depended less on public assistance <a href="#section1">[1]</a>. Few other programs could claim such 'bang for the donor buck', especially when factoring in the potential for recycling of returns from SME investments to other impact investments or high-impact donations.This realization prompted me to join RENEW full-time and to invest both from my and my wife's personal assets and from our donor-advised fund (DAF). In 2017, we used funds from our DAF to make an impact investment and received a tax deduction to support a company and the local economy in Ethiopia. As our DAF receives funds back from this investment, we are able to then recommend that the funds be redirected to other investments or causes we care about. The use of our DAF allowed us to invest our philanthropic dollars into organizations that were supporting poverty alleviation with RENEW.<figure class="image"><img src="/uploads/destaphoto_0_a9b2ff1109.jpg"></figure>RENEW believes that the most effective way to move a country from poverty and dependence to prosperity is to help small and medium enterprises (SMEs) grow and, in the process, unlock their potential as primary engines of job creation and economic growth. We seek to invest in great companies that struggle to access what they need to grow and provide full and productive employment and decent work for all. Our strategy is to build great management and companies that in turn will support their employees and the community. RENEW has developed and implemented a unique blended finance model from our offices in Ethiopia and Uganda to pursue this strategy in partnership with the Impact Angel Network and the U.S. and Canadian governments.As we enter the 2019 holiday season, many look back at the previous year and reflect on what they are grateful for - be it friends, family, successes, experiences, or other blessings. A few years ago, it was this holiday-centric, philanthropic mindset that created <a href="https://www.givingtuesday.org/">#GivingTuesday</a> - “a global generosity movement unleashing the power of people and organizations to transform their communities and the world… and inspiring hundreds of millions of people to give, collaborate, and celebrate generosity.”This year, RENEW wants to challenge the #GivingTuesday donors of the world to think a little differently about some of their philanthropy - why not invest your charitable dollars in a way that results in far reaching and sustainable impact for poverty alleviation?Accredited, entrepreneurial givers can invest with RENEW from a donor-advised fund to make a dent in global poverty with the potential of earning a return on their charitable capital.<figure class="image"><img src="/uploads/new1_0_7e879d63e0.jpg"></figure>What is a Donor-Advised Fund?A donor-advised fund, commonly referred to as a DAF, is a philanthropic vehicle administered by a public charity. Think of it like an investment account dedicated to supporting your charitable contributions over time.As a donor, you can recommend where the charitable dollars will be focused and can also recommend your favorite charities or causes, which will then receive support from the fund, either in the form of grants or investments.How does a DAF lessen my tax burden?Contributions to a DAF result in an immediate tax deduction for those itemizing deductions. Any financial returns realized through a DAF investment simply return to the fund, tax-free, and can then be re-invested or donated through the DAF. DAFs can also eliminate capital gains taxes and reduce marginal income taxes on donated appreciated stock <a href="#section2">[2]</a>.How do I go about creating a DAF?<ol><li>Select a DAF manager.</li><li>Donate cash, publicly traded securities, or other illiquid assets to fund the DAF.</li><li>Receive a tax deduction immediately for your charitable contribution to the fund (if you itemize).</li><li>Working with your DAF manager, you can choose a strategy for growing your fund.</li><li>Recommend a target – such as a charity or impact investment – for your philanthropic investment.</li><li>At this time, DAF investing with RENEW is available only to investors who are ‘accredited’. (SEC <a href="https://www.sec.gov/fast-answers/answers-accredhtm.html">definition</a>).</li></ol>&nbsp;[1] One notable study is the Small Enterprise Assistance Fund’s report, “From Poverty to Prosperity: Understanding the Impact of Investing in Small and Medium Enterprises” published in October 2007 summarizing the results of a survey of 50 SME investments.[2] The information contained in this brief is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor.

What Does Sustainable Investing have to do with #GivingTuesday?

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High-Impact Giving: Grow a Company. Build a Nation. Leave a Legacy.

<h1 style="text-align:center;">Setting up Roots Back in Ethiopia</h1>I have three major milestones in my life that help tell my story: (1) growing up in Ethiopia; (2) moving to the U.S.; and (3) moving back to Ethiopia.1. Growing up in EthiopiaBeing raised in a family of 10 by parents who were teachers, I was privileged to have a safe, nurturing childhood and lots of opportunities to learn from my elders. While reflecting back on my childhood memories, the good thing about growing up in a big family is we have been like a community in our small world – lots of fun, engaging moments, too many rules and at times chaotic, which all led to great family bonding.Now that I am a father of two (a 10 year old boy and a 3 year old daughter), I can witness all the excitement as well as the never-ending responsibilities of parenting. I always look back and appreciate the commitment and wisdom my parents had raising a big family with very limited resources.<figure class="image"><img src="/uploads/tamiru_bday_fotor_6283d926c1.jpg"></figure>With the amazing support of family and friends, I was able to successfully navigate through life, both in academics and in my career with no major setback or challenges: earning a BA degree in accounting in 2001 and a BSC degree in information systems in 2005, receiving multiple promotions during my 8 year financial services career working with more than 5 supervisors/mentors, and advancing to a leadership post having a direct report of close to 25 employees.Above all, winning the heart of my love (my wife), I declared myself the lucky one – life is beautiful. It is at this point that I decided to go international, and I chose the U.S. as my next adventure to pursue my MBA and the “American dream”.2. Moving to the U.S.Once I secured my student visa to the U.S., I was carried away by this dream of how my life would be transformed in a few years with lots of learning and exposure. I even made plans in advance as to what I would do for family and others five years down the road. My flight to the U.S. was my first international travel and also the first time I boarded a plane. That 17-hour flight by Ethiopian Airlines felt like a year as I was eager to hit the ground in the U.S.Transitioning to the U.S. and leaving my family behind was a different reality, followed by enjoying all the blessings of the U.S. (the “Land of Opportunity”). What a mixed emotion! I have to admit that the 2008 global financial crisis gave me a big blow, and, for the first time in my life, I faced what it feels like to be unemployed, lonely, confused, full of uncertainty, and challenged to start a career and life the American way.After several attempts to secure a job – multiple calls, follow-ups, few interviews, and rejections – I was offered my first job opportunity (a temp assignment). After that first hire, I continued to have nonstop and progressive responsibility in four companies, including a Fortune 500 company.Unlike my professional experience in Ethiopia, all of my supervisors while working in the U.S. were females from different nationalities including the U.S, U.K., Iran, and Russia – their devotion, commitment, and judgment were amazing and that really changed my perspective on the leadership capacity of women. I have a special regard and respect for my last boss in the U.S. who truly dedicated lots of time and energy in mentoring me and put tremendous confidence and trust in me to lead and push on various initiatives.My American dream halted unexpectedly when my employment contract was terminated. By then, I decided to move back to Ethiopia right away instead of looking for other opportunities.My experience working with more than 2,000 offshore employees based in India, Sri Lanka, and others led me to the idea of exploring the possibility of creating an outsourcing hub in Ethiopia as my next driver going back home.3. Moving back to EthiopiaReconnecting and settling back home is not as easy as you may anticipate. With the full support and comfort of our families, we have managed to ensure a smooth transition for the family by navigating through some challenges patiently. The focus, persistence and hard work of my wife (Dr. Selam Tilahun), who is also my silent healer and therapist, was critical. I took the longest break of my life to refill my energy. I got time to enjoy my family, appreciate the little things, revisit my battle rhythm to success, and reflect on my ambition and journey.<figure class="image image_resized" style="width:100%;"><img src="/uploads/tamiru2_fotor_0_3ed5221ba4.jpg"></figure>After that, I got fired up and started pushing forward on my big project of establishing an outsourcing hub that would provide accounting and business process outsourcing which would serve local and international businesses. The attempt didn’t succeed at the time due to conflicting scope, priority and other reasons.After the above failed entrepreneurial efforts, I decided to rejoin my first bank and accepted a role in product development and innovation. After more than one year of service, I needed to dive deeper on accounting/finance and business processes to stay on track toward my goal and started to look for other opportunities.It is at this time that I learned about an employment opportunity at RENEW. The idea of impact, various projects, multiple portfolio companies, a focus on accounting and finance, a grand vision, and American entrepreneurs made me seriously interested in the role.Here I am counting more than 8 months of an engaged, focused and transparent work environment at RENEW. On a regular basis, I interact directly with portfolio companies, specifically their finance team, to ensure timely and accurate financial reporting. Almost half of our portfolio companies’ finance teams are led by women. Enabling and empowering them in their finance and leadership journey is an exciting part of my job.I am inspired by Matthew Davis, CEO of RENEW, by his perspectives, grand vision for the company and attending The Exec’s Program focusing on the habits, discipline, and practices of successful corporate athletes. I am committed to continuously improving myself and to add to RENEW’s initiatives of establishing the “Berkshire Hathaway” of Africa.That is ME and my 40 years’ life journey in brief! The adventure continues in an impactful way. With everything going on, I choose to be excited and optimistic about the future again!

Tamiru’s Journey to Impact Investing; from Ethiopia, to the U.S. and Back Again.

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Setting up Roots Back in Ethiopia

<h1 style="text-align:center;">2019 in Review and a Sneak Peek at 2020!</h1>As we start off the new year and decade, it’s one of our traditions at RENEW to look back at the last 12 months and ahead to the next. February 2020 will mark eight years RENEW and the IAN have been in Ethiopia. Before we arrived, there was one PE firm, now there are over a dozen. RENEW’s <a href="https://www.renewcapital.com/what-we-do/investing">Impact Angel Network</a> is the most active SME investment group in Ethiopia, and we have already achieved two exits! Before the IAN, most of the private sector had no option for financing. Unless you had a micro-enterprise or a huge company, there was nowhere to get $500K. Now, friends advise entrepreneurial friends to speak with RENEW's angel network or pitch on <a href="http://www.tonetormultimedia.com/">Chigign 'Tobiya</a>, the investment TV show RENEW helped launch. The work is not just happening in Ethiopia and Uganda, but it's happening around the world with the Impact Angel Network. Here are some of the highlights for RENEW in 2019.January - We started the year with our annual partners planning session in Colorado. We also held an Econ-Tourism Trip that took place in Ethiopia, Uganda and Rwanda!February - We held our third round of the <a href="https://www.renewcapital.com/companies">CFO100</a> and <a href="https://www.renewcapital.com/companies">The Exec’s Program</a>. We also funded a second investment in Roadrunner Technology Solutions LLC (Roadrunner), which partners with Universal Courier Services PLC (<a href="https://deliveraddis.com/">Deliver Addis</a>) to expand the burgeoning logistics and e-commerce industries in Ethiopia.March - We celebrated International Women’s Day with an Ode to Africa’s Businesswomen and started making plans for an investment vehicle focused on women.April - RENEW and the Impact Angel Network committed capital to a fund dedicated to investing in women-owned and led companies in Ethiopia and Uganda. RENEW and the IAN designed the fund to address a pressing need to close the financing gap for women-owned companies in Sub-Saharan Africa. We also visited our partners, <a href="https://www.international.gc.ca/gac-amc/index.aspx?lang=eng">Global Affairs Canada</a>, in Ottawa, Canada.May - This was a big month at RENEW! We successfully exited two investments to a regional private equity fund and a family office. RENEW and the IAN provided two rounds of angel financing to support the launch of an Ethiopian production company that exports to international markets. We also held our fourth International Gathering weekend in Washington D.C., and we released our <a href="https://www.renewcapital.com/resources/blogs/The%20Fourth%20Annual%20Impact%20Report">Fourth Annual Impact Report</a>.June - We attended the 5th Annual Private Equity in East Africa Conference (hosted by EAVCA) and participated on the "Investing in Women is a Good Idea" panel discussion.July - We made our first investment in Uganda from the Women-Owned Business Investment Fund. The fund was set up to invest in female entrepreneurs in Ethiopia and Uganda, and the first company to receive an investment was Kijani Baby (<a href="https://www.kijanionline.com/">Kijani</a>).August - We closed our second investment from the Women-Owned Business Investment Fund. This investment was made into a company that supports tourism in Ethiopia, which partners with Travel Ethiopia PLC (Travel Ethiopia).September - We visited with our IAN Chapter in Virginia and spent some quality time with some IAN members and investors. The partners also visited London and the Netherlands.October - RENEW had the pleasure of hosting a panel discussion in partnership with the Aspen Network for Development Entrepreneurs (<a href="https://www.aspeninstitute.org/">ANDE</a>), <a href="http://www.trust.org/trustlaw/">TrustLaw</a> (Thomson Reuters Foundation) and <a href="https://www.international.gc.ca/gac-amc/index.aspx?lang=eng">Global Affairs Canada</a> on the changes that are coming to the legal and regulatory framework for investing in Ethiopia. We also launched our fourth cohort of The Exec’s Program and CFO100, and we had several members of the Impact Angel Network visit us in Ethiopia.November - We attended the <a href="http://www.ipsnews.net/2019/11/global-gender-summit-2019-african-leaders-take-responsibility-urgently-close-gender-gap/">Global Gender Summit</a> in Kigali along with 20+ female entrepreneur delegates from Ethiopia who had won the <a href="https://invest2impact.africa/">Invest2Impact</a> Challenge. What an inspirational time and an encouragement to double-down on our strategy to build gender-balanced, gender smart management teams!December - We announced an important strategic shift in our investment strategy to the Impact Angel Network. Look for more background on this in 2020, but here are the broad strokes of it. Going forward, we intend to bring capital, training and skilled management into companies the IAN and RENEW take controlling positions in. With this strategy, we will be able to provide opportunities for existing team members to learn from veteran managers that have successfully led similar companies. Owners of portfolio companies will be freed to focus on their core competencies. A critical piece of this strategy is that RENEW will manage the back-office services for portfolio companies in the areas of finance, accounting, marketing, HR, sales, IT and potentially others to achieve economies of scale. We will also continue to provide training to company managers and will work with them to implement the lessons they learned within the companies we invest in.Throughout the year, we enjoyed connecting with members of the Impact Angel Network in Ethiopia, Uganda and around the world. As we start this new year and decade, we are grateful to the <a href="../../new-strategy/partners.html">Government of Canada</a> who makes our work in Ethiopia possible, members of the Impact Angel Network who believe in the potential of businesses to be the engines of prosperity, our team who works tirelessly around the world and the inspirational entrepreneurs leading our <a href="https://www.renewcapital.com/portfolio">companies</a>.The year and decade ahead look bright. This year will be about implementing the strategy shift we announced in December and providing high-quality professional services as we build businesses into market leaders, adding value to their employees and the markets in which they operate in. Here's to a great 2020.The Renew Team, Matthew Davis, Tom Scriven, Laura Davis, Justin Reesor, Erin O’Connor, Emily Ziethen, Prasoon Raghuwanshi, Lulit Negash, Yoseph Getachew, Tsegamlak Solomon, Kirsten Newman, Teddy Fantahun, Dagmawit Shiferaw, Filseta Asrat, Mary Adoi, Tamiru Belayneh

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2019 in Review and a Sneak Peek at 2020!

<h1 style="text-align:center;">Management: The Real Missing Middle Opportunity</h1>As an avid angel investor in Africa and a manager of one of the most active SME investment firms in Ethiopia, seeing the development community take up the ‘entrepreneurship cause’ these last few years is refreshing. It has become popular for big foundations to fund impressive African entrepreneurship pitch days, accelerators and incubators from Lagos, Nigeria to Addis Ababa, Ethiopia. Because of this, Ethiopia is now home to more than a dozen private equity offices; up from only two firms eight years ago when we opened RENEW’s office here.Governments like the Federal Democratic Republic of Ethiopia are working to support the startup ecosystem and are developing local angel networks, rather than focusing solely on attracting large foreign direct investments. By the looks of it, the world is slowly moving in the right direction to fill the “missing middle” in Sub-Saharan Africa by growing a prosperous and vibrant private sector with balanced economies.While these developments are moving in the right direction, I think we are missing a small but critical piece of the puzzle. A piece that I believe could unlock even better, stronger and more sustainable growth.If the first step is building up cadres of promising entrepreneurs, our next job needs to be turning these big ideas into scaling companies. This requires strong management. While not as sexy as hearing a pitch, closing a deal or investing capital, businesses need solid executives and middle management to scale - ideas are good, but execution is everything. Unfortunately, there is a dearth of quality middle management in Africa. I argue the lack of management might be as critical (if not more) as the lack of capital that so many economists talk about.<figure class="image image_resized" style="width:100%;"><img src="/uploads/execsfeb_b5a597cae4.jpg"></figure>After eight years of backing companies in Ethiopia and meeting with hundreds more, we are not consistently seeing entrepreneurs effectively execute on their ideas and scale their companies. Which leads RENEW to a hypothesis: is there a huge opportunity for the development community to widen their lens and partner with investors to build up a class of local executives and managers that can scale companies into market leaders? We certainly believe so.At RENEW, we have been searching for patterns in SME success, looking across our portfolio and beyond to see why some companies fail and others succeed. We have concluded that those that fail have weak management. In markets across Sub-Saharan Africa, where competition is low, it’s not product-market fit or timing, it’s management. This is why we are working on an SME investment playbook that amasses years of best practices and lessons learned for building up the middle management in SMEs.Part of the playbook is training and hands-on experience, working alongside experienced executives that can transfer knowledge to budding CFOs and COOs. To start, we built a frills-free executive training program that teaches managers the basics of running effective management meetings, working their calendars, scanning their cash flow statements, and hiring and firing. Next, our program goes beyond the classroom and into the company - teaching real-world tactics alongside successful executives that we place into companies to mentor and build up local teams around them.We’d like to give a huge hat-tip to <a href="https://www.international.gc.ca/gac-amc/index.aspx?lang=eng">Global Affairs Canada</a> for stepping into the private sector development space and taking the narrative beyond capital and into the critical world of executive and management building by funding <a href="https://www.renewcapital.com/resources/blogs/Key%20Resources%20for%20Executives">The Exec’s Program</a> and <a href="https://www.renewcapital.com/resources/blogs/Building%20a%20New%20Class%20of%20Finance%20Executives%20for%20Ethiopia">CFO100</a>.We regularly hear that the development community wants solutions that create impact at scale. As an investor, I want companies that create profit at scale and, in doing so, create jobs, pay taxes and have a huge multiplier effect. Let’s not just throw capital at the problem. I recommend that the development community take a lesson from Canada - go beyond the glitz of the demo days and start training executives to lead these companies.To dig deeper into this issue of the middle management gap, come see us at Sankalp where we’ll be hosting a panel in conjunction with <a href="https://www.andeglobal.org/">ANDE</a> and Open Capital Advisors. Visit ANDE to find out more and <a href="https://www.andeglobal.org/events/EventDetails.aspx?id=1331628&amp;group=">register for the event</a>.

Scaling companies in Africa requires management plus capital.

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Management: The Real Missing Middle Opportunity

<h1 style="text-align:center;">The Workplace Response Tripartite Protocol that Forgot the Role of the Third Actor</h1>Since the outbreak of the COVID-19 pandemic, the government of Ethiopia, led by PM Abiy Ahmed, has been taking many different measures to contain the effect of the pandemic on human health and the economy. These efforts were strengthened when the first coronavirus case was reported in Ethiopia on March 13, 2020. The efforts have not been limited to Ethiopia. PM Abiy’s government has also been spearheading the response for all of Africa. PM Abiy’s request of $150 billion to the members of the G20 and securing continental support from the Jack Ma Foundation are the major efforts to mention. Read his letter to the Financial Times: LINK. Internally, several efforts have been made to contain the spread of the disease and save more lives. The government has also been taking measures to mitigate the social and economic impact of the pandemic.As part of the latter measure, the Ministry of Labour and Social Affairs (MoLSA) issued the COVID-19 Workplace Response Protocol (Protocol). As could be understood from the preamble, the Protocol is sourced from the International Labour Organization’s (ILO) Guideline on how to respond and manage natural and manmade crises in the workplace.The Protocol underlines the need to take logical, participatory legal and administrative measures with proactive tripartite consultations and direction. Consistent with the general aim, the Protocol has two major objectives. The first objective is to protect workplace actors from contracting COVID-19. In line with this objective, the Protocol outlines the basic workplace preventive measures that should be taken by employers, workers and safety officers. From the employer’s perspective, the Protocol requires employers to take certain measures like ensuring the provision of sanitary materials, eliminating congestion in workers’ transportation service and making sure social distancing is maintained. Similarly, workers are required to comply with these protective measures provided by the employer and take the responsibility of reporting workplace symptoms and cases to the appropriate body, among others.<figure class="image"><img src="/uploads/photo_2020_08_25_15_46_19_1_0_dd8d478476.jpg"></figure>The second objective of the Protocol, and the focus of this blog, aims to mitigate the impact of the pandemic on (1) the national economy, (2) the sustainability of enterprises, and (3) the social and economic situation and livelihood of workers. In order to address these challenges, the Protocol proposes certain administrative and legal measures that need to be taken step by step. In effect, the Protocol restricts employers from laying off employees as a result of this pandemic.As could be understood from the Protocol, with the proposed administrative and legal measures, the Protocol provides what steps an employer should take in order to ensure workers’ social security. Similar to what has been provided in the ILO guideline, the Protocol emphasizes the need to provide social protection for workers, who could be affected during this crisis.However, in its adoption, the Protocol has left out, what seems to be intentionally, certain parts of the ILO guideline. Whereas the guideline by the ILO is framed as a tripartite protocol between the government, employers and workers, the Protocol by the Ministry was issued in a form of an order for workers and employers to comply with. The Protocol provides the administrative and legal measures that employers and workers should avail themselves of. However, it doesn’t state what the role of the government should be. It totally imposes the responsibility of ensuring workers’ social protection on employers. In contrast, the ILO guideline provides for the need to protect employment and income, but it also provides that this can only be done with the combined efforts of workers, employers and the government.As per the ILO guideline, in these combined efforts, the government needs to take the lion’s share. Among others, the government is expected to stimulate the economy and labor demand. This is done by adopting active fiscal policies, particularly social protection measures such as unemployment benefits, along with public investment and tax relief for low-income earners and MSMEs. The government also needs to adopt accommodative monetary policies like interest rate reductions, reserve rate relaxations and targeted liquidity provisions. Because the crisis hits certain sectors particularly hard, like aviation, tourism and hospitality, and MSMEs in general, targeted lending financial support is required for these segments of the economy.These measures should not be left for a single government ministry. They require the commitment of the government in general. The issue is not only about determining what the relationship between employers and workers should be, but it is also about making sure that the country’s economy survives this crisis with minimal effect. We can only do that with carefully calculated policy decisions, which should involve all branches of the government. Protocols such as the one issued by MoLSA will not be able to address all those issues and could do more harm than good.In all these efforts, the government should focus on short-term workers social security and also long-term businesses continuity. It is only the balance of these two that can ensure sustainable social protection. This could be done by availing tax reliefs, providing credit facilities and loosening certain regulatory barriers imposed on employers. Otherwise, with the current bilateral arrangement between employers and workers, the government might ensure short-term social security but that would be at the cost of the national economy in general and businesses continuity in particular.Considering the current status of the country, the government of Ethiopia might not be able to provide all of the recommended support mechanisms by itself; however, this should undoubtedly be one of the areas where it seeks support of its international partners. This will require a huge investment, but it is something that needs to be done for the revival of the economy after the impending economic crisis.Uniform, large-scale, and coordinated policy measures are needed at times like this to save the economy. Making employers shoulder the burden of social protection is not a sustainable approach to workers’ social security. In fact, such uncoordinated measures could result in the death of hundreds of companies, especially MSMEs that cannot shoulder this responsibility for long. This unquestionably will result in a long-term social security crisis and it could take much time for the country’s economy to revive after the COVID-19 crisis is over.

How restricting employee layoffs creates problems for the private sector

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The Workplace Response Tripartite Protocol that Forgot the Role of the Third Actor

<h1 style="text-align:center;">COVID-19 Q&amp;A - Operating Your Business in Uganda</h1>Uganda has taken one of the strictest stances on the African continent in efforts to prevent <a href="http://statehouse.go.ug/sites/default/files/files/presidential-statements/address-corona-virus-4-may-2020-converted.pdf">COVID-19</a> from spreading in the country. On May 4, 2020, the President of Uganda provided an updated statement on matters regarding COVID-19. According to the statement, a few essential industries and businesses are now allowed to operate. These include (i) agricultural farming; (ii) food markets; (iii) factories; (iv) wholesalers to supply to factories; (v) hardware shops to sell factory goods and supply construction sites; (vi) repair workshops (garages) to operate on the cargo trucks; (vii) metal and wood workshops; (viii) insurance providers; (ix) select lawyers; (x) restaurants; and (xi) warehouses.Now that many businesses have been allowed to re-open, there are a few things you need to know.How can my staff get to work?With public and private transport still restricted in Uganda, employers are asked to shuttle their staff to work or encourage their staff to either cycle or walk to work.What protective equipment should I provide my employees?It is mandatory for all persons to wear face masks in public, therefore employees should ensure that their workers have the required protective gear.My business interfaces with the public. What do I need to know?If you have a business that’s open to the public, please ensure that your staff can safely remain 2 meters away from your customers. All customers who enter your facility must wear a mask. Please ensure that your customers have space and abide by the rule of remaining 4 meters apart from each other. Further, there is a concern that forced air will cause the virus to spread so shops should not operate air conditioning. For restaurants, only takeaway services can be provided at this time.<figure class="image"><img src="/uploads/uganda_0_e5713c583b.png"><figcaption>Image Source: Wild Uganda Blog: <a href="http://www.wildugandablog.com/things-to-do-in-kampala/">10 Things to do in Kampala</a></figcaption></figure>What should I do if an employee is suspected of having COVID-19?As an employer, under the <a href="https://ulii.org/ug/legislation/statutory-instrument/2020/52">Public Health (Control of COVID- 19) Rule2 2020</a>, you have a duty to notify a medical officer or medical practitioner if you believe one of your employees has COVID-19. Please call the Ministry of Health toll-free line on 919/ 0800 1000661/ 0800 203033, if you believe one of your employees should be checked.If COVID-19 is confirmed, you can expect a site visit from a medical officer. They will assess the situation and may: (i) order all persons who have been in contact with the COVID-19 patient to remain at the premises; (ii) cause the staff who were in contact with the COVID-19 patient to be removed to a regional referral hospital or another suitable place for quarantine. Please note that the health inspector must have written instructions from a medical officer to conduct a search or inquiry.I have to import/export or export goods and supplies to run my business. What do I need to know?<a href="https://ulii.org/ug/legislation/statutory-instrument/2020/53">Public health (Prohibition of Entry into Uganda) Order, 2020</a>. Businesses are allowed to import and export cargo only, through the different border posts in Uganda via vehicle, air or water transport. Only the United Nations and other humanitarian organizations are able to bring people or animals into Uganda at this time.<a href="https://ulii.org/ug/legislation/statutory-instrument/2020/46">Public Health (Prevention of COVID-19) (Requirements and Conditions of Entry into Uganda) Order, 2020</a>. At the border, all persons and cargo/vehicles/aircraft or vessels will be subjected to an examination conducted by the government medical officers of health. The medical officers of health have the power to isolate or quarantine the personnel, e.g. truck drivers, cargo crew. Upon examination, such personnel may be quarantined at a designated place or placed under observation for 14 days or more, while other personnel may be advised on the measures to take to avoid being infected with COVID-19. These interventions put in place to curb the spread of COVID-19 may result in delays for logistics; therefore, businesses should plan for this potential risk.

Understanding the UG Government COVID-19 Regulations & What They Mean for Your Business

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