<h1 style="text-align:center;">RENEW’s Legal Corner: January 2022</h1>RENEW’s Legal Corner is designed to keep you updated with the regulatory progress and changes&nbsp;happening throughout the different jurisdictions in which RENEW operates. This month has seen several regulatory changes in Ethiopia, Rwanda and Uganda. Below are the highlights:<figure class="image"><img src="/uploads/097_A9432_c96da6175e.jpg"></figure><hr>ETHIOPIA<h3>The U.S. Removed Ethiopia from AGOA Effective January 1&nbsp;</h3>The U.S. removed Ethiopia from the African Growth and Opportunity Act (AGOA) for acting against the AGOA statute with the alleged violation of human rights in relation to the war in the northern part of the country (<a href="https://agoa.info/news/article/15941-us-president-terminates-agoa-preferences-for-ethiopia-mali-and-guinea.html">Link</a>). This is following the impending decision passed by the U.S government in November 2021. However, the act has received a lot of criticism from governmental and non-governmental actors. Critics pointed to the adverse effect of the removal including the thousands of jobs created for female workers throughout the country, especially in the garment industry.Following the removal, the Ministry of Trade and Regional Integration is actively working to find alternative markets for Ethiopian products. During the review of the Ministry’s 100 days performance with the Ethiopian Plan Commission, the need to strengthen bilateral and multilateral integrations has been emphasized.<h3>NBE Amends the Forex Retention Directive and Exporters are Not Going to Like it</h3>The National Bank of Ethiopia (NBE) issued a new directive on the retention and utilization of export earnings and inward remittances. The new directive No. FXD/79/2022 has repealed Directive No.FXD/73/2021, which was issued less than five months ago. This is the third amendment to the directive since March 2021. The new directive has made significant changes, which might not be ideal for the retention of account holders in general and exporters in particular. Below are the major changes introduced:<ul><li>Under the new directive, banks are now required to surrender 70% of the foreign currency earnings to the NBE, either from export or remittance. Under the repealed directive, this requirement used to be 50%.</li><li>Similarly, the exporters or the remittance recipients' right of forex retention declined to 20% of the total export earning or remittance. This used to be 40% under the repealed directive.</li><li>The private banks' share of the earnings stood at 10%, which is similar to the repealed directive.</li></ul>This is expected to significantly slow down exports as most exporters are in the export business to generate forex - a scarce resource in the country. It is widely known that most exporters are originally importers who joined the export business to support their import business by using their forex retention rights.<h3>The Government to Approve a Supplementary Budget of 122B ETB due to the War</h3>The Ethiopian Council of Ministers passed a resolution during its regular session held on December 28, 2021. One of the major agenda items at the Council was approving a supplementary budget proposal submitted by the Ministry of Finance for the 2021/2022 fiscal year (running from July 7, 2021, to July 8, 2022). At the beginning of the fiscal year (July 2021), the government approved a 561.7B birr (approximately $12.9B USD) budget. However, as reported by the Ministry of Finance, the war in the northern part of the country demanded additional expenses, which the government couldn’t cover by shifting the budget.&nbsp;As a result, the Ministry of Finance reported that it has readied 122B birr (approximately 2.5B USD at the current exchange rate) as a supplementary budget for the current fiscal year. The budget will be used to rehabilitate conflict-affected communities and finance necessary government functions. This proposal has been presented to the Council of Ministers and received approval, and will now go to the parliament for final ratification.<h3>The Council of Ministers Approved the Formation of Ethiopian Investment Holdings as a Sovereign Wealth Fund</h3>The Council of Ministers approved the formation of Ethiopian Investment Holdings (EIH) as a sovereign wealth fund that holds state-owned enterprises (SOEs) under an umbrella. Part of the government's economic reform program is to increase public sector finance through enhancing the efficiency, transparency and governance of SOEs.&nbsp;&nbsp;EIH, which is currently under formation, will pool the different government resources to one center and will introduce an efficient corporate governance scheme. This, in return, is expected to increase the government’s revenue and serve as a tool which will contribute to the country’s economic growth and enhance the competitiveness of the economy.&nbsp;The Council of Ministers has reviewed the draft regulation, establishing the EIH, and approved its establishment. Consequently, steps are being taken to operationalize EIH but it will not come into existence until the establishment regulation is published in the Federal Negarit Gazette.<hr>RWANDA<h3>AfCFTA; Rwanda’s Performance A Year Later</h3>Trading commenced throughout the African Continental Free Trade Area (AfCFTA) in January 2021. Member states party to the trade agreement have mandatory duties to adhere to the specific responsibilities under the agreement, such as to progressively eliminate tariffs and non-tariff barriers to trade in goods, progressively liberalize trade in services, cooperate on investment, intellectual property rights and competition policy, settle all disputes concerning their rights and obligations, establish an institutional framework for the implementation of AfCFTA and others. Rwanda has made significant strides in implementing AfCFTA thus far, for instance, setting up a dispute settlement body, among others. Rwanda has also set its eyes on diversification by penetrating other African markets. This will be a huge opportunity for the country after registering a whopping $830M of&nbsp; exports within Africa for the greater part of 2021, representing 56% of total exports.&nbsp;Photo by Imran Mazar

Updates to regulatory changes in Ethiopia, Uganda and Rwanda: January 

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RENEW’s Legal Corner: January 2022

<h1 style="text-align:justify;">Ethiopia: IFRS Status and Tips for Businesses</h1>As Ethiopia continues to integrate with global markets, financial standards become more significant. One accounting standard that is often recognized as the global gold standard is the International Financial Reporting Standards (IFRS). IFRS refers to a single set of globally recognized standards and interpretations applicable to general purpose financial statements and other financial reporting of all profit oriented entities.IFRS standards prescribe:<ul><li>The items that should be recognized as assets, liabilities, income and expenses;</li><li>How to measure those items;</li><li>How to present them in a set of financial statements and the related disclosures about those items.</li></ul><figure class="image"><img src="/uploads/097_A2818_bb9f03054e.jpg" alt="A team of professionals in an office, engaged in discussions about IFRS implementation and financial reporting standards."></figure>The adoption of IFRS will result in financial reports for stakeholders that are understandable, reliable and relevant to users and transparent and comparable to other companies. IFRS will also increase the efficiency of contracting with other firms and lenders, and in the long term, such standards make for a more efficient capital market.&nbsp;&nbsp;&nbsp;Around the globe, 120 nations permit or require IFRS for domestic listed companies, while close to 90 countries have fully conformed with IFRS as proclaimed by the IASB (International Accounting Standard Board). The main objective of IFRS is to make the diverse business language used around the world consistent. However, its adoption and implementation bring opportunities and challenges to both businesses and governments.&nbsp;<h2 style="text-align:justify;">IFRS Status in Ethiopia</h2>Previously in Ethiopia, there was not a single accounting standard in use. Businesses had to rely on different regulations and their own internal accounting policies for the preparation of financial reporting. This impacted comparability and reliability of the reporting used by various stakeholders. The government of Ethiopia issued a proclamation called “Financial Report Proclamation of Ethiopia: 847/2014” and Council of Ministers Regulation 332/2014 instructing adoption of IFRS and establishing AABE (Accounting and Audit Board of Ethiopia).&nbsp;AABE is responsible for guiding and dictating the implementation of IFRS as of December 2014.The IFRS implementation roadmap has three phases which started in 2018. Since then, a number of large companies have adopted IFRS in their reporting process while the majority of SMEs and some public interest entities have not been able to adopt the standard. As a result, the government has delayed the implementation enforceability schedule and recently announced a new threshold for the adoption of the full IFRS (listing all applicable rulings or codification to be strictly followed by adopters) and also sectioning out IFRS rules for SMEs, which meet the definition below:Threshold 1: Minimum criteria to adopt Full IFRS: Entities that meet two of the below four criteria should start adopting the standard by 2023:<ul><li>Annual turnover exceeding 300M ETB</li><li>&nbsp;Total employees exceeding 200</li><li>Total asset exceeding 200M ETB</li><li>Total liability exceeding 200M ETB</li></ul>Threshold 2: Minimum criteria to adopt IFRS for SMEs: Entities that meet two of the below four criteria should start adopting the standards by 2024:<ul><li>Annual turnover exceeding 20M ETB</li><li>Total employees exceeding 20</li><li>Total asset exceeding 20M ETB</li><li>Total liability exceeding 20M ETB</li></ul><h2 style="text-align:justify;">Tips for IFRS Implementation</h2>Here are a few tips to get started and advance IFRS implementation in your company:<ul><li>Dedicate an expert or team who will be leading IFRS research or engagement.</li><li>Determine if your country’s IFRS rulings apply to your company or not.</li><li>If it applies, come up with an IFRS implementation plan, including making a decision on in house adoption or seeking assistance from an external party or consultant.</li><li>Identify the list of all relevant IFRS and IAS standards for effective transition to IFRS.</li><li>Develop the relevant accounting policy for your company.&nbsp;</li><li>Choose an appropriate costing model: Costing model or revaluation model.</li><li>Analyze your existing accounting process and identify deviations with IFRS rulings.</li></ul>Conversely, in Uganda and Rwanda, IFRS is much more widely adopted. Below is the IFRS status of both countries.&nbsp;<h2 style="text-align:justify;">Some Regional Comparisons</h2>Uganda has been using IFRS for more than 20 years. In 1998, the Council of the ICPAU (Institute of Certified Public Accountants of Uganda) adopted IFRS (then known as International Accounting&nbsp; Standards (IAS)). The ICPAU is mandated by the Accountants Act, 2013, to regulate and maintain the standards of accountancy in Uganda.&nbsp; In Uganda:<ul><li>IFRS standards are required for listed companies, financial institutions and government-invested companies.</li><li>IFRS standards are required for listings by foreign companies.</li><li>Uganda has adopted the IFRS for SMEs standard without any modifications.</li><li>IFRS for SMEs standards are permitted, although some private companies with state investments are required to use full IFRS standards.</li><li>The IFRS for SMEs was implemented for financial statements covering periods beginning on or after January 1, 2010.&nbsp;</li></ul>For nearly 15 years, Rwanda has shown a public commitment to move towards a single set of high quality accounting standards by issuing a law requiring all companies to use International Accounting Standards (IAS). Law number 11/2008 of 06/05/2008 established the Institute of Certified Public Accountants of Rwanda (the ICPAR Law) on August 1, 2008. To summarize:<ul><li>Rwanda has adopted both full IFRS and the IFRS for SMEs.&nbsp;</li><li>Domestic companies whose securities trade in a public market are required to use IFRS in their consolidated financial statements.</li><li>Foreign companies whose securities trade in a public market are required to use IFRS in their consolidated financial statements.</li><li>IFRS for SMEs is required for all SMEs.</li><li>IFRS for SMEs is permitted for SMEs that are not companies (such as proprietorships and partnerships).</li><li>There are no other local accounting standards.</li></ul><h2 style="text-align:justify;">Questions to Help you Plan</h2>Below are some common questions others have faced when implementing IFRS. These have been shared by early adopters and are listed below. Be sure to review these challenges before you develop your IFRS transition plan:&nbsp;<ul><li>Should we make the transition to IFRS in house or or hire a professional? Who should I hire? Do the necessary research before deciding and take into account the cost, size, complexity, talent gap of the business.</li><li>Is the IFRS implementation a finance role only? Many believe so, but don’t undermine the significance of engineering, HR, legal, marketing, procurement and leadership on key deliverables like estimates, valuation, severance, legal claim, inventory impairment and others.</li><li>Do we keep all original receipts for purchase of assets? Yes. These are needed&nbsp; for valuation purposes.</li><li>Do we have all HR related documents like leave, severance properly accounted for, documented or updated in a timely manner?</li><li>Are your key finance team members well trained or informed in the IFRS rulings or modifications?</li><li>Do I need to re-evaluate all assets to be IFRS compliant? There is a tendency to have everything re-evaluated but you should consult an expert as this might not be the case depending on the circumstances of your business.</li><li>Beware of unrealistic valuation reports as many have reported that inaccurate valuation has led to reporting huge profit with its own tax implications.</li><li>Some IFRS standards are hard to implement in some contexts and a thorough review is needed. For instance, IFRS 9 – Financial Instrument. Hence take time to understand details as relates to your business.</li></ul>Sources:<ul><li style="text-align:justify;">AABE - Accounting and Audit Board of Ethiopia (<a href="http://www.aabe.gov.et/">http://www.aabe.gov.et/</a>) - The information about IFRS standards in Ethiopia was derived from interviews with AABE staff members.&nbsp;</li><li style="text-align:justify;"><a href="https://cdn.ifrs.org/content/dam/ifrs/around-the-world/jurisdiction-profiles/uganda-ifrs-profile.pdf">https://cdn.ifrs.org/content/dam/ifrs/around-the-world/jurisdiction-profiles/uganda-ifrs-profile.pdf</a></li><li style="text-align:justify;"><a href="https://cdn.ifrs.org/content/dam/ifrs/around-the-world/jurisdiction-profiles/rwanda-ifrs-profile.pdf">https://cdn.ifrs.org/content/dam/ifrs/around-the-world/jurisdiction-profiles/rwanda-ifrs-profile.pdf</a></li></ul>Disclaimer:&nbsp; This blog article is strictly for informational purposes only and does not constitute accounting, tax or legal advice. Readers of this blog should consult their professional advisors to obtain advice with respect to IFRS implementation and any particular accounting or tax matter discussed herein. The information in this blog is provided “as-is” and no representation is made that the information is accurate or complete, nor should it be relied upon as such. Information in this blog may not constitute the most up-to-date accounting or other information. All liability with respect to actions taken or not taken based on the contents of this blog are hereby expressly disclaimed.

Here’s what you need to know if you are a business in Ethiopia and implementing IFRS. Explore the significance of IFRS adoption in Ethiopia for transparent financial reporting. 


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Ethiopia: IFRS Status and Tips for Businesses

<h1 style="text-align:center;">RENEW’s Legal Corner: December 2021</h1>RENEW’s Legal Corner is designed to keep you updated with the regulatory progress and changes&nbsp;happening throughout the different jurisdictions in which RENEW operates. This month has seen several regulatory changes in Ethiopia, Rwanda and Uganda. Below are the highlights:<figure class="image"><img src="/uploads/097_A9519_bd9d899233.jpg"></figure>&nbsp;<hr>ETHIOPIAThe National Bank of Ethiopia Revised the Directive on the Allocation of Forex&nbsp;The National Bank of Ethiopia (NBE), which is the central bank of the country, issued a new directive on the allocation of foreign exchange. The new directive numbered FXD/77/2021 repealed Directive No. FXD/67/2020, which was issued a year ago. The new directive, similar to its predecessor, has four categories of allocation i.e. ‘1st priority', ‘2nd priority', ‘3rd priority’ and ‘no priority’. Within that framework it has introduced a few major changes:<ol><li style="text-align:justify;">Removed “input for manufacturing of pharmaceuticals” from the 1st priority category and kept medicine and laboratory agent importing intact. In addition, it introduced in the 1st priority category (1) input for manufacturing edible oil; and (2) liquified petroleum gas (LPG), which was in the 3rd category in the repealed directive.</li><li style="text-align:justify;">Similar to the repealed directive, priority categories need to be allocated a minimum of 50% of the total forex allocation by any bank at any point in time. Categorically, this used to be 5% (for 1st priority), 22.5% (for 2nd priority), 22.5% (3rd priority), which now has changed to 7.5%, 22.5%, and 20%, respectively.</li><li style="text-align:justify;">Non-priority sectors are now required to deposit 50% of the total proforma value in birr using the prevailing exchange rate at the date of registration. The bank in return is required to pay at least a saving interest rate for the amount in the blocked account, which as we stand is 7% per annum.&nbsp;</li></ol>Other than these and other minor changes, the new directive kept most of the provisions of the repealed directive. This included proceeds from the sale of shares, profit and dividend transfer, which remained in the 3rd priority category.The National Bank of Ethiopia Lifted the Restrictions on Loan ServicesThe NBE lifted the restrictions placed on all forms of private loans provided by commercial banks.&nbsp;Back in August 2021, the NBE took different policy measures to tackle the soaring inflation, which was mainly driven by the increased gap between the official and parallel forex exchange rates. This was reportedly a result of the illicit financial networks that are financing the Tigray People's Liberation Front (TPLF), a rebel group currently fighting the government. To counter that activity, the NBE had taken different monetary policy measures, one of which was freezing all forms of private loans provided by commercial banks (read our blog on <a href="https://renewcapital.com/resources/blogs/What%E2%80%99s%20Behind%20the%20Soaring%20Inflation%20in%20Ethiopia%3F">“What’s Behind the Soaring Inflation in Ethiopia?”</a>).Since then, the NBE has issued consecutive circulars at different times revising the restrictions and providing exemptions for different loan categories and strategic sectors. Beneficiaries of this exemption include companies supplying petroleum products, inter-bank loan buyout transactions, sesame producers, importers and producers of edible oil and others. Now, the NBE has lifted all restrictions and allowed all commercial banks to provide loans to their clients without restrictions. The restriction had a significant impact on the economy in general and financial institutions in particular and the lifting of the restrictions is expected to help bring the economy back on track.&nbsp;Start-up Businesses Proclamation is on the Verge of Getting EnactedAs part of the reform program introduced in Ethiopia, the government has been working on building a vibrant start-up ecosystem. Part of this initiative was to draft and implement the Start-up Businesses proclamation (the “Start-up Proclamation”).&nbsp;Initially, this initiative was being led by the Federal Jobs Creation Commission, which later on shifted to the Ministry of Innovation and Technology (MINT). Per a statement by MINT this month, the Start-up Proclamation is now&nbsp; near the finish line and is expected to be enacted within the next one hundred days. Once finalized, the law enactment process requires the draft to be presented to the Parliament through the Council of Ministers’, which will then get published in the official Federal Negarit Gazette.&nbsp;The Start-up Proclamation has a number of elements aimed at addressing the different issues that start-ups currently face in Ethiopia. These include the establishment of the National Start-up Business Council, with a number of mandates aimed at supporting the start-up ecosystem. In addition, it established an innovation fund organized for the purpose of financing start-ups and innovative businesses. At a macro level it aims to foster innovation and the economy at large and create knowledge-base wealth while at the same time fostering job creation. Specifically, it is expected to be foundational to the country’s potential for entrepreneurship and innovation, and provide tailor-made support for start-ups and innovative businesses.The Number of Sectors that Require Certificate of Competence for Business License Has Been Reduced to 10The Ministry of Trade and Regional Cooperation (MTRC) reduced the number of business areas that require competence certificates to 10 from 52. It is in a circular that was circulated to the different trade bureaus that the Ministry announced its decision.The MTRC is the central commercial registration and business licensing body of the country. However, the service provided by the Ministry used to be backward, time taking and with a number of regulatory checkpoints. This has been one of the reform areas outlined by the government in its recent economic reform program related to ease of starting a business (read our <a href="https://renewcapital.com/resources/blogs/The%20Ethiopian%20Business%20Environment%20in%20Light%20of%20the%20Homegrown%20Economic%20Reform%20Program">blog on the reform program</a>). This has seen the number of sectors that require a competence certificate from 1,300 to 52.&nbsp;Now this again got reduced to 10, which is a positive development in terms of limiting the competence certificate to areas that are necessary for the government to ensure the safety and public health of the general public.<hr>RWANDAResolution to Address Inequalities Between Men and Women in EAC Services.The women caucus in the East African Community (EAC) regional parliament recently tabled a&nbsp; resolution to check the glaring inequalities between men and women currently serving under the EAC. This came during the annual international campaign against gender-based violence. The resolution implores the EAC Council of Ministers, the central decision-making and governing organ of the EAC, to establish structures to promote gender mainstreaming in the appointment and recruitment for all organs and institutions.&nbsp;The six key recommendations include:<ul><li>Gender should be a primary factor to consider by direct partner states while appointing candidates for Secretary General, Deputy Secretaries General, judges and members of Boards.</li><li>A gender audit to be conducted to advance gender mainstreaming.</li><li>Implement regulation 20(12) of the EAC staff rules and regulations and prioritize gender during the recruitment process of professional staff.</li><li>Incorporate affirmative action for women during the recruitment process.</li><li>Emphasis on women applying for the job vacancies advertised.</li><li>Create a conducive environment for women working in the EAC, taking into account specific needs for women including breastfeeding facilities, adequate maternity leave, day care centres, affordable education for children, favorable spouse allowance and an environment free from sexual and gender-based violence.</li></ul>Senate Summons Prime Minister Over Issues in Agriculture ExportsThe Prime Minister of the Republic of Rwanda has been summoned to appear before the senate committee on economic development and finance. The main subject of scrutiny will be the state of the agricultural sector, the country’s biggest contributor to the national economy. Hon. Édouard Ngirente will explain the government’s detailed plan to leverage the recent strategic partnerships with the likes of China and UAE with close support from the Ministry of Agriculture and the National Agricultural Export Development Board. Furthermore, there will be an in depth analysis of the recurrent challenges that the agricultural export market is currently facing in Rwanda like the lack of access to capital for farmers to cover the day to day activities and logistical issues among others.<hr>UGANDAThe National Social Security Fund (“NSSF”) is the monopoly in the pension sector in Uganda, with mandatory contributions for employees (if employers employ more than five staff).&nbsp;The Parliament of Uganda has passed the National Social Security Fund Amendment Bill 2021, that allows for 20% mid term access for workers who have saved for over 10 years and have reached the age of 45, with persons with disabilities who have saved for more than five years having access to up to 50% of their savings. Furthermore, the bill provides for mandatory registration and contribution to a licensed retirement benefits scheme such as NSSF, for both employers and employees in the formal sector. The Bill also provides for voluntary contributions for employers and employees within the informal sector.NSSF is a lead investor in the only locally domiciled and registered private equity firm in Uganda. With an increase in contributions from employers and employees in Uganda, there is an opportunity for private equity funds to raise capital from the NSSF.&nbsp;Photo by Imran Mazar

Updates to regulatory changes in Ethiopia, Uganda and Rwanda: December

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RENEW’s Legal Corner: December 2021

<h1 style="text-align:center;">RENEW’s Legal Corner: November 2021</h1>RENEW’s Legal Corner is designed to keep you updated with the regulatory progress and changes&nbsp;happening throughout the different jurisdictions in which RENEW operates. This month has seen several regulatory changes in Ethiopia, Rwanda and Uganda. Below are the highlights:<figure class="image"><img src="/uploads/team_7fa02694c2.jpg"></figure><hr>ETHIOPIAThe Capital Market Proclamation was Published in the Negarit GazetteAs part of the reform agenda, the Ethiopian Government aims to correct imbalances and safeguard macro-financial stability in the country. This includes making improvements to access to finance and the development of a capital market. Consequently, Parliament enacted the Capital Market Establishment Proclamation No. 1248/2021. After some wait since the enactment, the Proclamation was published in the Negarit Gazette this month. Here is our <a href="https://www.renewcapital.com/resources/blogs/What%20We%20Know%20About%20the%20Establishment%20of%20a%20Capital%20Market%20in%20Ethiopia%20">blog</a> on the last draft proclamation.The English Version of the New Commercial Code was PublishedAfter the new commercial code was enacted by the Parliament in March 2021, everyone has been looking for the final and codified version. However, the new commercial code was only printed in Amharic and the English version was only published this month. Here is our<a href="https://www.renewcapital.com/resources/blogs/The%20Commercial%20Code%20of%20Ethiopia%20is%20Changing%20How%20the%20Country%20Does%20Business"> blog</a> on the changes introduced by the new commercial code.The Council of Ministers Enacted an Amendment to the Income Tax RegulationThe Council of Ministers issued an amendment to the 2017 Income Tax Regulation on September 23, 2021. The amendment aimed to:1. Clarify some of the provisions of the Income Tax Regulation for the purpose of applicability and to change certain provisions which have a negative implication on some economic activities; and&nbsp;&nbsp;2. Reduce some of the hurdles and increase the inflow of investments.The major elements introduced include:<ul><li>Depreciation in relation to capital goods leasing - The amendment allows depreciation for a business asset held under a hire-purchase agreement;</li><li>Depreciation in relation to buildings - There has been a misinterpretation of the income tax regulation on how depreciation is calculated in relation to buildings partially used as a business asset. The amendment clarifies this provision and states that it will not apply to buildings that are not completed.</li><li>Loss carry forward - The amendment also cleared a misunderstanding in the taxpaying community that is associated with loss carry forward. The amendment clarifies that no taxpayer is allowed to carry forward a loss of more than two terms and not beyond five years.</li><li>Foreign exchange loss - The tax regulation only allows deduction of foreign exchange loss from foreign exchange gain. However, most companies, other than banks, which have foreign exchange loss might not have foreign exchange gain. Hence, to rectify this, the revised proclamation divides capital gains loss into two categories:<ul><li>If an entity incurred foreign exchange loss in relation to purchase of capital goods, the loss shall be added to the cost of the capital goods and be subjected to depreciation.</li><li>If the foreign exchange loss is not related to the purchase of capital goods, the loss will be considered as deductible for the tax period.</li></ul></li><li>Calculating capital gains tax - Inflation adjustments are to be made in relation to transfer of shares and bonds while calculating capital gains tax. Under the income tax regulation, capital gains tax is calculated on disposal of either immovable property or shares and bonds. However, only disposal of immovable property was subject to inflation adjustment for the purpose of calculating capital gains tax.&nbsp;</li></ul>Companies are Now Mandated to Prove “Cash on Hand”The Addis Ababa City Revenues Bureau issued a circular mandating companies to present evidence if they record “cash on hand” in their balance sheet. The main purpose of this is for the Revenue Bureau to identify if the cash on hand indicated on companies’ books exist at banks or on hand. The Bureau is ensuring that companies accurately record their financials and if for some reason a company can’t present evidence of a “cash on hand”, the Bureau will presume that the company has used the money off the books for backdoor business activities. In which case, the Bureau might charge a presumptive tax on the revenue that it could have received.<hr>RWANDANew Data Privacy Law EnactedAs of October 2021, companies and individuals in Rwanda have two years to comply with new personal data processing requirements, which protect an individual’s data and privacy. This new regulation requires an individual’s consent in order for their personal data to be collected and stored. It requires all companies and individuals to be able to prove that explicit consent was given when it comes to the collection and processing of personal data, and it requires all individuals whose data is collected to be made aware of how and where their information is being used.&nbsp;A key component of this new law is the ability for an individual to withdraw consent at any time and also for individuals to be able to request access to any personal data that a company may be storing. Once this law is enforced in 2023, there will be penalties for companies and individuals who are accessing, collecting and using personal data without consent. Learn more about these penalties and details about this new regulation<a href="https://www.newtimes.co.rw/news/new-law-outlines-penalties-mishandling-personal-data"> here</a>.<hr>UGANDAImplementation of Tax Compliance by the Uganda Revenue Authority (URA)On November 1, 2019, the URA introduced the Digital Tax Solution/Stamps (DTS), and later introduced the Electronic Fiscal Receipting and Invoicing Solution (EFRIS) on January 1, 2021,&nbsp; both aimed at improving business efficiency. A countrywide enforcement exercise was launched on November 1, 2021 which enforces the issuing of an e-invoice/e-receipt for goods and services provided by VAT-registered taxpayers. In addition, all gazetted products must bear a digital tax stamp.&nbsp; Failure to issue an e-invoice/e-receipt or to use a digital tax stamp are now offenses punishable by law.The Uganda Revenue Authority (URA) has recently been focusing on supermarkets that are not complying with issuing e-invoices and e-receipts. Learn more <a href="https://www.monitor.co.ug/uganda/business/finance/ura-to-penalise-supermarkets-which-don-t-issue-e-invoices-e-receipts-3604452">here</a>.&nbsp;&nbsp;Photo by Imran Mazar

Updates to regulatory changes in Ethiopia, Uganda and Rwanda: November

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RENEW’s Legal Corner: November 2021

<h1 style="text-align:center;">The Rise of "Re-Pats" -- African Talent Returns Home</h1> The financial crisis is not all bad news. One interesting repercussion is the effect on decades of immigration into the United States for a “better opportunity.” While immigration overall has slowed down, there is new phenomenon which is uniquely affecting Africa: people leaving America for greater opportunity in their home country. <a href="http://news.bbc.co.uk/2/hi/business/8370765.stm">Caroline Duffield’s BBC article</a> tracks the influence of this dynamic in Nigeria.The trend follows high quality business talent in the U.S. leaving either by choice or via a lay off, back to their home country where they had been watching growth and opportunity soar from afar. Now is the time to return ‘home’, bringing a wealth of business acumen to countless endeavors. One such individual quoted in the article said, “I came back to Nigeria after 10 years. I realized this place was calling for young entrepreneurs - to breathe new life into the system.”This shift has gained enough momentum to earn a catchy name, “re-pats”, taking cue from the original expatriate movement that marked last century. The success of a recruitment agency that specializes in bringing Nigerian talent back to Africa truly underscores the process, “In 2003, we thought around 5,000 people a month were coming in," says Funto Akinkugbe from Find A Job In Africa. "That's multiplied by three now. We're looking at the best part of 15,000 people on a monthly basis."While the challenges facing business in Africa still exist, this influx of new and experienced talent is better equipped to overcome barriers and continue to post strong growth in the region. One entrepreneur simply sums up the opportunity to become a re-pat, “It's changing fast - and you're either part of it, or not."Stories like this and many others focused on the growing business opportunities in Africa can be found on the new BBC program, <a href="http://news.bbc.co.uk/2/hi/in_depth/business/africa_business/default.stm">Africa Business Report</a> on BBC World News.

The financial crisis is not all bad news.

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The Rise of "Re-Pats" -- African Talent Returns Home

<h1 style="text-align:center;">Want Encouraging News? Look to Africa.</h1>According to a recent article published in The Economist, Africa is expected to withstand the current economic decline better than many other parts of the world. Entitled “Opportunity Knocks,” the article appeared in the magazine’s October 9, 2008 print edition.The author comments that “Despite the litany of problems, the 48 countries of sub-Saharan Africa are, by several measures, enjoying a period of unparalleled economic success. And despite the turmoil in the world’s financial markets, international investors still think they can make money there.”“In 1990-94 annual GDP growth was a weak 0.9%; since then, growth has averaged closer to 5%. Before this autumn’s financial meltdown, the IMF was predicting GDP growth of 6.6% this year; now it is predicting only a slightly lower rate,” the article continues.

Africa is expected withstand the current economic decline better...

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Want Encouraging News? Look to Africa.

<h1 style="text-align:center;">A Few of My Favorite Things: Some Facts About Africa</h1> As 2011 draws to a close for RENEW and the rest of the world, I wanted to take a few moments to remember some of my favorite things…about Africa:<ul><li>Thirty-six out of 46 African governments made things easier for business in in 2011.</li><li>The International Monetary Fund expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.</li><li>Africa's combined consumer spending in 2008 was $860 billion, and it is expected to grow to $1.4 trillion by 2020.</li><li>According to Standard Bank, around 60 million Africans have an income of $3,000 a year, and 100 million will in 2015.</li><li>Africa’s enthusiasm for technology is boosting growth. It has more than 600 million mobile phone users—more than America or Europe.</li><li>Ethiopia has grown by about 7.5% this year, without a drop of oil to export.</li><li>Trade between Africa and the rest of the world has increased by 200% since 2000.</li><li>Inflation dropped from 22% in the 1990s to 8% in the past decade.</li><li>In 2010, private-equity firms raised $1.5 billion for projects in Africa.</li><li>In 2010, total foreign direct investment was more than $55 billion—five times what it was a decade earlier, and much more than Africa receives in aid.</li><li>Foreign investors are no longer just interested in oil wells and mines. They are moving on to medium-sized investments.</li></ul><figure class="image"><img src="/uploads/recycledafricamap_0_1c5d67af95.jpg"></figure>﻿In the midst of all these great signs of growth in Africa, RENEW is also growing. Highlights from 2011 include:<ul><li>Implementing a project in Afghanistan, including an investor conference in Washington, D.C. and an investor trip to Afghanistan.</li><li>Conducting surveys on the investment climate in nine countries in Africa.</li><li>Running due diligence on opportunities in East Africa</li></ul>Wonder what the future holds for the RENEW team? Stay tuned for more information about what’s ahead in 2012… &nbsp;

As 2011 draws to a close for RENEW and the rest of the world...

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A Few of My Favorite Things: Some Facts About Africa

<h1 style="text-align:center;">U.S. Senators Visit RENEW Portfolio Companies</h1>This past weekend, a group of special guests were greeted at the gates of Mama Fresh Injera’s manufacturing facility in Addis Ababa, Ethiopia. <a href="http://www.coons.senate.gov/">Senator Christopher Coons</a> from Delaware (Chairman of the Senate’s Subcommittee on African Affairs), <a href="http://www.merkley.senate.gov/">Senator Jeffrey Merkley</a> from Oregon (Member of the Senate’s Subcommittee on State, Foreign Operations and Related Programs), <a href="https://www.opic.gov/who-we-are/people/pryor">Judith Pryor</a> (Vice President, Office of External Affairs, OPIC), <a href="https://www.usaid.gov/who-we-are/organization/dennis-weller">Dennis Weller</a> (Mission Director for USAID Ethiopia), and other distinguished staff members came to the production site to visit with team members of Mama Fresh Injera PLC and East Africa Emergency Services LTD (EAES), whose partner organization Tebita Ambulance and Pre-Hospital Emergency Medical Service PLC (TEBITA) parked ambulances outside. Members of the Impact Angel Network from Oregon and Delaware have invested in both Mama Fresh and EAES, making the visit all the more special.<figure class="image"><img src="/uploads/senators_event_logos_7d20c1c6ca.jpg"></figure>The senators spent several days in Ethiopia as a stop on their Africa trip to conduct meetings and site visits related to USAID and other U.S. government interests in the region.The visit started with a presentation by TEBITA’s operations manager, Yitages Mengistu, during which he provided a general overview of the company, their plans for the future and how much they have achieved to date. The senators and their delegation asked questions about the logistics and vision of the company, and saw the newest additions to TEBITA’s ambulance fleet that the company recently purchased and started using to transport patients.In May 2015, the Impact Angel Network established EAES to provide business development, procurement and administrative support for local emergency service providers, such as TEBITA - the first private sector ambulance company in Ethiopia. TEBITA, with the assistance of EAES, aims to be the leading emergency medical services (EMS) provider in East Africa and the EMS hub for Ethiopia. To date, the company has transported more than 30,000 patients in Ethiopia, and these numbers will continue to rise as the company expands operations. In addition to local emergency services, the company will continue to provide remote and international emergency evacuation services to U.S. citizens and other foreigners working in or visiting Ethiopia. EAES and TEBITA would also like to pursue long-term partnerships with U.S. medical organizations.<figure class="image"><img src="/uploads/senators_with_eaes_tebita_2_0_17f53a975d.jpg"></figure><a href="https://www.usaid.gov/">Photo Courtesy of USAID</a>&nbsp;The visit continued with a tour of Mama Fresh’s injera manufacturing facility, including a close look at the teff grinding room, injera dough room, injera baking room and packaging room. The Impact Angel Network’s investment in Mama Fresh in January 2014 helped finance a modern manufacturing and export facility. The delegation was impressed with the facility and how Mama Fresh manages the various production inputs it uses to transform teff grains into a delicious staple bread product. They were also impressed with the reach of the company’s global sales and distribution network, which spans across three continents. The tour concluded with a sampling of classic Ethiopian dishes alongside Mama Fresh’s world-famous injera.<figure class="image"><img src="/uploads/senators_visit_mama_fresh_1_ce65eb73a9.jpg"></figure>The IAN’s investment is enabling Mama Fresh to create jobs in the local economy as well - the company employs 83 individuals and works with more than 300 rural farmers who supply teff and other raw materials. Mama Fresh is also looking to explore new market opportunities for injera, including the growing gluten-free markets in the U.S. and Europe.The visit was a resounding success. RENEW is excited and proud to have shared the accomplishments of Mama Fresh and EAES with such a distinguished group of guests.To find out more about RENEW or the Impact Angel Network, contact us at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> or follow us on Twitter @RENEWLLC. &nbsp;

Honored guests met with Mama Fresh and EAES in Addis Ababa, Ethiopia.

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U.S. Senators Visit RENEW Portfolio Companies

<h1 style="text-align:center;">Matt Davis Speaks at U.S. - Ethiopia Business and Investment Summit</h1><figure class="image"><img src="/uploads/photo_la_investment_summit_2013_panel_0_62d172137e.jpg"></figure> RENEW's Matt Davis spoke at a panel on investing at the U.S. - Ethiopia Business and Investment Summit in Los Angeles on Friday, August 1. A similar summit was also held in Houston, Texas, and the main goal of the summit was to promote investment in Ethiopia and to invite investors to explore opportunities there. Over 300 business leaders, investors and government officials were at the summit, including Ethiopia's President, Mulatu Teshome, who invited investors to visit and invest in his country and highlighted several sectors of interest for potential investors.Matt sat on a panel of investors and funds and shared insight on the investment environment in Ethiopia. The panel focused on building a strategy for investing in Ethiopia, whether the size of investment is $200K or $2B. Other topics that were discussed included the importance of working with a local partner; the ease of working with the Ethiopian government; affordable labor and energy costs; and exciting opportunities in local manufacturing and export including Ethiopia's commodities that have a clear competitive advantage such as coffee, sesame and teff.Some West Coast-based members of RENEW's Impact Angel Network were also in attendance at the summit.