<h1 style="text-align:center;">Africa's Astonishing Statistics</h1>Not a week goes by that I don't get excited about the growth potential of at least one of the African businesses in RENEW's portfolio. There is no doubt in my mind that investors who are capitalizing on opportunities are positioning themselves for incredible growth potential over the long term. But on some occasions, when I am not caught up in the nitty-gritty of day-to-day work, I like to take a step back and look at Africa on a macro-level. That's when my mind explodes with the continent's great potential...Africa includes 53 countries and more than one billion people. According to World Bank figures, real GDP rose 4.9% a year from 2000 through 2008, and didn't stop growing in the recent economic downturn. That's more than twice the continent's growth pace in the 1980s and ’90s. Africa is growing by leaps and bounds, and businesses and investors in the United States and Europe dare not overlook the annual collective spending power estimated at more than $1.3 trillion USD.Here are some other impressive statistics about Africa:-It has 60% of the world's undeveloped, arable land -The continent holds 10% of the world's oil reserves, 40% of the world's gold and more than 80% of the chromium and the platinum metals -Foreign direct investment increased from $9 billion in 2000 to $62 billion in 2008 -40% of Africa's one billion people live in cities -Already the continent has more middle-class households than India (incomes of $20,000 or above) -With more than 500 million people of working age, the labor force continues to expand and is expected to exceed 1.1 billion (more than in China or India) by 2040Check out <a href="https://www.mckinseyquarterly.com/Africa/Checking_Africas_vital_signs_2606">Checking Africa's Vital Signs</a>, a part of McKinsey's June report on Africa for these and other astonishing statistics from the United Nations, World Bank and other great sources of macro-level data on Africa's great potential.

Not a week goes by that I don't get excited about the growth potential...

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Africa's Astonishing Statistics

<h1 style="text-align:center;">Don't Just Ask "What" - Ask "Why" and "How" to Invest in Africa</h1>Over the past year or so since RENEW launched the online Marketplace and the local partnerships, workshops and vetting process that supports it, our team has worked to help investors interested in Africa answer an important question: "What should I invest in?" But of course, investors must answer two other questions as well: "Why Africa?" and "How should I go about this?"This blog serves as a way for us to discuss answers to these questions. For instance, on the "why Africa?" question, U.S. News &amp; World Report ran a <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2010/08/26/12-reasons-to-invest-in-africa.html">story</a> detailing the reasons that Nile Capital Management launched its Nile Pan Africa fund, "the first actively managed, U.S.-based mutual fund to focus exclusively on Africa." Larry Seruma, chief investment officer of Nile Capital Management, gives 12 reasons why he believes it is time to give retail investors access to Africa, crossing an important threshold that has until now been mostly the preserve of the BRIC countries. Seruma cites the following points (click through the link above to read more detail on each) in answer to the "why Africa" question:<ul><li>Ground-floor opportunity</li><li>Low correlation</li><li>Strong growth expected</li><li>Profitable companies</li><li>Demand for commodities</li><li>Increasingly less violent</li><li>China's involvement in the region</li><li>Infrastructure spending</li><li>Low debt</li><li>Growing investment from abroad</li><li>Attractive valuations</li><li>Young demographics</li></ul>After reading Seruma's arguments, one might think that African investments, if chosen wisely, are a sure thing. Ngozi Edozien, head of West Africa for the private equity firm Actis, <a href="http://edition.cnn.com/2010/WORLD/africa/08/26/ngozi.edozien.interview/index.html#fbid=LjETbLiupYs&amp;wom=false">speaking</a> to CNN's Marketplace Africa, reminds us that this is not so. The question, "How should I invest in Africa?" matters a lot:"You cannot invest in Africa and sit far way," she said. "You actually have to be close to your investment. You have to be close to what is going on so that you can make adjustments to your business and investment strategy as required."Edozien calls this fly-in, fly-out approach (which many U.S. investors have tried, unsuccessfully) "briefcase investing." It does not work in Africa. This lesson, the "how", is one that RENEW spends quite a bit of time thinking about; it is the reason our team places so much emphasis, when working with SME owners, on our <a href="https://renewcapital.com/business-toolkit/guide-investor-relationships-0">guide to investor relationships</a> -- and why we think it is so important that investors understand the perspective of their investees.

...our team has worked to help investors...

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Don't Just Ask "What" - Ask "Why" and "How" to Invest in Africa

<h1 style="text-align:center;">Is the U.S. Really on the Upswing? Just Don’t Compare it to Africa…</h1> While the Economic Times reports a third straight downward revision for the U.S. growth rate, nations across Africa are enjoying strong futures.The U.S. rebound from a soft mid-year still leaves 2011 predictions for real GDP growth rate at 2.5%.Meanwhile, <a href="http://allafrica.com/stories/201007090873.html">Sub-Saharan Africa</a> is predicted to more than double the U.S. The IMF calculates an average growth rate of 6% in 2011 with more than a few countries fueling that explosion. African Development Bank is most bullish on <a href="http://www.sudantribune.com/spip.php?article35599">Ethiopia</a>, who leads the way with 10.9% growth while also projected to hit all Millennium Development goals by 2015. Rwanda and <a href="http://www.africagoodnews.com/business/economy/2121-imf-sees-strong-zambia-economic-growth-in-2011.html">Zambia</a> are also expected to be strong around 6-6.7%. <a href="http://www.timeslive.co.za/business/2010/08/30/imf-botswanas-gdp-seen-at-8.4">Botswana</a> is predicted at 8.3% and <a href="http://www.howwemadeitinafrica.com/ugandas-growth-expected-to-outpace-big-brother-kenya/3698">Uganda</a> recent oil discovery has them hovering around 7% as well. Tanzania exceeds the average as it directly benefits from the regional growth due to strength in food exports.If these numbers seem too uncertain or unpersuasive, simply consider an indicator the U.S. is all too familiar with – <a href="http://www.nytimes.com/2010/09/28/business/28views.html?src=busln">Walmart</a> has made a bid for Massmart, a consumer goods chain with stores throughout the region.

...nations across Africa are enjoying strong futures.

Is the U.S. Really on the Upswing? Just Don’t Compare it to Africa…

<h1 style="text-align:center;">How Big is the Opportunity in Africa??</h1>While the world continues to circle around the question of sustainable development in Africa, moving from aid to investment, the question of scalability continues to pop up; "really how big is the opportunity in Africa?"Kai Krause used a creative graphic representation, something that would go in the <a href="http://www.amazon.com/Visual-Miscellaneum-Colorful-Worlds-Consequential/dp/0061748366">Visual Miscellaneum</a>, to show that Africa has the whole (investment) world, in its hand.<figure class="image"><img src="/uploads/Africa_True_Size_Krause_5f795f21c4.png"></figure>The factors that allowed these "investing" countries to have their own industrial and agricultural revolutions are rapidly assimilating in Africa, fueled by an increasingly sophisticated working class. Any one of these countries has enjoyed success as a world power, economic leader, or established emergent economy throughout time....and ALL of them fit in this ONE continent?Of course there are countervailing factors, but the data speaks for itself -- Africa is huge. So while each of these countries has had centuries to maximize the land they were given, Africa has just begun...

Kai Krause used a creative graphic representation...

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How Big is the Opportunity in Africa??

<h1 style="text-align:center;">Looking to Rwanda</h1> While the US offers many reasons to be thankful and celebrate this holiday season, most agree that the country is not without its share of worries and wonderment. Stimulating the economy weighs heavily this shopping season as U.S. leaders look for solutions. One writer suggests the U.S. look to Rwanda, where the ease of starting a business ranks equal with America according to the World Bank's 2011 rankings.Equal? Yes.Rwanda has enacted a host of incentives and regulatory provisions to keep their projected 7% growth going strong in the new year.Beyond the opportunity to invest and engage the economies of East Africa, maybe the U.S. should look to learn from them too.

...where the ease of starting a business ranks equal with America...

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Looking to Rwanda

<h1 style="text-align:center;">Part 1: Angel Investing, Impact Investing and SMEs</h1> This is the first blog in a series entitled "A New Strategy for Africa and other Emerging Economies."Over the coming weeks and months, RENEW will be presenting a series of blogs and articles outlining ideas for a new strategy for how the U.S. and the West can engage Africa and other developing countries. Many people, in the fields of economic development, foreign diplomacy and international business, have begun voicing a need for something new.Our proposed strategy begins to address this need, and is shaped by three trends we see taking shape in the sectors of finance, development and philanthropy. These trends are:<ol><li>The rise of angel investors</li><li>The potential of SMEs in developing countries</li><li>The formalization of impact investing</li></ol><figure class="image"><img src="/uploads/SM_Es_Angels_and_Impact_59824fdb16.jpg"></figure>This blog kicks off a series of thoughts that will show how these converging trends could provide a new model for the U.S. and the West to catalyze growth in Africa and other developing countries, and strengthen our global competitiveness. Accompanying these thoughts will be perspectives from the field about the growing need for the U.S. to expand its role in Africa’s private sector; what we can learn from China’s strategy in Africa; and the changing perspective of Africa from a land of poverty to one of opportunity.

RENEW presents a series of blogs outlining a new strategy for how the West can engage Africa.

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Part 1: Angel Investing, Impact Investing and SMEs

<h1 style="text-align:center;">Ethiopia Angel Trip 1: Overview and Photos</h1>The Ethiopia Angel Trip 1 (ETAT 1) is underway. From February 26 to March 4, 2012 a group of five angel investors from around the United States are with the RENEW team visiting small and medium enterprises (SMEs) in Ethiopia. So far the ETAT 1 group has visited with six entrepreneurs (seen or learned about more than 15 potential investments), toured the city, visited the Ethiopian Commodities Exchange, eaten at several local establishments (injera anyone?) and enjoyed too many macchiatos to count. Here are some photos of several of the businesses the group has visited. More photos coming soon...Housing Project<figure class="image"><img src="/uploads/2012_Ethiopia_b23dc80814.jpg"></figure>Project Overview: On the outskirts of Addis Ababa, this project meets a growing need for housing among returning Diaspora, expatriates and local Ethiopians. The project includes plans for the first 18-hole golf course in Ethiopia, shopping, a school, a medical facility and more.Medical Diagnostic Facility<figure class="image"><img src="/uploads/2012_Ethiopia1_478f27c5f0.jpg"></figure>Project Overview: Providing diagnostic medical services since 2009, this 24-hour clinic continues to add service offerings for patients and doctors in Addis Ababa. The clinic currently provides computed tomography (CT) scans, digital X-ray, ultrasound, laboratory diagnostics and several other services.Sustainable Farm<figure class="image"><img src="/uploads/2012_Ethiopia2_79e194aeae.jpg"></figure>Project Overview: This 20 hectare farm outside of Addis offers small vegetables to several European markets and fresh tilapia to the Ethiopian market. Additionally, chickpea trials are underway to improve the production potential of Ethiopian small holder farmers.

From February 26 to March 4, 2012 a group of five angel investors from around the U.S....

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Ethiopia Angel Trip 1: Overview and Photos

<figure class="image"><img src="/uploads/ag_forum_logo_2_49cb82a1d9.png"></figure><h1 style="text-align:center;">MNCs: You Can Be Angels Too...</h1>Last week in Addis Ababa the Corporate Council on Africa, in partnership with USAID and several international agriculture companies, hosted the U.S.-Africa Agribusiness Investment Forum at the beautiful Sheraton Hotel. The forum provided an excellent meeting place for multinational companies, investors and development organizations to discuss the opportunities and challenges of investing in Africa's lush and untapped agriculture sector. I met so many interesting people working on great projects. The Ethiopia Commodity Exchange, Agriculture Transformation Agency, Overseas Private Investment Corporation, Africa Development Bank and a host of other important players participated in the forum. The panel discussions showcased new models for starting, growing and investing in agriculture business in Africa. However, I observed that there were only a handful of African-owned businesses in attendance. Granted, that may not have been the target market for the forum, but it made me wonder about one particular way our (the West’s) model for entering Africa could evolve. Here’s my reasoning:One of the common stories I hear about “Africa” is how challenging it is to do agriculture here. The list is long - including issues with land rights, climate, supply chains, local unrest, limited willingness to trade with neighboring countries, etc. The predominant model for entering Africa it through joint ventures with large local companies, greenfield expansions, acquiring privatized government companies, or acquiring a majority stake in a large local companies. "Go big or go home" is the main way the West enters – because that’s how the economics of agriculture typically work.I wonder if there’s a different approach for how the West can enter Africa’s agriculture market. MNCs usually have a CSR department, and for Africa that often means a fund to support the local community where the MNC is working - building school, drilling water wells, building a clinic, etc. In this way, the MNC begins providing what the local government cannot. Sometimes these programs work; sometimes they don't. But what if two years before entering an area in Africa in a big way, the company's CSR team took a different approach? The MNC could identify local companies (likely SMEs) along their supply chain. They could then use their CSR budgets to make strategic investments in the local companies, with the goal of building up capacity and quality to meet the MNC's standards. If successful, when the MNC is ready to enter the market, their brand would already be strong with the local community because of the investments they had made in the local economy and the jobs that were created. The returns they receive from these investments could be pooled in a fund, and perhaps matched by foundations and development organizations, to finance more “social” programs such as schools, wells, etc. Could this become a fully sustained system that grows together off successful business ventures? If I were the MNC, I would feel more secure about doing a big project, because over those two years of investing I would have learned a whole lot about the economy, working with the government, and I would have built strong relationships with the national, regional and local governments. The business community would know my name as it is associated with “MNC Ventures.” My MNC would have become an “impact angel” investor!In light of this strategy, it would be interesting at next year's Forum to have a breakout session with an MNC, a co-investor and a portfolio of pre-selected companies along the MNC’s supply chain. The local businesses would pitch their company’s products and services, their investment needs and their projected returns to the MNC and investors. The MNC, as the future customer and the investor, would select the most promising companies that align with their future business needs, and then have another meeting with local partners and co-investors to develop an investment plan that would build the capacity of these local businesses to meet the MNC’s future needs. As a result, the MNC would be committed, because they are investing their money instead of donating it (and may be less likely to back out on year two), the development community would have a clear business focus to support, the co-investors can share the risk, and the local businesses... well, let’s ask them.<figure class="image"><img src="/uploads/dsc_0413_0_352c80ea3f.jpg"></figure>

Is there a different approach for how MNCs can enter Africa’s agriculture market?

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MNCs: You Can Be Angels Too...

<h1 style="text-align:center;">Update From the Field</h1><figure class="image"><img src="/uploads/norway_december_1_25c41fb7dc.jpg"></figure>I am writing to give you a brief update on RENEW’s upcoming travel schedule and activities. I wish you and your family a happy holiday. We hope 2012 was a prosperous and healthy year for you.A brief update: Our U.S. and European-based teams continue making impressive progress with their investor outreach activities. Over the next four weeks we have a number of meetings scheduled in Europe and the U.S. with investors interested in Ethiopia. This swell of interest is exciting because, despite its current foreign investment challenges, it means that Ethiopia’s brand is strengthening in the global marketplace. As always, I emphasize that changes take time and require exceptional amounts of work to ensure Western investors and Ethiopian businesses have successful investment relationships. However, as we continue to meet (and meet, and meet) with members of the Ethiopian government, we’re encouraged by their heightened state of awareness about the importance of receiving feedback about how to improve Ethiopia’s support for foreign investors.We are also engaged in a number of exciting projects with local companies. Here, we have observed notable change, specifically towards business owners’ perspectives around the value and importance of bringing on equity partners. We are seeing an acceptance that the global market is coming to Ethiopia, and with it, increased competition. Once closely-held family companies are starting to open up to foreign partnerships and realizing that capital and knowledge transfer are keys to staying competitive.All of this, and more, has been incorporated into our “Unwritten Rules” training. We’re excited to say that we piloted this training twice in December, with great success, and will be offering it to a small group in January.What's next: Our executive team is currently in Norway – it’s cold and snowy compared to the beautiful warmth of Ethiopia. Here we are continuing discussions with investors that we started back in October. After the holidays, we will be traveling around the U.S. to meet with investors in Colorado and North Carolina. Our core team will return to Ethiopia mid-January, at which time we will be preparing for a number of investor trips we have scheduled for the first quarter of 2013. As a reminder, only businesses that have taken the “Unwritten Rules” will be introduced to investors. If you would like to attend the January session, please contact Kathleen DeLaHoussaye <a href="mailto:kdelahoussaye@renewcapital.com">kdelahoussaye@renewcapital.com</a>, to reserve a spot.In a few weeks we will be releasing our 2013 priorities – activities that will continue building a new investment bridge between the West and Africa.Happy Holidays.

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