<h1>Blended Finance: A Key Mechanism for Mobilizing Private Capital for Public Good</h1>Addressing today’s development challenges requires a fusion of creativity and collaboration. That's where blended finance comes in. According to Convergence, blended finance is the use of catalytic capital from public or philanthropic sources to increase private sector investment in sustainable development.&nbsp;<a href="https://www.renewcapital.com/">Renew Capital</a>, an Africa-based impact investment firm, partners with development agencies such as Global Affairs Canada and USAID to achieve leverage through a blended finance model.<figure class="image"><img src="/uploads/IMG_6247_aa8948edf2.JPG"></figure>“Blended finance is critical to achieving sustainable impact in Africa. We're committed to strengthening the investment ecosystem by developing pipeline for investors, organizing local capital and improving the investment environment. We also promote women's economic empowerment and address climate change by helping companies become more climate and gender smart,” says Renew Capital Managing Partner Laura Davis.Renew Capital has implemented its blended finance model in Ethiopia for more than a decade. Here, they share their eight biggest lessons learned in blended finance. These lessons are paving the way for Renew Capital’s rapid expansion across East Africa, and are key for any organization looking to implement blended finance.<h2>A Decade of Lessons in Blended Finance</h2>LESSON 1: FIND A BALANCE BETWEEN MONITORING AND EVALUATION AND REPORTINGImplementers of many blended finance projects face the ongoing challenge of serving two masters which both require robust and specific reporting. Additionally, obtaining timely and accurate financial statements from portfolio companies and other non-investee SMEs required for reporting can become a challenge.&nbsp;&nbsp;Tip:&nbsp;During the planning stage of a blended finance project, be intentional in what you agree to in terms of reporting. Creating alignment and overlap of reporting requirements for your different stakeholders will lessen the burden of monitoring and evaluation during implementation.LESSON 2: PERSIST ON THE OUTCOMES, BE FLEXIBLE ON THE ACTIVITIES AND OUTPUTInvesting in blended finance projects in Africa is a relatively new initiative for government and donor partners. Some approaches that work well in one country may be unsuccessful in another. It’s important to stay focused on the outcomes, remain nimble in the activities and apply lessons learned as you go.Tip:&nbsp;Make sure your donor partner and your investors are flexible and allow you to adjust activities and pivot plans as you begin implementation and apply lessons learned. Be diligent in documenting your failures and reviewing them to extract lessons learned.LESSON 3: DON’T BE AFRAID TO TRY SOMETHING RADICALLY NEWBe willing to try something totally radical. One component of our blended finance project in Ethiopia was to expand our reach to “investment hubs” in larger cities outside of Addis Ababa and to educate SMEs on investing, sourcing deals and creating valuable business networks. Due to unrest, logistics and a lack of local partners in these cities, our efforts had little traction. Instead of continuing down a failed path, we pivoted to a new, radical idea to reach the masses— an edutainment show customized for the Ethiopian culture and aired during prime time on Friday evenings. We soon went from minimal touchpoints in four cities outside of Addis with only a few stakeholders, to millions of viewers. By trying something new we were able to raise excitement for entrepreneurship and the formation of local angel networks.&nbsp;Tip: Be open to trying something radical if the status quo is not working. You may end up unlocking impact at a larger scale than you ever thought possible.LESSON 4: MONEY TALKS WITH POLICY REFORMIn 2022, Renew Capital celebrated 10 years of investing in Ethiopia. “Despite the challenges of investing in Ethiopia, Renew Capital has so far invested in 12 companies here,” says Laura. “This gained us credibility and a seat at the table when the government was updating the investment code and creating the Startup Proclamation. Our track record of bringing Foreign Direct Investment (FDI) into the country allowed us to help influence several changes that will have a significant impact on the future of the investment and entrepreneurial ecosystem.”Tip: Establishing a solid track record in a challenging investment environment can lead to valuable opportunities for influence and collaboration. We believe many African businesses can be attractive investments. If investors have a clear path to invest in them, they will. By blazing this trail, we hope to inspire others to invest in Ethiopia and other emerging markets with confidence and purpose.&nbsp;LESSON 5: STAY THE COURSE, DON’T GET PULLED AWAY FROM YOUR SWEET SPOTAs an investor there is a temptation to pursue grant opportunities or venture into areas beyond one's expertise or investment goals. Social enterprises with an alluring narrative, but no real investment case, can be particularly captivating. Nevertheless, it is crucial to stay focused on investment strengths and avoid sacrificing long-term sustainability for short-term funding and recognition.Tip:&nbsp;It's easy to be distracted by soft funding and grant dollars, but it's essential to remain disciplined with your investment model and focus on longer-term sustainability. Stay the course.LESSON 6: EXTEND THE TIMELINEInvesting in SMEs requires a long-term approach, as realizing impact and growth can take several years. External factors such as market and economic conditions can also impact success. Committing to long-term goals can help overcome these challenges and create greater value over time.Tip:&nbsp;Work with your donor to find ways to either extend the project or the reporting period to get a truer sense of the long-term positive impact of a blended finance model.LESSON 7: 80/20 RULE: FOCUS ON A FEW GROWTH COMPANIES, VERSUS TRYING TO HELP EVERYONENot everyone is meant to be an entrepreneur, and blended finance interventions need to realize this. You’ll figure out quickly which entrepreneurs have the capacity to take on financing and scale.&nbsp;&nbsp;TIP:&nbsp;Be aware that 80% of the impact and results will come from 20% of the SMEs you support under a blended finance model. Focus on the 20% and those who are equipped to grow and create impact at scale.LESSON 8: BE PREPARED TO EDUCATE ALL STAKEHOLDERS, MULTIPLE TIMESBlended finance is still relatively new to some stakeholders and you may need to educate them as they may not fully understand the ins and outs of blended finance.&nbsp;Some of the reporting, forms and requests will make little sense in the greater context in which the project operated. Some in the donor community will say blended finance projects are only making rich people richer. Some SMEs will think of and approach investors as grantmakers. And many investors will be ignorant of Africa’s private sector potential.Tip:&nbsp;Be prepared to educate stakeholders to dispel misconceptions and recognize the potential of the private sector in developing economies.Download Renew Capital’s<a href="https://latest-api.renewcapital.com/uploads/ABG_Program_Overview_and_Lessons_Learned_3ebb258c22.pdf">&nbsp;Accelerating Business Growth Project Report</a> for additional lessons learned from other key stakeholders in our blended finance model.

A Key Mechanism for Mobilizing Private Capital for Public Good

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Blended Finance: A Key Mechanism for Mobilizing Private Capital for Public Good

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!

<h1>Catalyzing Trade in Africa Through ARBG</h1>Insights and recommendations to overcome intra-African trade challengesIn its initial year, Renew Capital’s Regional Trade Facilitation program, a part of the Accelerating Regional Business Growth (ARBG) program partnership with Global Affairs Canada, has drawn important insights that could help shape the future of intra-African trade.&nbsp;During the design and development of the Regional Trade Facilitation program, Renew Capital’s ARBG team spoke to hundreds of organizations, experts and companies on the continent, resulting in a report that highlights some of the opportunities and challenges for African businesses looking to trade within the region. From addressing financing gaps to improving data reliability, here are the highlights of what we have learned so far, alongside early policy recommendations based on the findings:<figure class="image"><img src="/uploads/F058337_B_9451_4_F92_BDA_3_8_CAB_487_F5_C44_ad89c798c4.jpeg"></figure><a href="https://docs.google.com/forms/d/e/1FAIpQLSemdya80DGBvSN3xr42keTbyOtNHhILoS_BeK5Ac9XWH-48ZA/viewform">Sign up now</a> for the Regional Trade Facilitation program that’s designed for entrepreneurs to learn more about recent liberalization trends, the benefits of regional trade and strategies for executing effective new market entry.Capitalizing on the AfCFTA: Potential for ProgressThe Regional Trade Facilitation Program is central to the&nbsp;<a href="https://www.renewcapital.com/newsroom/five-facts-about-accelerating-regional-business-growth">ARBG strategy</a> and designed to:&nbsp;<ul><li>Capitalize on the African Continental Free Trade Area (AfCFTA): The&nbsp;<a href="https://au-afcfta.org/about/">AfCFTA</a> is more than a free trade agreement; it's a blueprint for Africa's future. ARBG seeks to leverage this potential to its fullest, supporting businesses with the knowledge and tools to navigate the treaty's provisions.</li><li>Equip businesses for success: ARBG is providing businesses with the tools they need to navigate the complex landscape of intra-African trade, including country-by-country trade assessments and training in the private investment process and business management.</li><li>Tackle trade barriers: ARBG seeks to identify the obstacles faced by entrepreneurs seeking to trade across borders and support companies by identifying solutions, creating linkages and advocating for policy changes as applicable.&nbsp;</li></ul>The Roadblocks to Progress&nbsp;In the region, businesses face significant hurdles they will need to overcome in order to progress:<ul><li>Lack of capital: Many firms looking to break into the export market struggle to access trade financing, hindering their ability to expand their operations.</li><li>Complexities of transportation, logistics and borders: SMEs looking to expand their horizons face concerns over time-consuming logistics and paperwork with the potential for goods to get lost in transit.</li><li>Scarcity of quality research and granular data:&nbsp;Lack of reliable data is an impediment to informed decision-making across the continent.</li></ul>Shifting the Trade FocusARBG's Regional Trade Facilitation program aims to shift the focus from external to intra-African trade. This involves:<ul><li>Equipping businesses with the skills and data: To help businesses thrive in a new era of regional trade, ARBG offers targeted training for SMEs interested in trade in East Africa. The project also develops country-by-country trade assessments that outline the barriers to trade faced by entrepreneurs and conducts research on finance opportunities and market intelligence.</li><li>Influencing policy:&nbsp;ARBG aims to shape the future of trade policy by offering recommendations based on findings.&nbsp;&nbsp;</li><li>Investing directly in businesses:&nbsp;Keen on regional trade, ARBG is walking the talk by investing in SMEs, supporting them in their business growth through finance, market research and support building the foundations of their businesses. &nbsp;</li></ul>Early Policy RecommendationsARBG's initial findings suggest several key areas of focus:<ul><li>Financing:&nbsp;Though repeatedly acknowledged as a challenge, the trade financing gap remains a key challenge for companies, partly due to the conservative nature of the banking sector. The solution likely lies within the private sector, where tech-based startups are now looking to fill the gap. Looking at how this burgeoning industry can be fostered (through private investment, regulatory reform, etc.) is recommended.</li><li>Reliable Data: There's a pressing need for quality research and granular data to guide decision-making. Solutions could build on existing data repositories (e.g., East Africa Community (EAC)&nbsp;<a href="https://eac.opendataforafrica.org/EACTD2011/trade-data-of-east-african-community">Open Data For Africa</a>, Observatory of Economic Complexity (OEC)&nbsp;<a href="https://oec.world/en/">data portal</a>), but should also include specific product details and sub-country-level data.</li><li>Import Substitution: Almost all companies we spoke to spent a significant amount of capital and time importing key ingredients. Swapping expensive foreign imports with regionally produced options offers significant opportunities for companies. Significant outreach and marketing is still needed to ensure the AfCFTA’s recently launched platforms like the Pan-African Payment and Settlement System (PAPSS) and the Africa Trade Exchange become trusted tools for traders to find and connect with new high-quality, cost-effective and accessible suppliers from the region.</li><li>SME Coordination:&nbsp;Among the Regional Economic Communities (RECs), a desire remains for the private sector to take greater ownership of coordinating amongst themselves to yield commercial linkages and pressure states to prioritize trade policy upgrades. While ultimately these processes need to be owned by SMEs, the RECs and their corresponding business councils can play an important role in jumpstarting these initiatives.&nbsp;</li></ul>"Increasing regional trade can significantly benefit the companies we partner with," says Renew Capital Director of Regional Private Sector Projects Lucas Robinson. "Companies will be able to employ more people, source more materials locally, grow their revenue and even manage currency fluctuation risks. These changes can have a significant positive impact on the businesses."<a href="https://docs.google.com/forms/d/e/1FAIpQLSemdya80DGBvSN3xr42keTbyOtNHhILoS_BeK5Ac9XWH-48ZA/viewform">Sign up now</a> for the Regional Trade Facilitation program in East Africa. The program is designed to help entrepreneurs in East Africa gain a better understanding of:<ul><li>Recent developments related to trade liberalization in Africa</li><li>Benefits of regional trade</li><li>Deployable strategies to increase trade</li><li>How to develop regional market entry strategies and execute trade plans</li><li>Tools to facilitate (new) regional market entry.&nbsp;</li></ul>&nbsp;*Ecosystem activation, pipeline development and capacity-building support provided to Renew Capital portfolio companies is generously supported by Global Affairs Canada.

Insights and recommendations to overcome intra-African trade challenges

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Catalyzing Trade in Africa Through ARBG

In celebration of Africa Day, we highlight the innovative and creative spirit of African entrepreneurs and explore the role of these entrepreneurs in Africa’s economic development.&nbsp;<h1>Africa's Entrepreneurial Spirit: Innovation, Creativity and Resilience&nbsp;</h1>The role of entrepreneurship in Africa’s economic transformationAfrica's private sector is experiencing rapid transformation. Today, innovative entrepreneurs are turning challenges into opportunities and leveraging technology to transform the finance, healthcare, climate, agriculture and transportation industries on the continent. This Africa Day, we're celebrating entrepreneurship by exploring how Renew Capital portfolio companies are innovating across these important sectors. <img src="/uploads/Africa_Day_71e32d4591.png">Innovation in AgricultureThe agricultural economy employs more than 50% of Africa’s labor force and typically accounts for 30–40% of GDP. Technology offers many opportunities to improve Africa’s agricultural sector.&nbsp;David Lukwago founded&nbsp;<a href="https://www.renewcapital.com/newsroom/inputi-using-technology-to-boost-agricultural-productivity">Inputi</a> to leverage the power of technology to make it easier for farmers to get access to farming inputs. The venture was born during the height of COVID-19 when the supply chain was severely disrupted due to national lockdowns in Uganda.&nbsp;“Inputi’s goal is to aggregate demand based on location. We are working to make the pickup of farm inputs as convenient as possible for farmers by delivering inputs to the nearest agro shop,”says Lukwago.&nbsp;&nbsp;Innovation in Fintech&nbsp;Many Africans still do not have access to financial services due to low levels of financial literacy and the high cost of transactions. Fintech integrates technology into financial services, enabling faster, more efficient, and cost-effective transactions while&nbsp;<a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4367898">enhancing financial literacy.</a>&nbsp;One company that is improving access to financial services is Akellobanker.&nbsp;<a href="https://www.renewcapital.com/newsroom/financial-inclusion-and-market-linkages-transform-lives">Akellobanker</a>, founded by Jean Antony Onyait, is a platform that gives Ugandan smallholder farmers and traders access to loans from financial institutions, primarily SACCOS (Savings and Credit Cooperatives) and microfinance institutions.&nbsp;“Five years ago, financial technology companies came over and showed banks that they could break through to places they weren’t reaching—breaking monopolies and creating healthy competition. This competition goes a long way in reducing prices and making services more affordable for local communities,” says Onyait.Also in Uganda,&nbsp;<a href="https://www.renewcapital.com/newsroom/renew-capital-angels-invest-in-ugandan-digital-payment-platform-xente">Xente</a> is tackling the sphere of digital payments with its neo-bank which allows businesses to make payments using cards, mobile money and domestic and international bank transfers, as well as to pay bills and send airtime and data. Only 5%–7% of all payment transactions in Africa were made via electronic or digital channels in 2022 (Mckinsey). The platform also allows businesses to manage their petty cash expenses to ease the complexity of accounting and finance.&nbsp;&nbsp;Innovation in Transportation According to the OECD, Africa has the fastest urban growth rate in the world and by 2050, Africa's cities will be home to an additional 950 million people. This has highlighted a growing need for more efficient and cleaner transport systems.&nbsp;A major challenge with Africa’s transportation sector includes high reliance on informal transport. In major cities in Africa, informal transport accounts for&nbsp;<a href="https://slocat.net/public-transport-challenges-in-africa-mapping-and-transit-data-as-a-remedy/">95% of all public transport trips</a> and most of the time, this form of transportation is inefficient and commuters are often forced to wait in long queues. Ugandan company&nbsp;<a href="https://www.renewcapital.com/newsroom/easy-matatu-the-startup-innovating-in-africas-urban-transportation-sector">Easy Matatu</a> is helping to solve this challenge with an app that connects commuters to book and pay for a seat in advance, reducing wait time and minimizing delays.&nbsp;“Our mission is to fix public transport in Africa’s cities using technology. This looks different in different African cities,” says Easy Matatu founder Carl Lema Andrew.BuuPass, a Kenyan company, founded by Wyclife Omondi of Kenya and Sonia Kabra of India, is also helping to&nbsp;<a href="https://www.renewcapital.com/newsroom/buupass-enhancing-mobility-across-east-africa">streamline</a> ticketing processes in East Africa. BuuPass enables bus operators to set up their routes, booking stations and real-time ticket booking, as well as access daily reports on their business transactions online.“Many of these (transport) companies were still using pen and paper for their ticketing processes and they lacked a centralized data source to inform their business decisions. To address this gap, we developed a bus management system that allows our clients to digitize their processes,” says BuuPass co-founder Kabra.&nbsp;At Renew Capital, we believe that Africa can harness its entrepreneurial spirit to unlock its full economic potential, drive inclusive growth and shape a prosperous future for the continent.&nbsp;Are you interested in learning more about entrepreneurs in Africa and their stories? Subscribe to our newsletters below.&nbsp;

The role of entrepreneurship in Africa’s economic transformation


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Africa's Entrepreneurial Spirit: Innovation, Creativity and Resilience 

In this blog, Bezawit Wondwosen shares her typical day as a Renew Capital intern. Interested in being part of the next internship program? Applications are now open!&nbsp;&nbsp;<h1>A Day in the Life of a Renew Capital Intern</h1>Everyday opportunities for gaining professional experience in private sector development and investment&nbsp;Have you ever wondered what an average day for an intern at Renew Capital looks like? I joined the Renew Capital internship program in Ethiopia after I graduated with my economics degree from Addis Ababa University. During my time at Renew Capital, I’ve learned a lot about the working world, met many kind and inspiring people, received mentorship from great leaders and have been involved with very interesting projects, events and tasks.<figure class="image"><img src="/uploads/Whats_App_Image_2023_05_19_at_12_13_18_eb998b70fa.jpeg"></figure>No day is exactly like the other in an internship. It can be exciting, bustling, unexpected and unplanned, but when you’re working to make the best of your experience, it’s extremely rewarding.&nbsp;Here’s what my typical day looks like:My alarm goes off at 7:00 am. It's time to get up and get ready for work. After a couple of snoozes, then anxiously thinking about what I have scheduled for the day, I’m up and excited to get busy. I need to get to work by 8:30 am, so I put on a nice pair of black pants, a blouse and sweater, and a pair of cute boots and I've got a stylish semi-casual outfit for the day. Then, I’m out the door and driving to work while listening to my current favorite podcast, "How I Built This by Guy Raz?" which was recommended by Matt Davis, our CEO, in one of the exec’s sessions.&nbsp;Our office is not far from where I live, so I get there within 30 minutes on a good day. The office is beautiful with windows all around. Around 8:30 am, I arrive at the office and head to my desk. My desk space essentials are usually coffee or tea, water, a notepad for notes and to-do lists, my AirPods and lipgloss. After unpacking, I open my laptop and check my email and calendar. I look over my calendar and see what the priorities are for the day and if I have free time, I try to assist anyone and support any project. A tip I try to remind myself is to ask whether my manager or another employee in any department needs help. Everyone always appreciates a helping hand and sometimes they can get too busy to delegate work.&nbsp;I have meetings with various departments throughout the day where I can learn more about them, find out what's coming up and find out if there are any prospective projects or events I can assist with. When meetings are completed, I return to my daily activities, which mostly involve training sessions and in-depth research on various topics. I enjoy researching different subjects since it takes me down unexpected rabbit holes and teaches me new information. When it’s finally lunchtime, I heat up the lunch I packed and sit with my colleagues. We are a group of people with different cultures and backgrounds so the conversations we have are always interesting which makes lunchtime so much fun.&nbsp;When lunch is over and I go back to work, I try to keep myself energized by drinking some coffee. My most productive hours are in the morning so I try to finish my harder tasks at that time.&nbsp; In the afternoon, I do the tasks that seem easier to me. When the day is finally over, I pack up my things and say, “Good night and see you tomorrow” to my colleagues for yet another work day. I usually finish my day by going to the gym, reading a book and spending time with my friends and family. And who knows what the next thing I will be assisting with tomorrow which makes it the best part of my internship experience. Renew Capital’s internships offer recent graduates based in Africa the opportunity to work on various investment and private sector development projects that will enhance their professional skills and gain work experience in an international firm operating across six African countries. Apply&nbsp;<a href="https://www.renewcapital.com/careers">here</a>!

Everyday opportunities for gaining professional experience in private sector development and investment 

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A Day in the Life of a Renew Capital Intern

<h1>Fueling the Growth of Ethiopia's LogiTech Startup Ecosystem</h1>USAID’s Bureau of Humanitarian Assistance seeks to strengthen the trucking, transportation and logistics sector through technology innovation<figure class="image"><img src="/uploads/W_Ith_credit_27033b5754.png"></figure>From late 2020 through February 2021, USAID’s Bureau of Humanitarian Assistance (BHA) conducted a&nbsp;<a href="https://pdf.usaid.gov/pdf_docs/PA00XFMD.pdf">Private Sector Landscape Assessment</a> (PSLA) for Ethiopia that identified and prioritized concrete opportunities to integrate high-impact private sector engagement (PSE) initiatives into USAID BHA’s emergency and non-emergency programming for Ethiopia. Ultimately, the PSLA recommended focusing on two thematic areas for new PSE opportunities:<ol><li>Expanding businesses to rural areas in support of the Mission’s Resilience Food Security Activities (RFSAs); and&nbsp;</li><li>Strengthening the trucking sector within Ethiopia through improving standardizations, planning requirements, utilization of new technologies, and improving driver requirements to both improve the delivery and reduce the costs of providing food assistance.</li></ol>In support of these recommendations, USAID BHA started the Strengthening Humanitarian Assistance and Resilience Private Sector Engagement In Ethiopia (SHARP-SEE) Project in partnership with Renew Capital in March 2022, during which the project teams have been working to strengthen urban to rural linkages and enhance the trucking, transportation, and logistics sector in Ethiopia. This collaboration has resulted in market and ecosystem research and culminated in a 12-week, intensive training program focused on 10 logistics and technology (or “LogiTech”) startups in Ethiopia. Key takeaways from project activities include:<ul><li>There are several persisting challenges that undermine the growth and modernization of Ethiopia's trucking, transportation and logistics sector.</li><li>Trucking and transportation companies are not tech-enabled, and most companies still operate with manual processes.</li><li>Macroeconomic conditions and regulatory barriers continue to undermine the Ethiopian startup ecosystem.</li><li>Only 0.07% of capital invested in logistics and transport startups in Africa was raised by Ethiopian companies from 2019 to January 2023.</li><li>The average deal size for Ethiopian logistics companies was $170K, significantly lower than other African countries from 2019 to January 2023.&nbsp;</li><li>Ethiopian startups only raised 5.82% of total capital raised by startups in Africa from 2019 to January 2023.</li></ul>&nbsp;Percentage of Capital Invested in Logistics by Country (USD, Millions, 2019 - January 2023)<figure class="image"><img src="/uploads/Screenshot_2023_05_18_at_11_18_47_AM_a31b08b385.png"></figure>(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)In other words, trucking and transportation companies are not tech-enabled, and most companies still operate with manual processes. According to interviews with SMEs throughout the SHARP-SEE project, trucking and logistics companies are interested in implementing technological solutions to address challenges associated with financial forecasting, accounting and operational efficiency. At the same time, while many companies have implemented solutions that allow them to track vehicle driving data, like location, speed, and fuel levels, the technologies in current use do not include logistics applications that support in the completion of tasks in the following key areas:<ul><li>Fleet Management Systems</li><li>Cargo Tracking and Matching Technologies</li><li>Last Mile Communications</li><li>Digital Work Orders &amp; Digital Truck Tasking</li><li>Efficient Unloading &amp; Loading&nbsp;</li><li>Digital Bidding and Tendering</li><li>Digital Warehouse Management Systems</li><li>Vehicle Space and Route Optimization</li><li>Public Transportation (Bus Fleet Management, E-Ticketing for Intercity Travel)</li><li>B2B Logistics between Urban and Rural Areas</li></ul>Furthermore, macroeconomic conditions and prohibitive government regulations undermine investment in the sector:<ul><li>Government directives on priority goods and quotas curtail the capacity of the private transportation, trucking and logistics sector.&nbsp;</li><li>49/51 percent company ownership in freight forwarding and shipping agency services discourages foreign investment and multinational innovations.&nbsp;</li><li>Investment Proclamation Number 1180/2020 requires that foreign direct investments must be no less than $200,000, undermining foreign investors’ ability to invest in startups and pre-seed companies.</li><li>Forex shortages, capital controls and the high cost of spare parts undermine investment and the growth of Ethiopia’s fleet.</li><li>Finally, the Ethiopian Shipping Line monopolizes approximately 85% of cargo that travels on the Djibouti corridor, leaving only 15% open for private contracts. The majority of this is humanitarian cargo, which receives an ESL waiver. At the same time, Investment Regulation 474 (2020), prohibits foreign ownership of inland trucking operations for loads under 25 tons, which constricts an estimated 15% of the total Ethiopian trucking market open to foreign investors and foreign companies, valued at approximately $350M, according to a trucking market size model developed by Renew Capital.</li></ul>As a result, private investment in logistics in Ethiopia lags behind regional counterparts and the country lacks an investable pipeline of tech-enabled logistics startups.&nbsp;The average deal size for Ethiopian logistics companies from 2019 to January 20230 was $170K, significantly lower than other African countries.&nbsp;Average Ticket Sizes for Logistics Deals in Africa (USD Millions, 2019 - January 2023) <img src="/uploads/image_4b78c20e06.png">(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)More broadly, Ethiopia’s startup technology ecosystem also remains underdeveloped with a limited pipeline of investable companies:&nbsp;Limited investment in Ethiopia is not just isolated to the logistics sector. For context, across sectors, Ethiopia only attracted 5.82% of capital invested in African startups from 2019 to Q1 2023. When adjusting for only tech startups, this number drops even more significantly, as Ethiopia’s largest startup deal in recent years was a $26M deal in a beverage startup, which dramatically skews these numbers.&nbsp;This is due to two primary reasons. First, as discussed, the limited pipeline undermines investor interest in the country. Second, high foreign investment investments ($200K) and the inability of foreign investment entities to provide debt financing undermines the ability of foreign investors to provide investment in smaller rounds, which is typically more appropriate for asset-light tech startups.&nbsp;Ethiopian startups only raised 5.82% of total capital raised by startups in Africa since 2019.Breakdown of investment funding by sector in Ethiopia as a percentage of total capital invested across the African continent by sector (2019 to Q1 2023).&nbsp;Capital Invested in Ethiopia By Sector as a Percentage of Total Invested Capital in Africa (2019 - Q1 2023)<figure class="image"><img src="/uploads/Screenshot_2023_05_18_at_11_18_56_AM_852882f800.png"></figure>(Source: Renew Capital analysis of publicly reported deals tracked in “Africa: The Big Deal - Startup Deals Database”)The LogiTech Investment Sprint Aims to Mitigate These Persisting Challenges: As such, the USAID BHA SHARP-SEE project team’s approach and solution to these persisting problems has been focused on helping build a pipeline of investment ready LogiTech startups with the ability to attract funding to Ethiopia’s Logistics sector. The 12-week training program focused on foundational business topics including strategic planning, organizational structures, managing business finances and investment preparation.&nbsp;The program also worked with startups to re-evaluate the effectiveness of their existing minimum viable products and seek true product market fit. Product development activities included in-depth customer interviews, the development of primary growth targets and KPIs, and continual target versus actual analysis and accountability.&nbsp;Participating startups’ products range in focus including, intercity logistics, intraregional public transportation, commuting, last mile delivery, business to business logistics and a digital solution for truck operators participating in import and export operations.Combined, these developing solutions fit well into Ethiopia’s modernizing digital economy and pave the way for a more tech-enabled future for Ethiopia’s logistics sector. At the same time, while in their infancy, some of these solutions are laying the foundation for improving the delivery of humanitarian aid by introducing digital tools to a traditionally undigitized sector. Furthermore, urban to rural linkages, between manufacturers and suppliers and retailers and between agricultural producers and export and local markets can be strengthened through the provision of tech-enabled logistics services. Finally, while still largely manual, busing and public transportation is moving towards digitization with two of the pitching companies focusing on improving the flow of people both within cities and between cities. In turn, these innovations can supercharge technology for logistics and continue to work towards more efficient delivery of humanitarian aid and the strengthening of urban to rural market linkages.Join us on May 31, 2023 as the final six companies from the LogiTech Innovation Sprint pitch their startups. Register&nbsp;<a href="https://us02web.zoom.us/meeting/register/tZYkce2rqj8jHdWZWTHs6i27mYpAyfU2Jbf4#/registration">here</a>.

USAID’s Bureau of Humanitarian Assistance seeks to strengthen the trucking, transportation and logistics sector through technology innovation


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Fueling the Growth of Ethiopia's LogiTech Startup Ecosystem

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

Although Zimbabwe faces economic challenges, a recent visit by Renew Capital to the country highlighted a number of positive factors attributable to the country, including a highly educated population, a thriving services sector and a growing startup environment.<h1>Zimbabwe Private Sector Snapshot&nbsp;&nbsp;</h1>A quick guide to challenges and opportunities for the private sector in Harare and across the nation&nbsp;<img src="/uploads/1f73bae3_40fe_4b04_b855_a7da8d97039a_1_06461ce4e1.jpg">Pictured: Harare’s Central Business DistrictZimbabwe has made headlines for years due to its inflation, currency issues and fractured banking system. But what is the reality between what the world perceives about the country, and what is happening on the ground?&nbsp;&nbsp;The Renew Capital team recently visited Zimbabwe on a fact-finding mission to meet with entrepreneurs, prepare for the Renew Capital expansion into Zimbabwe and learn firsthand about the challenges and opportunities in the country's private sector.&nbsp; <img src="/uploads/2d0b9d55_e9a3_4fab_8854_9068894cf919_2_91f4ad7240.jpg">Here are some takeaways on Zimbabwe’s private sector ecosystem:Opportunities:<ul><li>Zimbabweans rank among Africa’s most educated. According to the World Bank (2023), the country has "<a href="https://www.worldbank.org/en/country/zimbabwe/overview#:~:text=Zimbabwe%20has%20strong%20foundations%20for,are%20emerging%20in%20some%20sectors.">excellent human capital</a>, comparable to that of upper-middle-income economies in sub-Saharan Africa, although some skill shortages are emerging in some sectors."&nbsp;</li><li>Although Zimbabwe’s startup scene is still small, there is great potential. Innovation hubs like&nbsp;<a href="https://eight2five.co.zw/">Eight2five in Harare</a> are growing and offering support to local entrepreneurs. The country also has a legacy of entrepreneurship in the technology sector, with the Zimbabwean-founded&nbsp;<a href="https://www.econetafrica.com/">Econet Group</a> being among the&nbsp;<a href="https://www.gatesfoundation.org/about/leadership/strive-masiyiwa#:~:text=Masiyiwa%20is%20the%20Founder%20and,industry%20on%20the%20African%20continent.">pioneers of mobile telecommunications</a> on the continent.</li><li>The services sector is highly impressive, likely stemming from a strong history in&nbsp;<a href="https://www.trade.gov/country-commercial-guides/zimbabwe-travel-and-tourism#:~:text=Tourism%20is%20Zimbabwe%E2%80%99s%20third%20largest%20sector%20after%20mining%20and%20agriculture%20and%20has%20the%20potential%20to%20play%20a%20significant%20role%20in%20Zimbabwe%E2%80%99s%20economic%20recovery.">tourism</a>, which is the third-largest sector in the economy behind mining and agriculture (U.S. Department of Commerce, 2022).</li><li>Zimbabwe has beautiful weather and a strong agricultural foundation. According to Africa News, Zimbabwe registered its largest wheat harvest in 50 years in 2022 (375,000 tons) setting the country up to become a “self-sufficient&nbsp;<a href="https://www.africanews.com/2023/01/08/zimbabwe-new-african-agricultural-power-house//#:~:text=Zimbabwe%20has%20registered%20its%20largest,A%20unique%20performance%20in%20Africa.">agricultural powerhouse</a>.” The article also states that "the country no longer needs to import wheat to meet its needs, saving up to $300M in import costs."</li></ul>Challenges:<ul><li>The Zimbabwean currency currently lacks international exchange value, leading to a high demand for foreign exchange for essential imports.&nbsp;</li><li>Based on Renew Capital’s discussion with local private-sector players, there seems to be a concern about the government’s influence on the banking system.</li><li>Upcoming elections, slated for August this year, have heightened uncertainty about whether the elected government will be able to deliver a stable currency and create the stable political environment needed to build investor confidence.</li><li>Like many countries in sub-Saharan Africa, Zimbabwe has great wealth and many wealthy Zimbabweans, but there are few angel investors, angel networks and early-stage VC investors active in the market to fuel the formation and growth of the entrepreneurial ecosystem.&nbsp;</li></ul>Read more about Zimbabwe’s currency challenges&nbsp;<a href="https://www.aljazeera.com/economy/2022/5/5/dollar-oclock-should-zimbabwe-axe-its-faltering-currency-again">here</a>.Overall takeaway:&nbsp;Despite the challenges, Zimbabwe presents an opportunity for savvy and resourceful entrepreneurs to make a difference in the country.In the coming months, we will be diving deeper into Zimbabwe and other African markets to provide insights into the private sectors of each economy.&nbsp;

A quick guide to challenges and opportunities for the private sector in Harare and across the nation

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Zimbabwe Private Sector Snapshot 

<h1>Renew Capital Launches እሷ! (Isua) Network for Women</h1>Empowering Women Entrepreneurs in Ethiopia<figure class="image"><img src="/uploads/CU_4_A5847_aa966a2acf.JPG"></figure>Renew Capital has launched the እሷ! (Isua “Her”) Network, a peer-to-peer networking, coaching and training platform for women-owned and -led micro, small and medium enterprises (MSMEs) in Ethiopia. A launch event for the network, held in Addis Ababa in March, brought together Ethiopian women business owners and executives, alongside resource providers and Canadian and American government officials.Canadian Ambassador Stéphane Jobin provided opening remarks, highlighting the Government of Canada’s commitment to building more gender-responsive economies around the world and their excitement to be supporting this initiative.&nbsp;Nkemdilim Uwaje Bejo, CEO of Futuresoft Nigeria, also shared some of the specific challenges that women in business face across the continent and seven inspiring lessons for women entrepreneurs. Menna Selamu, Ethiopian entrepreneur and co-founder of Flipper International School, also shared insight into her business journey.&nbsp;<img class="image_resized" style="width:97.56%;" src="/uploads/CU_4_A5858_968a13e132.JPG"> እሷ! (Isua) is the Amharic word for ‘her’ and the እሷ! Network is a&nbsp;membership-based network that brings together women business owners and executives from various industries in Ethiopia. Although women's entrepreneurship in Ethiopia is on the rise, female executives continue to face societal impediments that challenge their business growth. With peer support, training and partnership facilitation, the&nbsp;እሷ!&nbsp;Network aims to improve the private sector ecosystem for women business owners and executives.&nbsp;The suite of offerings from the network will support women entrepreneurs in driving their business growth. It aims to build market leaders in their respective industries and strengthen women-to-women business partnerships. Members can access an exclusive directory of fellow business leaders to support these endeavors. The Government of Canada is supporting this initiative as part of its gender-smart development priorities. Implemented by Renew Capital, the እሷ!&nbsp;Network is part of a larger objective to build a gender-responsive economic ecosystem for women in Ethiopia. Ultimately, it will contribute to a growing pipeline of investment-ready, woman-owned enterprises.&nbsp; Are you a woman business owner in Ethiopia?&nbsp;<a href="https://share.hsforms.com/1SOVX-k9JRMuRM3oZJV63_Qee4rj">Apply to be a member</a> of this prestigious network to start making connections to support your business’ growth.