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

Easy Matatu is changing transportation for millions of Ugandans through an end-to-end digital ride-hailing platform for commuters and drivers. The Company leases pre-vetted and inspected vehicles with trained drivers and enables commuters to book safer and more efficient rides through the platform.

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Easy Matatu.avif

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

Uganda

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

&nbsp;<h1 style="text-align:center;">Press Release: RENEW LLC Becomes Renew Capital</h1>A new name and a new orange signal Renew Capital’s expansion across Africa<a href="https://renew-new-api.madtechet.com/uploads/2022_09_27_Press_Release_Renew_Capital_651b8fa71b.pdf" target="_blank" rel="noopener noreferrer" download="download">Download the Full Press Release</a><hr>&nbsp;DENVER, COLORADO, September 27, 2022&nbsp;—&nbsp;More than a decade after launching an innovative public-private finance model for growing small and medium businesses in Africa, the impact investment firm RENEW LLC has relaunched under a new brand, Renew Capital.&nbsp;The firm’s name change signifies a major push forward in Renew Capital’s&nbsp;ambition to expand their investment work to half of Africa’s 54 countries by 2027.&nbsp;The new brand’s bolder color palette and the shift of the Renew Capital arrow from left to right in the brand mark also symbolizes the forward momentum of the firm’s pioneering investment work on the continent.“The refreshed visual identity better communicates the boldness of our mission, our forward trajectory and the vision we are forging for a prosperous Africa,” said Managing Partner Laura Davis.&nbsp;<figure class="image"><img src="/uploads/Renew_Capital_Brand_Refresh_Before_After_hires_55340aa035.png"></figure>&nbsp;The Renew Capital name change also extends to the Renew Capital Angels, the firm's growing impact investor network. Formerly called the Impact Angel Network, the refreshed name more clearly denotes the relationship between the investment firm and the global network of for-purpose investors, which founder and CEO Matthew Davis plans to grow to a membership of more than 1,000 individuals and families by 2027.“With blended finance commitments in place to fund Renew Capital for the next seven years, the timing is right for Renew Capital to make a big push forward,” Matthew Davis said.&nbsp;“We strongly believe Africa’s private sector is the future of the continent, and we are more committed to our mission to grow companies, build nations and leave a legacy than ever,” Laura Davis said. “Our refreshed Renew Capital brand is our reflection of this commitment and our firm’s values of bringing integrity, intelligence, beauty and grit to this important and timely work.”Explore the new Renew Capital brand at&nbsp;<a href="http://www.renewcapital.com/">www.renewcapital.com</a>.About Renew CapitalRenew Capital is an Africa-focused impact investment firm with a goal to help change the way the world engages Africa—from giving to investing. Through an investment model that works with development partners to successfully connect entrepreneurs with impact investors, Renew Capital builds private sectors and investment ecosystems by addressing capital and capacity gaps in Africa’s middle markets. Founded in 2007, Renew Capital is headquartered in Denver, CO, U.S., with offices in Ethiopia, Rwanda and Uganda. For more information, contact&nbsp;connect@renewcapital.com.About Renew Capital AngelsThe Renew Capital Angels network is a global community of angel investors, foundations and family offices who seek financial returns and sustainable social impact by making impact investments into growth-oriented businesses in Africa. Since the establishment of the network in 2012, Renew Capital Angels has mobilized millions of dollars into Africa’s middle market. &nbsp;

A new name and a new orange signal Renew Capital’s expansion across Africa

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RENEW LLC Becomes Renew Capital 

<h1 style="text-align:center;">Three Reasons to Attend the SG2X Playbook Launch Event</h1>We hope you can join us for the upcoming launch event of the SME Gender Growth Acceleration (SG2X) Playbook, a gender-smart investment toolkit for fund managers and small- and medium-enterprises (SMEs) operating in Africa.<figure class="image"><a href="https://us02web.zoom.us/meeting/register/tZYsfumorzMsGNFbdSErJAJWZ99xB9aJMEn9"><img src="/uploads/SG_2_X_Comms_2_2x_ead7122005.jpg"></a></figure>Here are three reasons why we think you should attend:<ul><li style="text-align:justify;">Engage with the Broader Investment &amp; Development Communities: USAID, RENEW, and a consortium of leading GLI initiatives, including members of the 2X Challenge, will be in attendance to participate in a practical and engaging discussion on barriers affecting the GLI space and solutions.</li><li style="text-align:justify;">Learn Project Best Practices and Key Takeaways: Better understand how you (as a DFI, fund manager, development agency, SME, etc.) can better support the SME asset class to become gender-smart, providing positive portfolio results and catalyzing gender-lens capital into the space.</li><li style="text-align:justify;">Implement the Latest in GLI Resources: The launch event will provide a detailed overview of the SG2X Playbook, including its materials, tools, resources, trainings, etc., which represents the culmination of an 18-month project conducted through USAID’s Women Economic Empowerment Fund.</li></ul>Interested in registering for the launch event? Complete the registration form and mark your calendars!<ul><li style="text-align:justify;">Date: Thursday, September 22, 2022</li><li style="text-align:justify;">Time: 9-10:30 a.m. EST; 4-5:30 p.m. EAT</li><li style="text-align:justify;">Please register via this <a href="https://us02web.zoom.us/meeting/register/tZYsfumorzMsGNFbdSErJAJWZ99xB9aJMEn9">LINK</a> &nbsp;</li></ul>

Join USAID, RENEW, and other leading gender lens investors on September 22, 2022!


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Three Reasons to Attend the SG2X Playbook Launch Event

The African Resilience & Investment Series for Executives (ARISE) project helped 2000+ African women in agriculture-focused SMEs with coaching and skills training to help their recovery from impacts of the COVID-19 pandemic.

<h1 style="text-align:center;">ARISE Re-launches on the Last Week of September 2022</h1>Over the course of 2021, the Alliance for a Green Revolution in Africa (AGRA) and RENEW reached 1,382 women-owned and -led agri-businesses in sub-Saharan Africa (SSA) through the design, launch and successful execution of the African Resilience &amp; Investment Series for Women Executives (ARISE) Program in 2021.<figure class="image"><img src="/uploads/BOLG_2x_841ad93c4d.jpg"></figure>The ARISE program was designed with the knowledge that agriculture holds the key to broad-based economic growth, poverty reduction and food security in Africa, and with the understanding that the COVID-19 global pandemic had a severe impact on women-owned and -led agri-businesses in Africa. The ARISE program had the goal of addressing issues that can help the businesses boost their capacity to cope, recover and build resilience to future shocks.The ARISE program covered critical and relevant business and skills capacity topics over a series of five training programs, including recovery during a crises and business contingency planning, executive and financial management, leadership skills, investment readiness and pitching to secure third party finance, as well as emotional support and networking sessions. The training programs included the&nbsp; Investment Seminar, Accelerated Women Executives’ Program, Investment Preparation, Pitch Coaching sessions and Peer-to-Peer Support (i.e., virtual coffee sessions).&nbsp;&nbsp;While the ARISE program was successful in engaging with strong and dynamic women and creating a platform through which agri-businesses could come together to learn best practices, attend coaching and support sessions, obtain essential tools to implement learnings, and network with industry peers and discuss the ways to recover and build the groundwork of resilience for their businesses, there’s more to be done.&nbsp; AGRA’s promotion of women’s economic empowerment within the agriculture sector and addressing the persisting problems they face is not meant to be a one time thing, rather it’s a continuous expedition of breaking the barriers impeding growth of agri-businesses in Africa.&nbsp;With the feedback, learnings and key takeaways from the ARISE program the AGRA and RENEW project teams will be enhancing the ARISE program and providing strengthened and further tailored training programs over the coming 4 months. During this period, members of AGRA’s VALUE4HER platform will have the opportunity to go through an intensive upskilling and reskilling program, wherein the original suite of training programs will all be improved to better address self-identified business and skills gaps, as well as bridge the confidence, self-esteem and ambition setting gaps that were observed as part of the post program survey for the original ARISE program. The ARISE project teams believe the enhanced trainings will better meet women-led and -owned agri-businesses’ needs in terms of content, tools and engagement, and we look forward to working with AGRA-supported companies again in the coming months.&nbsp;Note: Be sure to watch your inbox, the Value4Her platform and RENEW’s marketing channels for announcements regarding training dates and times for the above mentioned key sessions. We encourage you to be one of the futuristic, growth-minded and exemplary women agri-preneurs who participate and strive to make a mark on economic growth, poverty reduction and food security in Africa.&nbsp; &nbsp;

ARISE Re-Launches The Last Week of September 2022!

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ARISE Re-launches the Last Week of September 2022

<h1 style="text-align:center;">A Brief on the Draft VAT Proclamation; The Changes Introduced</h1>Ethiopia introduced value added tax (“VAT”) two decades ago under VAT Proclamation No. 285/2002 (“VAT Proclamation”). The VAT Proclamation was introduced as a replacement for the sales tax that was in place. Since then, the VAT Proclamation has been amended twice in 2008 and 2019 per Proclamation No. 609/2008, and Proclamation No. 1157/2019 (collectively, the “Amendments”). The 2008 Amendments were mainly focused on VAT registration requirements and criminal liabilities associated with VAT. On the other hand, the 2019 Amendments were mainly on reducing the tax reporting burden for a certain category of taxpayers, withholding of VAT by taxpayers, and VAT refund. Despite the Amendments, however, the VAT Proclamation failed to cover new business concepts like e-commerce and other changes in the economy.&nbsp;Consequently, a new VAT proclamation has been drafted (“Draft Proclamation”) that will replace the age-old VAT Proclamation. The Draft Proclamation is introduced to reform the rules in relation to VAT. The revision is needed to recognize new concepts which are recognized by the international community, take into consideration the changes in the economy and make VAT easily understandable and executable.&nbsp;With the above policy background, the Draft Proclamation has made some major changes. In this blog, we will cover some of the major changes introduced by the Draft Proclamation.<figure class="image"><img src="/uploads/097_A2814_f27fb82728.jpg"></figure>Accounting period and VAT filing: Regarding accounting period and VAT filing, the Draft Proclamation seems to be in line with the 2019 Amendments, which has eased the cost of filing VAT by changing the VAT accounting period from one calendar month to three calendar months based on the annual turnover of a taxpayer. This is also expected to alleviate the cash flow problems of small VAT registered businesses. Whereas all taxpayers with an annual turnover transaction of more than 70M Birr will be required to file VAT every month.Definition of terms: Terms like body, person, tax officer, fair market value, related person, and capital goods are defined under Federal Tax Administration Proclamation No 983/2016. The Draft Proclamation has given the same meaning to the terms, which ensures consistency across different tax laws. This will eliminate the uncertainty that can arise on the meaning of terms, which technically have the same meaning but have different definitions under different tax laws.Taxable activities: The definition of the supply of goods and services is critical in defining what taxable activities are. The Draft Proclamation broadened the scope of a supply of goods to include any transaction that involves a change in ownership of the goods. Supply of service is also defined broadly and there has been a shift in the definition of supply of service to include thermal or electrical energy, gas, or water, which were defined as goods in the VAT Proclamation.Registration: There are two types of registration for VAT under the VAT Proclamation and the Draft Proclamation, which are: obligatory registration and voluntary registration.&nbsp;<ul><li>Obligatory registration: The VAT Proclamation imposes an obligation to register for VAT when the total value of taxable transactions during the 12 months exceeds ETB 500K. This was later raised to ETB 1M. The Draft Proclamation increased this amount to ETB 5M.</li><li>Voluntary registration: The VAT Proclamation allows voluntary registration if the applicant supplies at least 75% of its goods or services to a person/business registered for VAT. The Draft Proclamation has changed this requirement to a monetary requirement; if the taxable activity is more than ETB 2.5M the applicant will be allowed to register for VAT.</li></ul>Cancellation of registration: Under the VAT Proclamation, a VAT-registered person can apply for cancellation if he has ceased to make taxable transactions. Under the Draft Proclamation, notice to the tax authority within seven days is required when taxable transactions cease to exist. Another reason for cancellation under both proclamations is when the total taxable transaction annual turnover in the period of 12 calendar months is expected to be not more than ETB 1M (ETB 5M, in the Draft Proclamation). In this case, the registered person can ask for cancellation at any time after three years of the date of its most recent registration for VAT. Under the Draft Proclamation, the three year requirement is reduced to two.&nbsp;Zero-rated activities: Under the VAT Proclamation, there are mainly four taxable activities that are zero-rated; while the Draft Proclamation has maintained this list, it has included specific requirements to be fulfilled for each category. Furthermore, goods that are imported for the purpose of maintenance, renovation and improvement are zero-rated based on the Draft Proclamation.Exempted goods and services: Certain activities which are exempted from VAT under the VAT Proclamation are subject to VAT under the Draft Proclamation. The Draft Proclamation has specifically excluded all exemptions and other benefits (i.e., zero rated activities) other than those listed under the draft.&nbsp;The following are some of the activities which are currently exempted but will be subject to VAT when the Draft Proclamation becomes effective.&nbsp;<ul><li>Transportation: Although transportation is exempted under the Draft Proclamation, taxis that have less than the capacity of holding 8 persons including the driver (which includes those operating through ride-hailing platforms and taxis), renting of vehicles, and vehicles used for transportation of tourists do not fall under the definition of transportation based on the Draft Proclamation, which means they are subject to VAT taxation.</li><li>Supply or import of national or foreign currency: Although the VAT Proclamation exempts supply or import of national or foreign currency, the Draft Proclamation did not. The Draft Proclamation specifically noted that any exemptions or activities that are zero-rated under the previous laws will not be applicable unless such benefits are given by the Draft Proclamation.&nbsp;</li><li>Supply or import of fuel gas, pension funds, permit and license fees, lease of a dwelling for less than two months, and others are also excluded from VAT exemption.&nbsp;</li></ul>On another note, the Draft Proclamation has included tax exemptions that are not included under the VAT Proclamation. For instance, goods that investors import or buy locally that are exempted from customs duty per the investment incentive regulation, goods that are VAT exempted by international agreements and imported by international organizations, and goods that are imported by diplomats and missionaries are exempted from VAT. &nbsp; &nbsp;

Ethiopia is changing its two decades old Value Added Tax proclamation

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A Brief on the Draft VAT Proclamation; The Changes Introduced

<h1 style="text-align:center;">The New Investment Incentive Scheme is Expected to Change the Investment Ecosystem &nbsp;</h1>As part of the country’s <a href="https://www.imf.org/en/News/Articles/2019/12/23/na122319-six-things-to-know-about-ethiopias-new-program#:~:text=The%20IMF%20has%20approved%20a,for%20sustainable%20and%20inclusive%20growth">economic reform program</a>, the government of Ethiopia adopted a new investment proclamation and regulation in 2020, repealing the decade-old investment Proclamation No. 769/2012 (read our blog on the new investment proclamation <a href="https://www.renewcapital.com/resources/blogs/Having%20Skin%20in%20the%20Game%20Can%20Help%20with%20Investment%20Reform">here</a>) and Regulation No. 272/2012, hereinafter referred to as the Repealed Regulation. Despite the adoption of these investment laws, investment incentives provided under the Investment Incentives and Investment Areas Reserved for Domestic Investors Council of Ministers Regulation No. 270/2012 were not repealed and were kept as transitory provisions until a new Incentive Regulation is enacted. The business community has been waiting for the introduction of new investment incentives and after more than two years, the Council of Ministers has approved new regulations to provide for investment incentives, hereinafter referred to as the Incentive Regulation.&nbsp;&nbsp;Investment Proclamation No. 1180/2020 clearly stipulates the necessity to further increase and diversify foreign investment inflow into Ethiopia to accelerate inward transfer and diffusion of knowledge, skill, and technology. The adoption of a separate and detailed Investment Regulation compared to the previous one can be considered as a move to achieve this commitment and make the country a destination for Foreign Direct Investment (FDI). Nevertheless, whether the Investment Regulation will achieve its targeted goal will be seen in the coming years. With this in mind, we have covered the major highlights of the Incentive Regulation briefly below.<figure class="image"><img src="/uploads/097_A2846_254237521f.jpg"></figure>Administration of Investment Incentives - The Incentive Regulation has given the Ministry of Finance (MoF) a broad range of powers in administering investment incentives. Previously, various government bodies were empowered to govern different sections of the incentives. For instance, the Ethiopian Investment Board was assigned to come up with a directive to regulate the exemption of motor vehicles, and the Ethiopian Investment Commission had the power to decide on the importation of duty-free capital goods and construction materials. However, under the Incentive Regulation, the MoF has the power to issue directives to govern these matters. In addition to this authority, the MoF can grant tax incentives, issue directives on the eligibility criteria for tax incentives, and conduct a cost-benefit analysis on investment incentives to determine the impact of tax incentives on the economy. Furthermore, the MoF is empowered as an overseeing body over other regulatory institutions in ensuring whether tax incentives are used for their designated purposes.&nbsp;&nbsp;Investment Areas and Incentives - Investors which invest in areas that are far from Addis Ababa have additional investment incentives provided under the incentive laws. The Repealed&nbsp; Regulation clearly mentions these areas; however, the Incentive Regulation does not. It states that investors who invest in areas far from the urban center and/or with very low infrastructure development will be entitled to an income tax deduction of 30% for three consecutive years after the expiry of the income tax exemption period. The MoF is expected to come up with a directive listing these geographic areas. Similarly, investors who invest in new, atypical, and selected tourist destination areas in hotels, lodges, and resorts with a rank of a star will be entitled to a five-year income tax exemption. The MoF directive is also expected to list these atypical and selected tourist destination areas.&nbsp;&nbsp; Employment Opportunities for Ethiopians Abroad - Investors who provide job opportunities for Ethiopians abroad are provided with income tax exemptions. There are three requirements to be fulfilled by the investors in order to benefit from this exemption. First, the employee who will go outside of Ethiopia should obtain a qualification certificate from an institution recognized for providing training to persons who are to be placed in a foreign country. Nonetheless, the Investment Regulation does not state the type of qualification or training necessary for employees who will go outside of Ethiopia. Secondly, the employer should bring evidence from the Ministry of Labor and Skills that proves the employment of Ethiopians outside of Ethiopia. Lastly, based on the number of Ethiopians sent abroad, the income tax exemption schemes provided under the Incentive Regulation can differ. Nevertheless, the investor will not get more than six years of exemption, regardless of the number of Ethiopians it sends abroad for work.Exemption for Expansion or Upgrading of Existing Investment - In relation to exemptions provided for investors who expand and upgrade their existing investment, the Incentive Regulation has made some changes. Under the new law, investors should bring evidence to benefit from such incentives. They should show whether the investment has achieved the type and volume of product and other preconditions as mentioned in their investment license. In addition, the expansion should be in line with the eligibility criteria listed under the directive that will be issued by the MoF. Finally, to benefit from such exemption the investors are expected to submit audit reports about their existing investment.Incentives for the Mining, Petroleum and Geothermal Works - Section four of the Incentive&nbsp; Regulation gives detailed coverage for mining, petroleum and geothermal works. Investors who engage in these sectors can import machinery, equipment and vehicles without paying customs duty for the operation of their investment. However, capital goods that are imported into Ethiopia cannot be sold to other parties without securing prior approval from the MoF, but the investor can re-export these goods without paying customs duty. Expatriate employees of a contractor and/or a subcontractor that engages in petroleum and geothermal works are allowed to import household goods and personal effects of any kind free of customs duties in accordance with regulations.&nbsp;Commencement Period for Income Tax Exemption - The starting period for the income tax exemption under the Repealed Regulation is the date of commencement of production or provision of services by the investor. The Ethiopian Investment Commission is required to notify federal or regional tax organs about the commencement of production or provision of services by the investor. Under the new Incentive Regulation, income tax exemption starts after the investor obtains its investment license or expansion permit. The EIC or a federal government body delegated by the EIC to issue investment permits will notify the Ministry of Revenue about the obtainment of an investment license or expansion permit.&nbsp;&nbsp;&nbsp;

As part of the country’s economic reform program, the government of Ethiopia adopted a new investment proclamation and regulation in 2020, repealing the decade-old investment Proclamation No. 769/2012.

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The New Investment Incentive Scheme is Expected to Change the Investment Ecosystem 

<h1 style="text-align:center;">RENEW’s Legal Corner: May 2022</h1>Our take on May’s developments in the investment ecosystems of East Africa.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2836_15ec557b17.jpg"></figure><hr>ETHIOPIAThe New Directive by the Ministry of Revenues Eases the Deductibility of LoansThe Ministry of Revenues (MoR) issued a directive related to keeping tax books of accounts. The new directive No. 176/2014, which repealed Directive No 152/2011, aims at bringing clarity to the business community on keeping books of accounts and having supporting documents with an ultimate goal of creating consistency in terms of application. The new directive has made some noteworthy changes. However, perhaps the significant one is related to the registration and documentation of loans.&nbsp;Previously, taxpayers were required to show a loan agreement that was notarized at Documents Authentication and Registration Services (DARS) in order to recognize a certain entry to the company’s books as a debt. Otherwise, there is a high probability that the transfer will be considered an income and subject to tax. This has been a major dispute area between the taxpayers and the tax authority.The rigidity of the process at DARS to get a loan agreement notarized added to the fact that most businesses are family-owned and lack of awareness resulted in shareholders usually putting their personal money into their business at times of distress without DARS registration and facing excessive taxation.&nbsp;The new directive has provided some clarity to that. Even though the burden of proof still rests on the taxpayer, now a loan can be proven in different ways in addition to proof of notarization at DARS. Despite the upgrades to the law, be advised that not getting a loan agreement notarized at DARS will have consequences in terms of stamp duty penalty. The business community is still advised to get the loan agreement notarized at DARS, however, the consequence of not doing so is now less grave.&nbsp;NBE has Released a Complete Guidelines for Telecom OperatorsIn 2020, the National Bank of Ethiopia (NBE), came up with a <a href="https://nbebank.com/wp-content/uploads/pdf/directives/Payement%20system/ONPS-02-2020.pdf">Licensing and Authorization of Payment System Operators Directive - ONPS/02/2020</a>, which allowed telecom operators to engage in payment and related services in Ethiopia. As a follow-up to this, NBE has introduced a <a href="https://www.nbe.gov.et/wp-content/uploads/pdf/directives/Payement%20system/A-complete-Guide-on-licensing-process.pdf">Complete Guide on Payment System Operator License Process</a> that stipulates the details of the licensing process for the financial firms that want to engage in related businesses.&nbsp;The guideline has five phases detailing the application procedure to secure the license. These include to whom the application should be addressed, documents that should be submitted with the application, company formation and the authorization process.&nbsp;&nbsp;&nbsp;&nbsp;Basic Food Items Can Now Enter Ethiopia on Franco Valuta Basis&nbsp;In an effort to control the food inflation in Ethiopia, triggered by internal and international factors, the government is taking new measures. As part of this move, the Ministry of Finance has issued a circular allowing the Ethiopian diaspora and Ethiopians’ who live abroad to import basic food items into Ethiopia without a foreign currency permit.&nbsp;In a circular which is written to the Ethiopian Customs Commission, the Ministry of Finance has given permission to the diaspora and Ethiopians who live abroad to import oil, wheat, sugar, rice and instant milk under the franco valuta scheme. The new circular waives the restrictions that were imposed on the volume that is allowed. Under the new circular there is no minimum requirement and persons who are considered eligible can import any amount of the basic food items which are listed under the Directive.&nbsp;NBE Has Come up with a New Directive for the Implementation of Technology in Core Banking OperationsNBE has introduced a Directive that obligates commercial banks to automate their system, at least their core business processes. As per this law, commercial banks are required to automate their customer due diligence, loan processing, loan portfolio management, and interest banking services among others.&nbsp;NBE has set a time frame for banks to modernize their banking processes, which is within the next two years starting from the effective date of the Directive. Not complying with the Directive within the set time framework will result in an ETB 10,000 fine each month. If a bank fails to automate its core banking business within additional two years, it will face partial or full suspension of related core business in due consideration of the nature of the function.<hr>UGANDAThe End of Umeme’s Monopoly over the Supply and Distribution of ElectricityThe Ugandan Parliament has passed an Electricity Amendment Bill 2022 which, if ratified by President Museveni, will end Umeme Limited's (“Umeme'') monopoly as the sole bulk power supplier of the country. Umeme has been operating under a 20 years electricity distribution concession effective March 2005 from the Government. Umeme is Uganda’s main electricity distribution company, listed on the Uganda Securities Exchange and cross-listed on the Nairobi Securities Exchange of Uganda and is currently distributing about 97% of all electricity used in the country.&nbsp;The new bill permits suppliers to receive generation and transmission licensees to supply electric power in bulk directly to categories of customers specified by the Minister. The assent of President Museveni is the only remaining hurdle for the bill to be implemented.The implementation of the presidential directive will take away Umeme’s service territories where it is not licensed. It will also give a selling power to industries at a tariff that eliminates the current expensive distribution costs of Umeme.&nbsp;Uganda Import Rule Over Age-Old CarsIn a new directive by the Uganda Revenue Authority (URA), imports of vehicles older than nine will be cleared under the East African Community’s Single Customs Territory (SCT) which allows members of the bloc to jointly collect customs taxes. Complementary to this directive, any vehicle nine years old or more from the date of manufacture shall no longer be cleared under the current warehousing regime. As a result, based on CRSP The price of used cars will be inflated as it attracts an import duty of 25%, excise duty (ranging from 25% to 35%) and value-added tax of 16% payable cumulatively and in that order.The likely impact of this directive will be first, a decrease in vehicles sold on the automobile black market in Kenya and secondly, it will create a tough environment for Ugandan importers as they will be required to lodge import declaration forms in their respective home countries and pay relevant taxes upfront to facilitate the export process. Thus, the price of automobiles will likely imminently increase. However, for some, this is viewed as positive news from an environmental point of view because consumers will inevitably opt to purchase newer cars that have lower carbon emissions. Kampala, Uganda’s capital, is currently reported to have the second-worst air quality in Africa.<hr>RWANDARwanda to Benefit from $25m Initiative for Climate Resilient Crop VarietiesBurundi, Rwanda and the Democratic Republic of Congo (DRC) are part of the countries listed for consideration in the new initiative that strives to ensure environmental conservation and increase food security. According to an article in the New Times, the&nbsp; $25 million regional initiative dubbed “Transforming Agri-Food Systems in West and Central Africa” (TAFS-WCA) initiative has been launched by CGIAR, a global research partnership to improve nutrition and food security within the context of climate change in West and Central Africa through nutritious, climate-adapted and market-driven food systems. Rwanda depends greatly on agriculture for both domestic consumption and export. Earlier this year, a prolonged drought eroded more than 40% of Rwanda’s farmer’s produce, mainly beans and maize. This situation was exacerbated when the heavy rains that came, later on, damaged the crops that had survived the dry spells. This initiative will offer farmers some relief from the adverse and sometimes unavoidable effects of climate change subsequently ensuring food security and steady yields for consumption and export.Ukrainian Refugees Could be Sent&nbsp; to RwandaIn an interesting twist, senior officials in the UK have stated that Ukrainian refugees entering the country with illegal documentation may be relocated to Rwanda. The process will begin in the next few weeks following a $158M deal struck by the British government and Rwanda last month. Thousands of illegal migrants who haven’t yet been processed in the UK will be granted asylum or refugee status. According to an article in The Guardian UKTom Pursglove, the minister for justice tasked with tackling illegal migration stated in defense of the new immigration scheme that, “This is a new and untested policy at this point in time. I do think that in the fullness of time we will see this policy, as part of a wider package that we are introducing, really shift the dynamic.” The Migration and Economic Development Partnership will likely be beneficial in achieving Rwanda’s economic and social transformation by integrating the asylum seekers into the workforce.&nbsp;1. <a href="http://umeme.co.ug/">http://umeme.co.ug/</a>2. <a href="https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812">https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812</a>3. <a href="https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394">https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394</a>4. Current Retail Selling Price

Our take on May’s developments in the investment ecosystems of East Africa


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RENEW’s Legal Corner: May 2022

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

Ethiopia’s opportunities to increase early-stage investing

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

<h1 style="text-align:center;">RENEW’s Legal Corner: April 2022</h1>Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2846_254237521f.jpg"></figure><hr>ETHIOPIAA Startup Proclamation that Incentivizes Startups and Investors is in the MakingEthiopia is in the process of enacting a Startup Proclamation that aims to create an innovative ecosystem that is able to promote innovation and job creation. The proclamation that is currently in the draft stage is expected to bring solutions to some of the challenges that startups and innovative businesses face in Ethiopia including barriers to entry and exit, administrative challenges, and access to finance.&nbsp;One of the major measures taken by the Startup Proclamation is incentivizing angel investors to invest in startups and innovative businesses in Ethiopia. The incentives to such investors include tax breaks on capital gains tax and allowing debt investment, among others. [We will be publishing a white paper next week on angel investing in Ethiopia, and will include details on how the Startup Proclamation will likely impact angels.]Road Transport Proclamation in the PipelineThe Ethiopian Ministry of Transport and Logistics released a draft Road Transport Proclamation (Draft Proclamation), which, once enacted, will repeal the nearly decade and a half old Transport Proclamation No. 468/2005 (Transport Proclamation). The revision is needed in order to restructure the road transport sector in a manner that makes it competitive, safe and efficient and cognizant of the economic and social developments of the country. Below, we have summarized some of the major changes that are proposed by the draft proclamation as compared to the current one.Railway Transport Sector RemovedThe current proclamation regulates almost all forms of land transport including railway transport and their operators. However, in reality, this hasn’t been the case since 2017. With the enactment of the Railway Transport Administration Proclamation 1048/2017, the sector has been removed from the Transport Proclamation. Reinforcing that decision, the draft proclamation removed the regulation of railway transport from the scope of application.&nbsp;Maritime Transport Sector RemovedSimilar to the railway transport sector, the maritime sector administration has been part of the Transport Proclamation. However, this has been removed from the transport sector and a separate regulation has been set up per the Maritime Sector Administration Proclamation No. 549/2007. Similarly, the draft proclamation reinforced that decision and left the maritime sector out of the scope of the transport sector regulation.&nbsp;&nbsp;&nbsp;Establishment of the National Road Transport CommissionUnder the current Transport Proclamation, powers in relation to regulating the transport sector are given to the Transport Authority, which is empowered to promote an efficient, adequate, economical and equitable transport system. The new draft proclamation changes the name of the regulator to the National Road Transport Commission, which will have similar mandates to the Transport Authority. However, since there is a need to tie the works of the regulatory body with cross-border activities and neighboring countries, the decision is being taken to elevate the body to a commission.The Use of Technology&nbsp;The draft proclamation emphasizes the need for integrating technology into the transport sector, which is also one of the major reasons for the need to revise the current Transport Proclamation. The use of technology is mainly introduced in relation to data collection and dissemination. The draft proclamation provides for the establishment of a data center for such purposes.&nbsp;<hr>UGANDAChanges in the Coffee Sector Continue to Raise Concern&nbsp;A recent deal between the Ugandan government and Uganda Vinci Coffee Company Limited (UVCC) to set up a coffee processing plant in Uganda has raised concerns based on the exclusive rights given to the company to purchase all the Ugandan coffee to the exclusion of other players in the coffee sector. UVCC has been given free land in the Namanve Investment Park on a 49-year lease agreement and has been granted priority rights over the purchase of coffee to ensure its supply. There is also concern around the tax exemption extended to the investor. According to an article in the <a href="https://www.monitor.co.ug/uganda/news/national/inside-multibillion-coffee-deal-govt-signed-with-uvcc-3769446">Monitor</a>, the agreement, which lasts for a 10 year period, states that ‘the exemptions shall extend to taxes and impositions applicable to all the activities of the company and its foreign staff in respect to the export of green coffee beans.’It further states that ‘where no exemption from tax is allowed under the law of Uganda or exemption provided is inadequate to provide the company with comprehensive relief from taxes or other impositions, then the government undertakes that it will bear the cost of all taxes.’ In effect, this ensures the company will not have to pay any taxes and puts taxpayer money at risk for a deal they had not previously been made aware of or approved.&nbsp;This agreement comes after the recent decision of the Ugandan government to withdraw its membership from the International Organization of Coffee Exporters where it previously has been a pivotal member. The timing also aligns with the new National Coffee Bill passed in August 2020, which requires the registration of coffee farmers and, according to the Monitor, has not been well received.&nbsp;<hr>RWANDAImproved land rights for foreign investors may increase Rwanda’s attractiveness&nbsp;&nbsp;In an effort to position Rwanda as an entrepreneurial hub of Africa, significant changes continue to be made to the country’s laws in order to attract investments from all parts of the world. The new amendments to the land law n° 27/2021 of 10/06/2021 will likely play an instrumental role in achieving this. New land rights regarding state land leases and land concessions were revised alongside the existing rights that apply to nationals and foreigners in Rwanda.Under the new amendments, an <a href="https://www.collinsdictionary.com/dictionary/english/emphyteusis">emphyteutic</a> lease that initially stipulated a lease term of 49 years for investments and 20 years for a residential house extended the term to 99 years for both types of lease. This will likely encourage investors.&nbsp;Regarding freehold titles, historically a foreigner was only allowed full and exclusive rights to land by virtue of international bilateral agreements between Rwanda and other states, if they co-owned the land with a Rwandan citizen who had at least a 51% ownership stake, or were apportioned land in a special economic zone. The new revisions to the land law grants freehold rights to foreigners if approved by a presidential order in exceptional circumstances of strategic national interest. Though this is undefined in the new land law, and no such presidential order has been issued yet, the hope is that the order would cover all strategic investment undertakings under the new investment laws.&nbsp;The additional inclusions to the land law consist of land concession that entails use of private state land for a period not exceeding 49 years for strategic investment like forestry, agriculture and livestock, among others. An article in <a href="https://www.newtimes.co.rw/opinions/foreigners-rights-land-rwanda-new-land-law-and-its-impact-investment">The New Times Rwanda </a>stated that “All projects of national importance are deemed as strategic investments, such projects focus on special impact to the development of the country and its people.” The article further details the state lands lease which is “a State private domain land lease agreement between the State and an investor for strategic investment in construction of infrastructure for commercial purposes such as trade centers, hotels, real estate, restaurants, public parks, tourism sites, schools, hospitals passengers or goods transportation stations and industries.” The lease term is 99 years and can be renewed pending fulfillment of the investor’s tax obligations and diligent land conservation.&nbsp;

Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda