<h1>Rwanda, a Rising Star in Africa's Economic Landscape</h1>Exploring Rwanda's startup ecosystem&nbsp; <img src="/uploads/IMG_6194_4c08eb0359.jpeg"> Rwanda, the land of a thousand hills, is a vibrant nation with a population exceeding&nbsp;<a href="https://www.worldbank.org/en/country/rwanda/overview">13 million</a> people and an estimated&nbsp;<a href="https://www.worldeconomics.com/Country-Size/Rwanda.aspx#:~:text=The%20official%20estimate%20for%20Rwanda's,in%20puchasing%20power%20partity%20terms">GDP of $32 billion</a> (in purchasing power parity terms) as of the end of 2022. Rwanda has been recognized for its efforts in promoting&nbsp;<a href="https://www.elibrary.imf.org/view/journals/002/2017/214/article-A002-en.xml?rskey=S8MnHZ&amp;result=70">gender equality</a> and has made considerable strides in creating a favorable business environment.&nbsp; In 2023, Renew Capital officially launched operations in Rwanda, a step that strengthens our commitment to&nbsp;<a href="https://www.renewcapital.com/companies">investing in growth-oriented businesses</a> across Africa. In this blog we explore the country’s entrepreneurial landscape, thriving sectors and development strategies.Ease of Doing BusinessThe World Bank's "Ease of Doing Business” report ranked Rwanda 29th in 2019 and 38th in 2020 out of 190 economies worldwide. According to the&nbsp;<a href="https://rdb.rw/rwanda-maintains-2nd-position-in-africa-in-2020-world-bank-doing-business-report/">Rwanda Development Board</a>, the reforms captured and reflected in these four indicators strongly impacted its regulatory business environment.<ul><li>Starting a business: Rwanda has made it easy for people to start a business by offering newly formed SMEs a two-year trading license tax exemption.&nbsp;</li><li>Building permits: Rwanda's ranking in the domain of construction permits experienced a notable jump of 25 points, advancing from 106th position in 2019 to 81st globally in 2020 thanks to the accelerated process for acquiring water and sewage connections and the enhancement of building quality control through a mandatory liability insurance requirement for all construction professionals.</li><li>Electricity supply: The upgrading of Rwanda’s power grid infrastructure has increased the dependability of the country’s electricity supply. This has resulted in an improvement in Rwanda's ranking from 68th to 59th worldwide.</li><li>Contract enforcement: The most remarkable progress was observed in the enforcement of contracts, with Rwanda leaping from the 78th to 32nd place globally. This jump was largely attributed to the introduction of a new small claims procedure and a reduction in court fees.</li></ul>Other additional investment benefits offered by the government include:&nbsp;<ul><li>Free business registration</li><li>Highly digitalized and efficient administration (only six hours to register a business)</li><li>One-stop center for investors with dedicated investment acceleration and aftercare team</li><li>No restrictions on foreign ownership</li><li>No restrictions on capital flows</li><li>Capital gains exemption on sale or transfer of shares</li></ul>Economic Landscape Rwanda's&nbsp;<a href="https://rdb.rw/about-rdb/#overview">investment climate</a> is one of the most attractive in Africa. The Rwanda Development Board (RDB) is playing a significant role in attracting and facilitating investment. RDB's key services include one-stop center services (business and investment registration, visa facilitation, tax incentives management, etc.), investment promotion, investment deals negotiation, tourism and conservation and private sector skills development.&nbsp;Rwanda's&nbsp;<a href="https://www.minecofin.gov.rw/fileadmin/user_upload/Minecofin/Publications/REPORTS/National_Development_Planning_and_Research/Vision_2050/English-Vision_2050_Abridged_version_WEB_Final.pdf">Vision 2050</a> is the country’s long-term development strategy which seeks to transform the country into a knowledge-based, high-income country by 2050. This strategy offers various investment opportunities in sectors such as education, technology, infrastructure and health. Rwanda has made significant&nbsp;<a href="https://www.afdb.org/en/news-and-events/press-releases/africas-economic-growth-outpace-global-forecast-2023-2024-african-development-bank-biannual-report-58293#:~:text=Africa's%20pre%2DCovid%2D19%20top,%2C%20and%20Tanzania%20(5.6%25)">progress</a> toward achieving its Vision 2050 goals, and the country is now considered to be one of the fastest-growing economies in Africa. Major Sectors in RwandaThe&nbsp;<a href="https://rdb.rw/invest/">manufacturing sector</a> in Rwanda is still small but steadily growing at an annual rate of 7%.&nbsp; Rwanda's strategic position aids cross-border trade, particularly within East and Central Africa's estimated 268 million population. This has led to increased trade volumes.&nbsp;<a href="https://rdb.rw/invest/">Key exports&nbsp;</a>include beverages, dairy products, processed food and construction materials.Agriculture is the primary occupation for 70% of Rwanda's inhabitants. The agricultural sector accounts for 29% of Rwanda's GDP. Limited availability of farmland has prompted the nation to prioritize the enhancement of crop productivity, focusing on high-yield produce like maize, potatoes, wheat, beans, peas, cassava and soya.Rwanda has implemented the ICT for Rwanda Agriculture policy (ICT4RAg), with the aim to stimulate cooperation between ICT and agricultural sectors. This collaboration seeks to develop solutions in areas such as weather forecasting, pest and disease management, storage infrastructure, market accessibility, soil health and nutrient analysis, teaching innovative farming techniques, facilitating funding and credit services, and controlling pollution.Gender EqualityRwanda stands out globally for its efforts in advancing gender equality and women’s empowerment, particularly in political participation. The&nbsp;<a href="https://www.worldbank.org/en/country/rwanda/overview">parliamentary elections</a> in September 2018 saw women fill 61% of seats. The&nbsp;<a href="https://www.ipu.org/news/voices/2022-10/how-did-rwanda-become-no1-gender-equality">proportion of women members&nbsp;</a>of parliament is at 61.25% today, way above the current global average of 26.4%.Internet Penetration&nbsp;Rwanda’s&nbsp;<a href="https://datareportal.com/reports/digital-2023-rwanda">internet penetration</a> rate stood at 30.5% of the total population at the start of 2023.Mining SectorRwanda's primary mineral&nbsp;<a href="https://rdb.rw/invest/">exports</a> include tin, tantalum, tungsten ores, as well as some gold and gemstones. The sector offers opportunities in ore processing and diversification. In 2015, mining generated $149 million in foreign exchange.&nbsp;Electricity AccessRwanda has achieved one of the world's fastest rates of population&nbsp;<a href="https://documents1.worldbank.org/curated/en/819241600653622828/pdf/Rwanda-Energy-Access-and-Quality-Improvement-Project.pdf">electrification</a>, increasing from 6% in 2009 to about 54% in March 2020. Globally, Rwanda's electrification progress from 2010-2016 ranked 11th, and third in Africa.<figure class="image"><img src="/uploads/Whats_App_Image_2023_02_20_at_17_00_20_33f6a86db5.jpeg"></figure>Entrepreneurial GrowthRwanda has made great strides in entrepreneurship, with a significant number of startups being launched in the country. The country has put in place strong institutions, a strong judicial system and enacted economic transformation strategies. The ecosystem of enterprise support providers is growing fast, marked by new openings of coworking spaces, incubators, accelerators, universities and youth entrepreneurship programs. The central stakeholders in the innovation ecosystem are primarily putting their efforts toward entrepreneurship education, SME finance and networking opportunities.Rwanda's robust economic growth, ease of doing business, commitment to development strategies and gender equality are among the reasons Renew Capital has opened its doors in Rwanda. As the country continues to make strides toward its Vision 2050, opportunities will continue to expand.&nbsp; At Renew Capital, we're passionate about nurturing growth-oriented businesses. Visit our&nbsp;<a href="https://www.renewcapital.com/companies">companies page</a> to learn more.&nbsp;

Rwanda

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Rwanda, a Rising Star in Africa's Economic Landscape

Desire Nduwarugira, project manager at Renew Capital, reflects on the recently celebrated Africa Day and shares more about what it means for Africa to be united, as well as how initiatives like the Accelerating Regional Business Growth (ARBG) can support African SMEs in trade and help Africa's businesses thrive.<h1>Our Africa, Our Future!</h1>Commemorating Africa Day while working at an Africa-focused Investment firm!On May 25 each year, Africans at home and abroad commemorate <a href="https://www.renewcapital.com/newsroom/africas-entrepreneurial-spirit-innovation-creativity-and-resilience" target="_blank" rel="noopener noreferrer">Africa Day</a>, symbolizing our shared history and aspirations. At Renew Capital, this day provides an opportunity to reflect on&nbsp;<a href="https://www.renewcapital.com/about">our vision</a>.I believe that Pan-Africanism offers Africa a path toward unity, progress, and economic development. By striving for sustainable socio-economic and political integration, we can achieve full independence and control of our resources as a collective and diverse entity.<figure class="image"><img src="/uploads/1_Y9_A3503_9530be4e58.jpg"></figure>Desire Nduwarugira pictured far right&nbsp;Pan-Africanism driving business growth: The AfCFTAAt Renew Capital, I am part of a multi-year private-sector development program funded by Global Affairs Canada (GAC) –&nbsp; the Accelerating Regional Business Growth (ARBG) Program – which aims to improve the small and medium enterprise (SME) investment ecosystem across East Africa.East Africa is well-positioned to experience significant private sector growth in the coming decade fueled by African Continental Free Trade Area (AfCFTA) which promises increased regional integration, policy reform, trade and investment.&nbsp;With 55 member countries, the AfCFTA is the largest free trade area in the world. Its goal is to create a single continental market, connecting 1.3 billion people with a combined GDP of $3.4T USD. It has the potential to lift 30 million people out of extreme poverty. However, realizing its full potential depends on implementing substantial policy reforms and trade facilitation measures.Under ARBG, the Trade Facilitation Program is designed for ambitious companies in East Africa interested in starting or expanding their cross-border trade activities through the AfCFTA. The program includes a two-part virtual training session on June 5 and 6, covering:1) Trade liberalization in Africa, explaining the current status of the AfCFTA and its benefits for SMEs.2) Operationalizing trade-related goals by creating a market entry strategy, export marketing plan, and import diversification strategy.Registration for the program is currently <a href="https://docs.google.com/forms/d/e/1FAIpQLSemdya80DGBvSN3xr42keTbyOtNHhILoS_BeK5Ac9XWH-48ZA/viewform" target="_blank" rel="noopener noreferrer">open</a>.Before joining Renew Capital, I successfully managed several projects at One Acre Fund, an international organization serving smallholder farmers in Africa. I graduated from Lake Tanganyika University's School of Law in Bujumbura, Burundi, and have been working in Rwanda since 2015. From serving smallholder farmers to fighting against hunger to working with entrepreneurs to accelerate business growth, my mission is to improve the lives of my fellow Africans.

Commemorating Africa Day while working at an Africa-focused Investment firm!

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Our Africa, Our Future!

Only about 2.83% of capital invested in climate-related startups in Africa from 2019 through Q1 2023 went into logistics companies, including electric vehicle startups. This logistics brief focuses on EVs as part of Renew Capital's series on climate tech in Africa.&nbsp;<h1>Insights on the EV Sector Across Africa</h1>Making electric vehicles a viable solution for the African market<figure class="image"><img src="/uploads/E_Vs_1cc229e4a7.jpg"></figure>Source: <a href="https://www.pexels.com/photo/international-banknotes-pile-featuring-various-currencies-29769669/" target="_blank" rel="noopener noreferrer">photo by Kindel Media</a>Approximately $2.15B was invested in climate deals in Africa from 2019 to Q1 2023. Only 2.83% of that capital went into logistics and transport, which includes electric vehicles.<img src="/uploads/A1_A19392_6_D70_4_BDA_8_EC_6_871416_DC_5_D64_1_201_a_30404271a5.jpeg">(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)&nbsp;Investors closed 22 startup EV deals from 2019 to Q1 2023. Kenyan companies accounted for 36% of these funding rounds.<img src="/uploads/image_3f0cd094f7_338ceb127b.png">(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)&nbsp;While EV investments peaked in Africa in 2022, we are not aware of any EV deals that have been reported in Africa to date in 2023.&nbsp;<img src="/uploads/image_59ceb483ba_f9ac76d932.png"> &nbsp;(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)EV Initiatives by the Government of&nbsp;RwandaAn earlier&nbsp;<a href="https://www.renewcapital.com/newsroom/africa-e-commerce-struggles-to-scale-while-tech-logistics-companies-attract-capital#:~:text=Rwanda%27s%20EV%20and%20E%2DMobility%20Solutions%20Struggle%20Despite%20Government%20Push%C2%A0">logistics brief</a> highlighted challenges associated with scaling EVs in Africa using Rwanda as a case study. The Rwandan government has invested heavily in sustainable infrastructure and e-mobility. While private investments have been made to grow e-mobility solutions throughout Rwanda, the government has created a slate of incentives to promote investment in e-mobility solutions:<ul><li>Low charging costs, especially between the off-peak hours of&nbsp; 11 pm to 8 am. Tax breaks on imports of any e-vehicles, equipment, or materials required to develop charging infrastructure</li><li>Public land allocated to companies setting up charging stations for no cost/rent-free</li></ul>Despite these government initiatives and private sector investments, the current challenges EVs face in Rwanda underscore challenges that will likely prevent the proliferation of EVs throughout sub-Saharan Africa in the near term. High entry cost to purchase, inadequate charging infrastructure and poor road infrastructure are key pieces missing that will potentially limit the possibility of EVs taking over the African market.&nbsp;While larger EVs including Volkswagen’s ID.4 will likely be imported to Rwanda and are already being sold in Ethiopia to deal with the problem of poor infrastructure, the majority of Rwandans and sub-Saharan Africans cannot afford to own these expensive vehicles.&nbsp;Interestingly though, given rising fuel costs in Ethiopia and the relatively low cost of electricity in East Africa’s largest economy, EVs may be able to make a splash.&nbsp;An Ethiopian EV Cost Comparison ExperimentAn in-house experiment conducted by some of Renew Capital's Ethiopian team members determined that the current gas cost of operating a fuel Peugeot 6 Seater SUV (at 62 ETB/KM) was four times more expensive than the comparable EV Volkswagen ID6 in the Ethiopia market.&nbsp;The purchase price of both vehicles is comparable at 5.5M ETB (approximately $105K). This is despite recent incentives placed on EV purchases by the Ethiopian government which only require a 15% import tax for fully assembled imported vehicles. This example underscores that while upper-class individuals in Ethiopia can afford the $105K price tag, many Ethiopians will not be able to access them over the long term.Therefore, the future of EVs in Ethiopia depends on the ability of car manufacturers to create a smaller-sized EV more comparable to the Toyota Vitz or Platz, commonly driven vehicles by middle to upper-class individuals in Ethiopia. Still, with a Toyota Platz and Vitz priced at 1.6M ETB ($30K) and 1.2M ETB ($23K) respectively, even these vehicles in the current Ethiopian economy are considered a luxury. At the same time, electric motorcycles are making headway in Ethiopia’s neighboring countries including Kenya, Rwanda and Uganda.For example, electric motorbikes could cost around $1,500, which is far cheaper than the cost to buy a smaller-engine-sized car like the Toyota Vitz or&nbsp; Platz.At the same time, the transition to EVs in Ethiopia will not be without its challenges. One of the key barriers to adoption is the lack of charging infrastructure. Currently, there are only a handful of charging stations in Ethiopia, which limits the practicality of EVs for many people. In addition, high upfront costs and limited availability of EV models in Ethiopia are other obstacles to widespread adoption.Despite these challenges, there is a reason for optimism. At least two Ethiopian organizations, including private companies, are working on installing the infrastructure required for charging widespread adoption of EVs. For example, in 2021, Ethiopian automotive company&nbsp;<a href="https://ethiopianmonitor.com/2021/12/28/first-electric-vehicle-charging-station-opens-in-addis-ababa/">Marathon Motors</a> partnered with Nissan to launch an electric vehicle pilot program in Ethiopia. As part of the program, Marathon has installed charging stations at its dealerships and service centers. Likewise, at the beginning of 2023, Cardinal Industrial PLC&nbsp;<a href="https://www.eep.com.et/en/it-is-planned-to-build-500-electric-vehicle-charging-stations-in-one-year/">announced its plans</a> to build 500 EV charging stations across Ethiopia over the next year.&nbsp;&nbsp;Moreover, as part of its 10-year economic development plan, the Ethiopian government intends to import 4,800 electric buses and 148,000&nbsp;<a href="https://www.globaltimes.cn/page/202207/1271799.shtml">electric cars&nbsp;</a>by 2030.&nbsp;Bottom LineEVs have not historically received adequate investment in the African market. At the same time, the EV market needs meaningful innovation in order to make electric vehicles a viable solution for Africa. Aside from motorcycles, very few sub-Saharan Africans have the ability to purchase and use EVs due to their high entry cost and limited charging infrastructure. Importantly, EVs in public transportation could be a more durable solution for EVs in Africa than personal vehicles.

Making electric vehicles a viable solution for the African market

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Insights on the EV Sector Across Africa

<h1>Five Facts about Accelerating Regional Business Growth&nbsp;</h1>ARBG to benefit thousands of East African SMEs through training and mobilized capital&nbsp;<figure class="image"><img src="/uploads/IMG_0093_06ef9ec373.jpeg"></figure>Renew Capital officially launched the seven-year&nbsp;<a href="https://www.renewcapital.com/newsroom/press-release-government-of-canada-and-renew-capital-sign-a-seven-year-partnership-to-expand-the-firms-business-model-across-africa">Accelerating Regional Business Growth (ARBG) program</a> in partnership with Global Affairs Canada (GAC) this month in Kigali, Rwanda. The ARBG program will benefit thousands of SMEs through training and help attract and mobilize capital into the continent.&nbsp;Here are five exciting facts you should know about the ARBG program:1. ARBG focuses on regional impactUnlike many programs that take a country-by-country approach, ARBG starts with a regional perspective in order to learn from and leverage regional experiences. For example, with a regional approach, a company in Kenya can learn from the experiences of a company doing similar things in Zambia, or a company in Ethiopia will hear about the growth process of a Ugandan company. Regional impact sharing is hugely valuable.2. ARBG supports intra-African tradeThe vast majority of trade-enabling programs in Africa over the last two decades have been focused on trade with the West, the Middle East or Asia. Very few programs have focused on supporting trade&nbsp;between African countries. By making intra-African trade a focus of the ARBG training program we hope to leverage the African Continental Free Trade Area, which should be implemented over the next decade. The program will support businesses with knowledge of how to trade with other African countries and produce country-by-country trade assessments outlining barriers to trade that many entrepreneurs on the continent face.&nbsp;<img src="https://lh4.googleusercontent.com/yh3eecWZN8r4YGKzpbYE3Qf24LPg6W7eAwX4cvFrUSB8-9os7gG_b4SJy5L5lrX_nwY9pn3-3mBHAsutcbgSCfkVc5iFXiuWNfIP7L2Fpc5qiK0WSLiG5JwXWjlPdLXloYw0Y18VwOuw67CWMX7i1Hw">3. ARBG empowers women-led businessesARBG is making a concerted effort to support women-owned and women-led businesses. In addition, we're helping all businesses we work with to look at ways in which their businesses can be gender smart and cognizant of the role gender plays in fostering successful businesses in Africa.4. ARBG expands Renew Capital’s presence on the continentARBG will operate in seven cities: Addis Ababa, Ethiopia; Kigali, Rwanda; Kampala, Uganda; Nairobi, Kenya; Lusaka, Zambia; Dar es Salaam, Tanzania; and Khartoum, Sudan. Expanding Renew Capital’s efforts across a number of different countries exposes investors to a much wider range of investment opportunities and spreads out investment risk and – hopefully – will get people that otherwise may not be comfortable investing in Africa more comfortable with that idea.5. ARBG to train thousands of SMEs&nbsp;The ARBG training program will train thousands of entrepreneurs in elements of what it means to run a successful business, including finance, management, trade training, etc. ARBG allows us to reach thousands more businesses in the region than we otherwise might have been able to reach. And even though Renew Capital may only invest in a small number of these companies, there are countless wider benefits for the companies in the region that are involved in the program.Ongoing and upcoming ARBG training programs:<ul><li>Trade training - March 2023 (<a href="https://docs.google.com/forms/d/e/1FAIpQLSeAr2nm7hAjpmo108CVXKrCely7l_miBY6DY_qRqCyHdkt21Q/viewform">Register here</a>)</li><li>CFO 100 program - ongoing&nbsp;</li><li>Execs’ training - ongoing</li><li>Pitch coaching sessions - ongoing</li></ul>

ARBG to benefit thousands of East African SMEs through training and mobilized capital 

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Five Facts about Accelerating Regional Business Growth

<h1>African E-Commerce Struggles to Scale, While Tech Logistics Companies Attract Capital</h1>An update on Africa’s logistics market intelligence, trends and asset-light tech innovation&nbsp;The Founders of E-Commerce and Logistics Giant Jumia Resign&nbsp;In November, after five years of successive losses, the founders of African e-commerce giant Jumia&nbsp;<a href="https://finance.yahoo.com/news/jeremy-hodara-sacha-poignonnec-step-134402513.html">resigned</a>. The joint resignation came just 10 days before a rocky third quarter financial report.&nbsp;The company also moved its remaining executives to Africa to account for the rising rent prices of their original Dubai headquarters. Moves like these underscore the issues multinational companies face operating in Africa as currency devaluations, limited access to foreign currencies and heavy government control on imports can continually undermine a business' success.&nbsp;These moves came just as Jumia's stock price dropped by 68% from its high-profile New York IPO in 2019. In 2022, the company suffered from currency devaluation in the markets where it operates, undermining revenues. For example, according to&nbsp;<a href="https://techcrunch.com/2022/11/18/jumia-to-cut-products-and-overheads-as-new-management-chase-profits/">TechCrunch</a> (Q3 2022), “the Nigerian Naira, Egyptian Pound, and West African CFA depreciated by 5%, 14% and 13% respectively against the dollar during the nine-month period ending September 30, 2022.”<figure class="image"><img src="/uploads/L_brief_7098c31674.jpeg"></figure>In response, Jumia will emphasize capturing local stock, reducing the need to import items with foreign currency —which governments heavily regulate. The company also intends to shift its&nbsp;<a href="https://www.digitaljournal.com/pr/jumia-announces-leadership-changes-to-support-its-journey-towards-profitability">monetization model</a> from commission charges to offering value-added solutions like advertising and building a stronger local supply of goods, according to Franics Dufay, the current acting CEO.&nbsp;Finally,&nbsp;<a href="https://www.bloomberg.com/news/articles/2022-11-07/jumia-co-founders-step-down-from-loss-making-africa-online-firm?leadSource=uverify%20wall#xj4y7vzkg">Amazon</a> has plans to launch in additional African countries in 2023, including in Nigeria and South Africa, putting increased pressure on Jumia. Importantly, Amazon's first African venture in Egypt, which launched in 2017 with Amazon’s acquisition of Souq, has had mixed success as the global e-commerce company struggled to adapt itself to local markets and expectations.Rwanda's EV and E-Mobility Solutions Struggle Despite Government Push&nbsp;What’s happening: EV and e-mobility solutions have&nbsp;<a href="https://www.bbc.com/news/business-63622624">struggled to scale</a> in Rwanda, despite heavy government investment and private sector&nbsp;<a href="https://www.ipsnews.net/2022/05/six-ways-rwanda-building-resilient-sustainable-transport-systems/">incentives</a> in recent years. While private investments have grown e-mobility solutions throughout Rwanda, limited charging infrastructure, poor local roads and a lack of support for EVs outside of Kigali have prevented e-mobility solutions from scaling beyond the country’s capital.&nbsp;Government&nbsp;<a href="https://www.ipsnews.net/2022/05/six-ways-rwanda-building-resilient-sustainable-transport-systems/">incentives&nbsp;</a>include low charging costs, tax breaks on imports of any e-vehicles, equipment or materials required to develop charging infrastructure and rent-free public land to set up charging stations. At the same time, development agencies have contributed to infrastructure development in support of private sector companies. For example, in 2021 Ampersand, an electric motorcycle company in Rwanda, secured a&nbsp;<a href="https://www.dfc.gov/investment-story/reducing-carbon-emissions-east-africa">$9M debt facility</a> from the U.S. Development Finance Corporation to help it scale by installing additional charging stations and purchasing new batteries.Bottom Line: While the government and private sector have made efforts to advance EV and e-mobility solutions in Rwanda, the current challenges the sector faces highlight the difficulties that will impede the widespread adoption of EVs throughout sub-Saharan Africa in the near term. EVs are a necessary step towards reducing carbon emissions but current limitations such as high vehicle costs, limited charging infrastructure and poor road infrastructure are crucial obstacles that must be addressed to ensure their success.<figure class="image"><img src="/uploads/L_brief_1_666b0060ec.jpeg"></figure>Kapu Secures $8M in Seed Funding Led by Giant Ventures and Firstminute CapitalIn December, tech newsletter&nbsp;<a href="https://techcrunch.com/2022/12/04/social-commerce-startup-kapu-by-ex-jumia-executive-comes-out-of-stealth-with-8m-funding/">TechCrunch</a> reported that e-commerce startup Kapu, led by former Jumia executive Sam Chappatte, received $8M in a seed funding round co-led by Giant Ventures and Firstminute Capital with participation from Founder Collective, Base Capital, Norrsken and Raven One.&nbsp;Kapu’s solution digitizes the informal retail sector in Kenya. While recent startups including Wasoko (formerly Sokowatch) and MarketForce seek to solve B2B logistics problems for small informal retailers, Kapu takes it a step further, creating direct B2C linkages which reduce grocery prices for Kenyan consumers. Strengthening linkages like these throughout Africa will greatly reduce costs to consumers. Throughout African markets, middlemen typically create these market linkages at high costs, playing the role that scalable technology should replace at a much lower cost to consumers. It is unlikely that Africa’s informal retail sector will formalize in the near term, but investors and companies that recognize and embrace it could become near-term winners.The Logistics Brief is a report on African logistics market intelligence. It focuses on trends and provides updates on asset-light tech innovation in the sector.&nbsp;Subscribe now to stay up to date with the latest investment happening across Africa.&nbsp;

An update on Africa’s logistics market intelligence, trends and asset-light tech innovation 

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Africa E-Commerce Struggles to Scale, While Tech Logistics Companies Attract Capital

<h1>Exploring Rwanda, a Frontier Market for Creative, Cross-Cutting Industries</h1>Renew Capital actively investigates impact investing opportunities in the East African nation<figure class="image"><img src="/uploads/IMG_5392_3e558777eb.jpeg"></figure>It’s Saturday night in Kigali, and crowds of stylishly dressed Rwandans pour into Century Cinema in the city’s vibrant downtown for the&nbsp;<a href="https://www.masharikifestival.org/">Mashariki African Film Festival</a>. Some men wear colorful Converse sneakers with their closely tailored suits. Some women wear ceremonial&nbsp;mushananas–&nbsp; flowy silk and satin dresses with over-the-shoulder sashes.&nbsp;“Film and creative industry usually has a lot of energy, especially on Saturday,”&nbsp;<a href="https://www.minict.gov.rw/about">Rwandan Minister of ICT and Innovation Paula Ingabire</a> tells the audience during the premiere of La Gravité, a sci-fi movie written and produced by French-Burkinabé director, writer and actor Cedric Ido. The minister came to watch the film and tout Rwanda’s advances in growing creative, cross-cutting industries.“One can only say that the potential is real and there are so many opportunities going forward to really build a very strong and vibrant industry,” she continues. “The filming industry is one that has a high potential of creating decent jobs, and beyond just decent jobs, it is also an opportunity for us as Africa, as East Africa, as Rwanda to really tell our story, from the eyes of people that are being part of that story."<figure class="image"><img src="/uploads/IMG_5123_fa95123da4.jpeg"></figure>The theme of the festival was Afrofuturism, a fitting description for the week-long event that closed on December 2, a date designated by the United Nations Educational Scientific and Cultural Organization (UNESCO) as&nbsp;<a href="https://www.unesco.org/en/days/world-futures">World Futures Day</a>.&nbsp;The event also coincides with Renew Capital’s recent efforts to grow its Kigali office and scale up its engagement in Rwanda’s markets. The firm first established a presence there in April 2021 with the goal of growing the country’s small and medium-sized enterprises and helping connect Rwanda’s private sectors to international markets. Renew Capital now has a staff of four in Kigali, including investment and legal consultants and a marketing and communications associate.&nbsp;The film festival was one place for Renew Capital to explore opportunities and learn more about the potential that Rwanda offers for impact investing. As the minister noted, Rwanda’s creative industries are just one among many areas of innovation. She reminded audiences that the global film industry is learning to thrive after being disrupted by emerging technologies such as artificial intelligence, virtual reality, internet of things and 3D printing, but those innovations can be instrumental in how members of a society engage each other. And she wants the world to know Rwanda is standing at the frontier of a whole new global economy.&nbsp;“With technology, we are very crosscutting. You'll find us in healthcare, in education, in agriculture,” Ingabire says.&nbsp;<figure class="image"><img src="/uploads/DSC_0788_df3571de6e.JPG"></figure>Rwanda is Ripe for Investment&nbsp;According to the International Monetary Fund (IMF), Rwanda is one of the fastest growing economies in Africa. The Rwanda Development Board lays out at least&nbsp;<a href="https://www.visitrwanda.com/investment/investment-opportunities/">11 investment areas</a> with potential, including manufacturing, tourism, ICT, infrastructure, energy and agriculture—a sector that currently&nbsp;<a href="https://www.gov.rw/highlights/economy-and-business">makes up 35% of the national GDP</a>. Entrepreneurship is also thriving in Rwanda thanks to the ease of doing business. It doesn’t take much to register a new company and the startup ecosystem is well developed. As a result, the SME investment landscape in Rwanda offers many opportunities.&nbsp;All across Kigali, Rwandans talk of the confidence they have in what they can provide to domestic and international markets, while also voicing concerns that old models of development are no longer working. Rwandan Chamber of Commerce Director of Finance and Administration Manzi Germain told Renew Capital that traditional aid institutions sometimes focus too heavily on the training aspects, without providing finance.&nbsp;<figure class="image"><img src="/uploads/IMG_5347_3a9584a33e.jpeg"></figure>For example, he noted that seven of Rwanda’s key agricultural products—coffee, tea, plantains, honey, beans and flowers—are in demand at the domestic, regional and international levels. While small-scale farmers have spent years updating their knowledge of producing these products and organizing their businesses through microenterprise cooperatives and development programs, Germain believes the bigger issue is the ability of these farmers to access capital to scale these businesses to meet demand.&nbsp;Businesses need credit to build the structures and obtain the packaging materials required to get their products to market.&nbsp;Germain says Rwandan agribusinesses often ask him things like “where am I going to actually store these fertilizers? Where are the facilities?”“Not all (development) agencies are open to it,” he says, noting that some agencies have a very simplified understanding of the teach-a-villager-to-fish philosophy. “They say, ‘No you teach them. That's it and that's it.’”&nbsp;Other industries are highly developed but lack the necessary connectivity to the population. This is common with agribusiness. It’s also a challenge for Rwanda’s healthcare industry which has been touted as a success story because of its universal health coverage scheme, efficient systems and world-class facilities. But when it comes to ambulances, the country is facing a major shortage.&nbsp;“We have Volkswagon here and we have Toyota here, but they cannot manufacture those quantities on the deadline we have,” Germain Manzi says, noting that there aren’t enough assembly lines for mass production. However, some facilities have produced a handful of specialized ambulatory vehicles for VIPs. “It would take them a year to be able to manufacture them, and you find it would be at a higher cost.”&nbsp;<figure class="image"><img src="/uploads/IMG_5389_433c8265a7.jpeg"></figure>Renew Capital believes its model can help fill that gap. And in fact, Renew Capital Angels, the firm’s investor network, has previously invested in a private-sector ambulance solution in Ethiopia—East Africa Emergency Services LTD (EAES), which partners with Tebita Ambulance to provide international and domestic clients with access to reliable, high-quality emergency care.Renew Capital provides the level of capital that established SMEs need to get to the next level. Alongside investments, the firm provides a unique form of capacity building to ensure that SME executives can show they have done their due diligence to be investment ready and are prepared to scale.&nbsp;Desire Nduwarugira, a Kigali-based Renew Capital project manager, says the firm is ready to equip established SMEs with tailored support. Like Germain Manzi, Nduwarugira agrees that some entrepreneurs have the skills to run their companies, but access to finance is their biggest barrier to take their business to the next level. At the same time, there are still some who didn’t get the chance to learn about business management even though they got access to finance.&nbsp;“Renew Capital helps them to better use their capital. It has a solution for both categories of entrepreneurs,” says Nduwarugira. “Boosting SMEs’ growth creates more jobs and greatly contributes to the economy, specifically where unemployment is high.”“I like to think of Renew Capital as a home for entrepreneurs. In Rwanda’s private sector, growth-minded entrepreneurs are not quite sure of who to turn to for financial and management support which are the two pain points the firm sets out to remedy,” says Renew Capital Legal Counsel Lincoln Ford Linguyeneza.Back at Century Cinemas, Mashariki Film Festival Director Tresor Senga took a break from his event hosting to speak with Renew Capital. A pioneer in the country’s burgeoning tech and creative industries, Senga explains that it was the rehashing of one of Rwanda’s worst historical stories that led him to foster an industry for telling new ones. In the early 2000s, foreign filmmakers had been coming to Rwanda to chronicle the country’s 1994 genocide against the Tutsi. That included the production of films such as the 2004 Hollywood feature&nbsp;Hotel Rwanda.&nbsp;Senga, a used car salesman at the time, began learning film production basics by watching Youtube videos and networking with the foreign film crews. Through them, he was able to attend master filmmaking classes in Toronto, Vancouver, Los Angeles, Berlin and other major media production hubs.“The money that I (made) was invested in the film industry. I produced my first film in 2012 in the DRC (Democratic Republic of Congo) and Gisenyi (a Rwandan resort city on the border with DRC),” he says. It was a short feature, but it gave him an entree to screen at different festivals. “Then I found myself in the industry until now.”By 2013 Senga had founded the Mashariki African Film Festival, and a few years later, he was partnering with Italian filmmaker Fabrizio Colombo, who has served as an advisor and director for the Zanzibar International Film Festival. With sponsorship from the European Union and Colombo’s technical support, Senga created the Tumenye Sinema, a master class series for Rwandan youth, which often takes place in rural communities. He has also developed several private film production companies in which he employs some of the 400 youth in his training program.&nbsp;Meanwhile, Rwanda has a new platform called Zacu on Canal Plus, a local TV channel showing exclusively Rwandan content.&nbsp;“Now our products here are in demand,” he says, adding that Rwandan film creators are also getting noticed internationally, and that some of the content his students have produced is getting into festivals in Europe. “It'll be a nice platform for them to flourish.”<figure class="image"><img src="/uploads/IMG_5351_87fc61f59b.jpeg"></figure>The 2022 Mashariki African Film Festival showcased 22 short films directed, produced, shot and edited by youth who participated in Senga’s master classes across the country. While not all of these students will pursue long-term careers in Rwanda’s burgeoning media industry, the event reflected the collaborative spirit and imagination entrepreneurs need to develop innovative SME ecosystems.&nbsp;For young filmmaker Philbert Aimé Mbabazi, it sends a positive message about risk taking because, as he put it, “anytime you’re doing something that doesn’t look like what people see as a career, what people see as safe, it’s problematic,” but, he says, he did it anyway, and plans to keep going.&nbsp;<figure class="image"><img src="/uploads/IMG_5353_7ef400d902.jpeg"></figure>Another young student, Uwikijije Peace Antoinette, was excited to share how this kind of creative, technical training gives Rwandan women the tools they need to lay the groundwork for building their country’s future narrative.“It helps them to be more confident,”&nbsp;Uwikijije said as she stood at the front of a theater packed with her fellow film students. Petite but mighty, she exuded a sense of optimism, standing tall in a broad pink hat and clutching a bright yellow African print blazer under her arm. “Shooting the videos and writing the script puts their ideas out to the public.”&nbsp;Do you have an established startup making a social impact in areas such as youth, women and the environment in Rwanda? Renew Capital’s Kigali-based staff would be glad to discuss training and investment opportunities. Visit this&nbsp;<a href="https://www.renewcapital.com/companies">link</a> to find out more.&nbsp;Want to know more about Renew Capital's last decade of impact investing in East Africa? Check out our <a href="https://latest-api.renewcapital.com/uploads/Renew_Capital_2021_22_Impact_Report_b027a62dd1.pdf" target="_blank" rel="noopener noreferrer">2021-2022 Impact Report.</a>&nbsp;&nbsp;

Exploring Rwanda, a Frontier Market for Creative, Cross-Cutting Industries

Renew Capital actively investigates impact investing opportunities in the East African nation

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Exploring Rwanda, a Frontier Market for Creative, Cross-Cutting Industries

<h1>RENEW’s Legal Corner: December 2022</h1>Primer on the Developments in the Investment Ecosystem in East Africa<figure class="image"><img src="/uploads/unnamed_1_ff4089a587.png"></figure>ETHIOPIAThe Ethiopian Government Comes up with a New Regulation to Govern Immigration FeesA new regulation titled the “Service Fee for Immigration and Citizenship Service Regulation No. 516/2022” (the “Service Fee Regulation”) which deals with the immigration fees chargeable in Ethiopia was introduced in November 2022. By the provisions of the Service Fee Regulation, there has been a significant increase in the application fees of visa and passport services. In some cases, there has been an increase of about 200% when compared to the previous fees. The extant provisions of the&nbsp;<a href="https://www.investethiopia.gov.et/images/Covid-19Response/Covid-19Resources/June-2/Investment-Proclamation-No.-1180_2020-Copy.pdf">Investment-Proclamation-No-1180/2020</a> which introduced a 3- and 5-year multi-entry visa category for investors has now been reaffirmed by the Service Fee Regulation. By the Service Fee Regulation, shareholders of companies registered in Ethiopia can apply for a 5-year multi-entry visa, while a general manager, a board member and top management employees of a foreign enterprise can only apply for a 3-year multi-entry visa. The current application fee for a 5-year multi-entry visa is USD 1K&nbsp; and the application fee for a 3-year multi-entry visa is USD 750. This is a welcome development and reduces the number of applications that expatriates and foreign investors need to make to come into Ethiopia. It also has the potential of improving the ease of doing business in Ethiopia. In addition, it is expected that this will streamline the application process and reduce the administrative burden on the immigration authority. The FDRE Immigration and Citizenship Service is expected to work closely with Ethiopian Investment Commission (EIC) to facilitate the issue of the new visa categories to foreign investors.&nbsp;&nbsp;The Government Expressed its Interest to Privatize Ethio-telecom&nbsp; The&nbsp;<a href="https://www.mofed.gov.et/media/filer_public/38/78/3878265a-1565-4be4-8ac9-dee9ea1f4f1a/a_homegrown_economic_reform_agenda-_a_pathway_to_prosperity_-_public_version_-_march_2020-.pdf">Homegrown Reform Economic Agenda: A Pathway to Prosperity</a> states explicitly the government’s interest to privatize the telecom sector. According to the reform agenda liberalization measures will include the issuance of additional telecom service licenses to operators and the partial privatization of the state-owned Ethio-telecom”. As part of this move, Safaricom Ethiopia has joined the Ethiopian telecom sector and is operational. For the second phase, the government expressed its interest to privatize part of Ethio-telecom and issued a request for bids to interested bidders in 2021. However, the Ethiopian government canceled and postponed the proposed privatization plan. This month, the government reinitiated the proposed privatization plan and expressed its interest to privatize 40% of Ethio-telecom. The expression of interest is valid until December 12, 2022 and major telecom companies are expected to participate. This move coupled with other privatization targets of the government&nbsp; is expected to have a positive impact on the overall economic and social development of Ethiopia. &nbsp;&nbsp;<hr>UGANDAGovernment suppliers adapt to the new VAT change and its effect on their businessGovernment suppliers have raised a number of questions with the new amendment to Section 26 of the Value Added Tax Law that permits them (suppliers) to account for VAT on cash basis as a solution to the recurrent challenge of delayed supplier payments from the government. Initially, government suppliers with taxable supplies not exceeding USD 133K (UGX 500M) in annual revenue could make use of the cash method in order to account for&nbsp; VAT regardless of who they supplied and whether payment had been received. This forced suppliers to borrow from banks as an alternative to funding VAT payments to Uganda Revenue Authority (URA) while maintaining considerable cash flow that was adversely affected by the slow government payments.According to an article in the Monitor Uganda, the questions that arose from the amendment&nbsp; included:<ul><li>Given that invoices are now issued via URA’s Electronic Fiscal Receipting and Invoicing Solution (EFRIS), how should invoices be declared in the VAT return when payment has not yet been received?&nbsp;</li><li>How should a supplier declare VAT incurred on its purchases and expenses when payment has not yet been made?&nbsp;</li><li>What criteria should a supplier use to determine if its customer qualifies as “government”?&nbsp;</li></ul>This amendment means that suppliers should keep record of payments received from government versus invoices issued to ensure an accurate declaration of VAT and avoid interest and penalties arising from late payment of VAT.&nbsp;The law states that any person who intends to access VAT on a cash basis should claim VAT charged on their purchases and expenses only when they have paid for them. Hence government suppliers would have to track invoices on purchases and expenses and how much they paid in that instance then claim only the input VAT on costs that have been paid.&nbsp;The Uganda Revenue Authority is yet to clarify on which institutions qualify as “government” for VAT purposes. The VAT law also doesn’t expressly stipulate whether the VAT incurred from government and non-government customers should be claimed on cash or accrual basis.&nbsp;<hr>RWANDAUSD 920K earmarked for online access for legal instrumentsAccess to the country’s domestic laws, law reports, judgements and even international treaties has been a consistent issue in the Rwandan legal system. Anyone that was interested in acquiring such information would have to acquire it either at the Office of the Prime Minister’s website or in person at the designated court of law. One would also have to keep an eye out for the legal amendments made either in the local newspaper or TV news segment. This significant USD 920K investment in developing a web portal of Rwanda law and cases dubbed (<a href="http://www.amategeko.gov.rw">www.amategeko.gov.rw</a>) will facilitate easy access to various legal documentation. Three languages; English, Kinyarwanda and French will be offered on the platform. It so far has over 700 laws available for students and legal practitioners. With the previously reported issue of case backlog in the judicial courts, this platform is a timely remedy to delivering swift justice and upholding rule of law. According to an article in the New Times Rwanda, Faustin Ntezilyayo, the Chief Justice, implored the software engineers working on this platform to update it regularly. He also pointed out evident gaps within the judicial system such as resources and literacy gaps that deter access to justice, adding that the web will address some of them.The portal was developed with the help of the judiciary, MINIJUST, technical support of the Rwanda Information Society Authority (RISA), and the Justice Sector IT team, engaged by LEXBASE S.A.&nbsp;&nbsp;&nbsp;&nbsp;1) A Homegrown Reform Economic Agenda: A Pathway to Prosperity, https://www.mofed.gov.et/media/filer_public/38/78/3878265a-1565-4be4-8ac9-dee9ea1f4f1a/a_homegrown_economic_reform_agenda-_a_pathway_to_prosperity_-_public_version_-_march_2020-.pdf,&nbsp;2) https://www.monitor.co.ug/uganda/business/prosper/vat-change-causes-headache-for-govt-suppliers-4030054 &nbsp;

Primer on the Developments in the Investment Ecosystem in East Africa

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RENEW’s Legal Corner: December 2022

<h1>RENEW’s Legal Corner: November 2022</h1>Our take on developments in the investment ecosystems of East Africa<figure class="image"><img src="/uploads/097_A2846_254237521f.jpg"></figure>ETHIOPIA&nbsp;Franco-Valuta Beneficiaries Are Expected To Show The Source Of Their Hard Currency Going Forward&nbsp;In April 2021, the Ministry of Finance (MoF) allowed importers to import basic commodities using the Franco-Valuta scheme without any requirement for verification of the source of their hard currency. This decision was made due to the inflation that is impacting the country’s economy. By allowing importers to import basic commodities without complying with the strict banking procedures, it was expected to increase the importation of basic goods into the country. However, in less than a year, the government reversed this decision. Starting from this month, importers are required to show the source of their hard currency to the National Bank of Ethiopia (NBE) to import goods through the Franco-Valuta scheme. The NBE has come up with this decision to control the parallel foreign currency market in the country. According to NBE, beneficiaries of the Franco-Valuta scheme are getting hard currency from the parallel market, and the requirement of verification is expected to alleviate this problem.&nbsp;&nbsp;Ministry of Finance Bans the Issuance of Letters of Credit For 38 Import ItemsThe Ministry of Finance (MoF) has banned the issuance of letters of credit for 38 selected import items. In a circular letter to the National Bank of Ethiopia (NBE), the MoF has ordered the denial of foreign currency issuance for these items, which was made effective on October 17, 2022, and will stay indefinitely. The restriction was imposed on the products as they were not found to be priority items. The prohibition spans a range of items, including processed foods, beverages, artificial jewelry and flowers, bottled water, fruits, carpets, hand and wall watches, human and artificial hair, perfumes, fireworks, bags, umbrellas, seafood, cigarettes, and others. Automobiles imported by private companies are likewise subject to the restriction. This ban will affect the nation both positively and negatively. It will have a detrimental impact on several business communities that are involved in the importation, wholesaling, supermarket business, and retail of the 38 items listed. It also has the potential to increase contraband trade. The prohibition will, however, assist the nation in obtaining foreign currency for imports of high importance, such as medicine and basic commodities, support the expansion of domestic enterprises, and reduce illegal money transfers related to the selected commodities.&nbsp;Trade and Investment Divisional Court Inaugurated in Addis&nbsp;The Federal Court of First Instance officially launched a divisional court solely focused on trade and investment. The court is composed of 11 hearings that deal only with construction, investment, banking, and insurance cases. Five of the hearings under the classification hearing are assigned to commercial matters, and the other five hearings are assigned to banking and insurance matters. The remaining hearing is assigned to deal with construction-related issues. The court is composed of 14 judges and five assistant judges. Although the court was inaugurated this month, the trial was started in June 2022. The bench is anticipated to improve service delivery in issues relating to business, banking, and insurance. Having a separate division court focused solely on trade and investment has a positive impact on enabling businesses in Ethiopia to operate more efficiently and productively by reducing the amount of time and money businesses are required to devote to dispute resolution.&nbsp;<hr>UGANDA<a href="https://www.newvision.co.ug/category/news/blb-fida-uganda-launch-partnership-to-champio-146166">BLB and FIDA Uganda partnership to prioritize women’s land rights</a>At the recent Legal Aid Open Day held in Luweero, the pertinent issues that arose for discussion during the legal clinics concerning women’s land rights included&nbsp;sensitizing women and youth, who are adversely affected the most during land disputes, about land ownership and offering legal support to these vulnerable groups in order for them to obtain unequivocal rights to their parcels. According to an article in the New Vision, a Memorandum of Understanding between the Buganda Land Board (BLB) and the Uganda Association of Women Lawyers (FIDA Uganda) will purposely be driven towards obtaining justice for women and youth over contested plots of land. Furthermore, emphasis will be placed on securing or registering their tenancies and understanding the different rights that come along with the specific type of tenancy held.&nbsp;This partnership seeks to address pertinent issues such as the certificates of occupancy that are conclusive evidence of ownership and rights to the land. It is also a beneficial partnership with the land board which is entrusted to manage some of the biggest parcels in the Buganda Kingdom. The two parties have a duty to educate the women and youth on their tenancy rights on land which will contribute to the reduction of perennial land disputes in the country.<hr>RWANDARwandan corporate lawyers to play a role in economic growthRwanda is on track to establish itself as a top investment and tourism destination in Africa by providing several incentives and legislative amendments to attract more foreign investments. With that comes a number of transactional agreements and laws that need to be accurately structured in order to ensure compliance with domestic laws and also provide a precedent for other investment agreements. It is essential that the whole entrepreneurial and investment ecosystem realize the role of lawyers in structuring major deals, drawing up laws, amending legislation and facilitating dispute resolution while completing the deal.&nbsp;In a New Times article, Felix Manzi, the Director of the CERTA Center for Law and Innovation, a new initiative with the purpose of blending Rwandan legal expertise with innovation and creation, stated that lawyers play a very pivotal role in Rwanda’s economic prowess. He noted that “the entire African continent is trying to attract FDI” and lawyers should equip themselves with the requisite knowledge to understand certain concepts regarding innovation and creation. He also noted that there may be an evident lack of skilled manpower to deal with legal advice and representation in this field which will consequently lead investors to reallocate their funds to a more equipped jurisdiction like Kenya2.Rwanda needs to train and maintain an efficient and competent legal fraternity that can compete within the East African regional bloc and also handle all the legal related tasks that come along with the rapid rate of growth and development which the country intends to achieve. &nbsp;&nbsp;<hr>1)<a href="https://www.newvision.co.ug/category/news/blb-fida-uganda-launch-partnership-to-champio-146166">https://www.newvision.co.ug/category/news/blb-fida-uganda-launch-partnership-to-champio-146166</a>2)https://www.newtimes.co.rw/article/2023/news/business/competent-business-lawyers-crucial-in-rwandas-economic-voyage-experts

Our take on developments in the investment ecosystems of East Africa: November

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RENEW’s Legal Corner: November 2022

<h1>RENEW’s Legal Corner: October 2022</h1>Our take on developments in the investment ecosystems of East Africa<figure class="image"><img src="/uploads/LWN_6417_94da49e087.jpg"></figure>ETHIOPIAEthiopia Positions to Open The Banking Sector To Foreign Investors&nbsp;The Ethiopian Council of Ministers approved the draft policy on opening the banking sector to foreign investors. In Ethiopia, the finance sector, which includes banking, insurance, and microfinance, has been among the protected areas closed to foreign companies. The government of Ethiopia has decided to amend laws to allow foreign investments in the country’s banking sector. Once the new policy is published, the preparation of other legal frameworks like proclamations, regulations, and directives will follow. The NBE is already revising the existing banking business proclamation, and the long-lasting Banking Service Code is also expected to be amended accordingly.&nbsp; The newly approved policy allows foreign banks to enter using four commercial modalities. Foreign banks can open subsidiary arms in Ethiopia, open branches in Ethiopia, and will also be allowed to acquire shares in existing local banks. Based on this policy, foreign banks can acquire up to a 30% direct stake in local banks. Foreign individuals are allowed to acquire up to 5% and foreign non-bank investors are allowed to acquire up to 5% in any local bank. However, the policy excludes insurance and microfinance from the scope of activities open to foreign investors. The change Ethiopia is making in opening up the sector to foreign investors will enable it to support the sector’s services with technology, enhance the networking of the country’s economy with the international market, improve the forex shortage, and strengthen the competitiveness and efficiency of the finance sector.&nbsp;A New Limit On Birr And Forex Holdings Is Introduced&nbsp;The National Bank of Ethiopia (NBE) has issued a directive to limit the amount of birr and foreign currency held in the territory of Ethiopia. The Directive FXD/81/2022, entered into force on September 5, 2022, states that it has become necessary to limit the Birr holding amount for a person entering into and departing from Ethiopia, and sets conditions, limitations, and circumstances under which an Ethiopian, a resident of Ethiopia, and a non-resident or any other person may process and utilize foreign currency. According to the Directive, a person entering into and departing from Ethiopia may hold up to a maximum of Birr 3,000.00 (Birr Three Thousand) per trip to and from Ethiopia, and a person residing in Ethiopia entering the territory of Ethiopia shall convert all foreign currency he/she is carrying at an authorized forex bureau for the equivalent sum in Birr, or deposit to his/her foreign currency account within 30 days of entry to the territory. The directive also sets a time limit for holding and conversion of foreign currency for foreign nationals of Ethiopian origin or Ethiopian nationals not residing in Ethiopia who enter into the territory carrying foreign currency.The Government Has Introduced A New Directive For Imported Personal AppliancesThe Ministry of Finance has introduced a new Directive regarding taxation of personal appliances (i.e.,&nbsp;<a href="http://www.ecc.gov.et/web/guest/%E1%88%98%E1%88%98%E1%88%AA%E1%8B%AB%E1%8B%8E%E1%89%BD/-/document_library/iqHSSioaLJqF/view_file/911902?_com_liferay_document_library_web_portlet_DLPortlet_INSTANCE_iqHSSioaLJqF_redirect=http%3A%2F%2Fwww.ecc.gov.et%2Fweb%2Fguest%2F%25E1%2588%2598%25E1%2588%2598%25E1%2588%25AA%25E1%258B%25AB%25E1%258B%258E%25E1%2589%25BD%3Fp_p_id%3Dcom_liferay_document_library_web_portlet_DLPortlet_INSTANCE_iqHSSioaLJqF%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview">Personal Appliances Import Directive No. 923/2022</a>, hereinafter the “Directive”) this month. This directive is more restrictive on importation of personal appliance goods compared to the previous law. The categories of goods which have duty and tax-free privilege are reduced from 102 categories to 16 categories under the new law. In addition, persons who accept a personal appliance as a gift shall pay a 30% income tax if they do not have a tax identification number. Furthermore, individuals are not allowed to receive a personal appliance product more than two times in a year. The Directive mentions the main purpose for the amendment is to fight illegal activities which are impacting the import trade negatively and the introduction of this Directive is expected to alleviate this problem.&nbsp;NBE Has Come Up With A New Insurance Directive&nbsp;&nbsp;The Ethiopian government is introducing big changes to the financial sector.&nbsp; Recently, the fintech and banking sectors have opened for the private sector and foreign investors. In September, the National Bank of Ethiopia (NBE) came up with another big move which greatly impacted one of the financial sectors in the country, the insurance sector. NBE introduced a new directive for insurance companies. Under&nbsp;<a href="https://nbebank.com/wp-content/uploads/pdf/directives/insurancebusiness/scan0054.pdf">Minimum Paid-Up Capital for an Insurance Company Directive No. SIB 57/2022</a> (hereinafter the “Directive”), the minimum paid up capital for new insurance companies has increased to ETB 400 million from the previous ETB 60 million amount. In addition, the Directive introduced provisions which impact the current operating insurance companies and new businesses which will join the sector. Increasing competition in the sector and enhancing the retention capacity of insurance companies are mentioned as the key rationales for introducing the new Directive.&nbsp;&nbsp;&nbsp;The Agricultural Sector Is Expected To Benefit From The Supplier Credit Scheme&nbsp; The agricultural sector contributes the lion’s share to the Ethiopian economy. However, investors engaged in this sector used to complain about its neglect from access to finance and credit for a longer period. To their satisfaction, NBE has introduced a new&nbsp;<a href="https://nbebank.com/wp-content/uploads/pdf/directives/insurancebusiness/scan0054.pdf">Minimum Paid-Up Capital for an Insurance Company Directive No. SIB/57/2022</a> which allows supplier credit for importers of agricultural machines/inputs. In addition, liquefied petroleum gas importers are also mentioned as the beneficiary of the supplier credit under the directive.&nbsp; However, the directive sets a maximum cap on the borrowing capacity of the importers. The debt-to-equity ratio of the company may not exceed 60:40 of the registered capital in the business license. If the importers fulfill the rest of the document requirements stipulated under the directive, they can benefit from the supplier credit scheme. The introduction of this directive is expected to increase agricultural productivity and to modernize the agricultural sector.&nbsp;&nbsp;<hr>UGANDAEU Resolution on EACOP Causes Stir Amid Progress on Oil PipelineAn emergency resolution passed last month by the EU parliament has come under heavy scrutiny by the citizens of Uganda at large. The resolution passed by a majority of the house in essence seeks to halt operations of Uganda's oil projects in particular the East African Crude Oil Pipeline (EACOP) and Tilenga.&nbsp;The legislative body of the European Union bases this decision on the insistence that there should be a feasibility study for the span of 12 months to ‘identify an alternative route that would preserve the environment and consider other projects based on renewable energy,’ as mentioned in an article by the Independent Uganda. The body has gone ahead to request that&nbsp; drilling activities should not commence around protected green areas such as the Murchison Falls National Park. They also requested that human rights violations such as arbitrary arrests of activists and inadequate compensation for those expropriated from their land by EACOP be remedied.This decision was met with a lot of dismay by the Uganda government who have said it is rooted in hearsay and misinformation about the realities of Uganda’s pipeline projects. The Minister of State for Energy and Mineral Development stated this month in regard to the route that ‘the Hoima- Tanga route was selected as the best route&nbsp; for Uganda after careful evaluation based on the best pipeline routing principles. In addition, Uganda has up-to-date stringent laws on the environment and protected areas, which are strictly followed in developing oil and gas projects.’While addressing the concerns on human rights violations and compensation for Projected Affected Persons (PAPs), the minister stated that ‘a specific Human Rights Impact Assessment (HRIA) was undertaken and measures were put in place to address any potential adverse effects on land-based livelihoods.’ He also added that EACOP in Uganda affected 3,648 PAPs as opposed to the alleged 100,000 that the EU parliament had projected and 2,662 have already signed compensation agreements with 1,977 fully paid already.3<hr>RWANDANew Land Law To Outline Different Avenues For Dispute ResolutionMatters of land conflicts related to boundaries and systematic land registrations under the new&nbsp; Law n° 27/2021 of 10/06/2021 governing land will now be handled by the National Land Authority and Districts or the City of Kigali. This was an evident switch from the earlier mass land registration from 2008 to 2013 where over 12M parcels were registered in the Land Administration Information System (LAIS). The new land law outlines the process of handling land disputes and enables the National Land Authority and local government institutions to make decisions on disputes related to boundaries and systematic land registration only.According to an article in The New Times, ‘Disputes outside of that scope do not fall under the powers of the National Land Authority. For example, land transfer disputes are not included in the new law because the transfer contract is signed between individuals and does not directly engage the institution. To implement this provision, Ministerial Order No 004/MoE/22 of 15/02/2022 determining modalities and procedures for resolution of disputes related to land boundaries and systematic land registration was published to set procedures to be followed when a person is filling the land case.’The new law emphasizes alternative dispute resolution as an effective remedy to these disputes but also gives the parties the option to pursue court proceedings as is their constitutional right. It has also enabled the courts to reduce the backlog of land disputes appearing before them which had proven to be a deterrent to effective and fair justice earlier in the year.Merits Of The ACFTA For Women And Youth In TradeThe African Continental Free Trade Area (AfCFTA)’s Protocol on women and the youth is a significant step in the right direction towards Intracontinental trade having included the two most dominant demographics in the trade industry. The protocol is being mulled over by the body’s Secretariat putting into account the immense contribution of youth and women to the continent’s economic growth. According to the Secretary-General of the AfCFTA Secretariat, Mr. Wamkele Mene, ‘they are the drivers of the African economy. SMEs run by women account for close to 60 percent of Africa's GDP, creating about 450 million jobs.’&nbsp;He also stated, in response to what the AfCFTA offers women who contribute to 70 percent of informal trade in Africa, that ‘we offer scale. Women will now be able to expand their market and have access to new markets in East Africa, in Southern Africa, in Central Africa. We offer an opportunity to expand into a market of 1.3 billion people with a combined GDP of $3.4 trillion.’Despite this protocol still being in the negotiation stage, the studies conducted to create inclusive legal provisions for youth and women within this protocol will offer a myriad of opportunities for young Africans developing cutting edge technological solutions for everyday problems and deviate from the traditional trade agreements that seemingly benefited mainly larger corporations. &nbsp;&nbsp;<hr>&nbsp;<a href="https://www.independent.co.ug/eu-resolution-on-eacop/">1) https://www.independent.co.ug/eu-resolution-on-eacop/</a>2) &nbsp;<a href="https://chimpreports.com/uganda-eu-resolution-on-eacop-hinged-on-hearsay/">https://chimpreports.com/uganda-eu-resolution-on-eacop-hinged-on-hearsay/</a>3) &nbsp;<a href="https://chimpreports.com/uganda-eu-resolution-on-eacop-hinged-on-hearsay/">https://chimpreports.com/uganda-eu-resolution-on-eacop-hinged-on-hearsay/</a>4) <a href="https://www.newtimes.co.rw/article/1494/news/business/land-disputes-now-resolved-differently-pursuant-to-new-land-law-in-rwanda">https://www.newtimes.co.rw/article/1494/news/business/land-disputes-now-resolved-differently-pursuant-to-new-land-law-in-rwanda</a>5) https://www.un.org/osaa/news/what-afcfta-holds-women-and-youths-20226) https://www.newtimes.co.rw/article/1329/news/business/why-the-afcfta-protocol-on-women-and-youth-in-trade-is-indispensable&nbsp;