<h1 style="text-align:center;">Enabling Rockstars in East Africa!&nbsp;</h1>Though 59 universities produce fresh graduates every year in Ethiopia, a lack of business etiquette and job skills is seen among many of those who aim to enter the workforce. Even if these graduates have the right academic scores, they often lack mentorships and apprenticeships to prepare for the corporate world.&nbsp;One of the focuses of the Government of Ethiopia with regards to its higher education system is to improve the quality and employability of university graduates. RENEW has designed an internship program, launched first in Ethiopia, with the goal of enabling and preparing fresh university graduates for success in their career paths. Our internship program targets fresh graduates from all regions in Ethiopia giving equal opportunity through a diversity conscious and gender smart selection process. Our aim is that interns at RENEW grow as people and professionally through proper guidance in the right career path.&nbsp;“I am proud of how far I have come. I have met talented, easy going, fun, genuine professionals and a great mentor who wants to help me grow at work as well as my life. I am so grateful for my beautiful and new experience here at RENEW.” – Abigael&nbsp;<figure class="image image_resized" style="width:97.32%;"><img src="/uploads/intern_picture_8a9f4ea213.jpg"></figure> Led by a program coordinator, the internship program takes 6 months, shortlisting 10 excellent candidates from marketing, business and economics, legal, and project management studies every year from universities around Ethiopia. Selected interns are provided with onboarding training, business skill development training (communication, negotiation, presentation, work ethic, professional conduct, etc.). This is coupled with technical or project based “on the job training” according to their fields of study and interest, special mentorship sessions with experienced professionals, team outings and CSR activity participation and dynamic research project assignments for different divisions. Other benefits offered to them are appropriate stipends and medical insurances.“When I saw RENEW's flyer for an internship, my gut feeling told me to apply. It has now been more than 4 months since I joined the program, and I have gotten amazing mentorship from senior members of the team and familiarized myself with the professional space.” – Hermela&nbsp;Interns also get a chance to take The Exec’s Program at The Exchange. They are periodically assessed based on KPIs like implementing disciplines, the progress they made in various areas, qualities of their deliverables and the initiative they show to manage up for the team.&nbsp;“For a new graduate, having a chance to get an internship at RENEW has a special meaning. I got the chance to have a practical outlook on the concepts I learned theoretically in my economics studies at the university. It also enabled me to understand more about my strengths and weaknesses that I should keep and improve for my future career.” - SolomonAs RENEW expands to other countries in Africa, we look forward to seeing our internship program enable and empower the youth to be competitive and confident candidates as well as create further job opportunities by collaborating with reputable local universities.&nbsp;&nbsp;

RENEW has designed an internship program, launched first in Ethiopia, with the goal of enabling and preparing fresh university graduates for success in their career paths.

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Enabling Rockstars in East Africa! 

<h1 style="text-align:center;">Lets #BreakTheBias for International Women’s Day</h1><a href="https://www.internationalwomensday.com/theme">International Women’s Day</a> (IWD) is fast approaching on March 8, 2022, and this year's theme is “Break the Bias” (#breakthebias). The goal for this year’s campaign aims to turn a spotlight on the gender biases people carry around with them, and to actively move forward to collectively create a world free of bias, stereotypes and discrimination.&nbsp;At RENEW, we aim to encourage ourselves and those around us to examine and change our biases. Below is a video we’ve been sharing during <a href="https://www.renewcapital.com/what-we-do/market-building">The Exec’s Program</a> to help highlight the biases many tend to have. Watch the video, answer the riddle and consider sharing it in your community.&nbsp;<div class="raw-html-embed"><iframe src="https://www.facebook.com/plugins/video.php?height=314&amp;href=https%3A%2F%2Fwww.facebook.com%2Fmindspace.me%2Fvideos%2F550888202442564%2F&amp;show_text=false&amp;width=560&amp;t=0" width="1000" height="562" style="border:none;overflow:hidden" scrolling="no" frameborder="0" allowfullscreen="true" allow="autoplay; clipboard-write; encrypted-media; picture-in-picture; web-share"></iframe></div>&nbsp;

International Women’s Day (IWD) is fast approaching on March 8, 2022, and this year's theme is “Break the Bias” (#breakthebias)

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Lets #BreakTheBias for International Women’s Day

<h1 style="text-align:center;">A Globetrotter Who Found Her Way Back to Uganda</h1>I recently celebrated my one-year anniversary at RENEW. The journey has been a rollercoaster, in a positive way.&nbsp;A few months before joining RENEW, I completed my MBA at Warwick Business School. Going back to business school full-time was challenging initially, as I had spent years working in the SME investing field and developed a passion and increased desire for investing and transforming businesses to achieve their long-time vision, and I took a break to embark on an educational adventure. The reason I say it was an adventure is because for the last thirteen years, my life had been a series of adventures, where I called different places home and had a lot of introspection and exposure to different cultures.&nbsp;<figure class="image"><img src="/uploads/Diana_76e9ca7187.png"></figure>I was born and raised in Kenya, and I would classify myself as someone that is really patriotic and proud of my roots. After seventeen years growing up in Kenya, I moved to Canada for my final year of high school and that is when my journey of being a global citizen began. It was here that I was initially exposed to an environment that was incredibly diverse with students from Canada, Kazakhstan, China, Nigeria, to mention but a few. As a naturally curious person, I was fascinated by the divergence in values, perceptions of the world and desires of different individuals. However, one thing that was clear was despite our differences there was a general understanding as to what makes us human and the priorities of different nations, including economic empowerment. Soon after completing high school, I moved to Rutgers University in New Jersey, U.S.A. to pursue a bachelors of science in finance. While at Rutgers, which again was an incredibly diverse environment, I gained key tools that have formed the foundation of who I am. It was during this adventure that I believe I began to find my purpose. Upon graduating from Rutgers, I was itching to put into practice what I had learned. It was clear to me that my desire was to play a significant role in the development impact and economic empowerment of Kenya. The question was, how could I play a significant role, at the time when there was a wave of economic and social change. It is this passionate desire and indebtedness to my homeland that led me to move back home to Kenya, after living abroad for five years.After a challenging but active job search, the opportunity to join Pearl Capital Partners (PCP) presented itself and it seemed like the perfect fit because it focused on African emerging markets, Kenya included, and they were attracting a great degree of private equity and venture capital funding. Additionally, it tied into my long-term goal as the firm’s investment thesis was to invest in businesses that would generate social and environmental impact alongside a healthy financial return. Thus, getting a foot in the door at my age would open vast opportunities. While at PCP, I was immersed into substantial work from the beginning and was exposed to investment opportunities across eastern and southern Africa. I was fortunate enough to not only be involved on the investment side, but also got to represent the fund on different boards and be part of a team that was driving companies to become robust businesses that could scale.&nbsp;In February 2017, I moved to the Uganda office after being promoted to senior investment analyst and transitioned to the role of investment team lead. The general assumption is that Uganda and Kenya, given that they share a border, have cultures that are more or less similar. However, I was shocked to realize that while our cultures have similarities, there are certain cultural nuances that differentiate Kenyans. I soon realized that I had to tame my initial “aggression” or zeal to close investments in Uganda and had to initially take some time to appreciate and learn the country. As I flashback to July 2018, when I closed my first investment as a deal lead, I recall the feeling of euphoria and sense of self-actualisation that was awakened. The due diligence process and approval process was tough as the fund’s investment committee scrutinized the investment to detail. This accomplishment validated my long-term vision and inspired me to pursue my long-term goal of obtaining my MBA.In 2018, I began the long and grueling process to go back to business school. While it was tough, I was focused on the fact that my long-term career goal was to be a senior leader in the SME investing field and to have the ability to invest in businesses that could catalyze growth in Sub-Saharan Africa. To achieve this goal, it was essential that I develop strong soft skills such as managerial and leadership skills and to widen my network. My MBA experience at Warwick was a transformative and amazing experience. The challenging, yet scintillating, multicultural learning experience, provided the ideal environment to broaden my perspectives, whilst providing the perfect platform to share insights. Further, the expected differences of the students in the cohort were a hallmark of my experience and provided the opportunity (despite the COVID-19 pandemic) to unify the student cohort through thoughtful, honest and genuine intellectual forums.Fast forward to the end of the MBA program, I wasn’t sure where my career would take me - London, Nairobi, Paris or Kampala. As fate would have it, the opportunity to join RENEW presented itself, and it was clear that there was a reason that I needed to move back to Kampala. During the onboarding process in Addis, I felt at home knowing that I was part of a team that shared the same values. That is the desire to address the missing middle and support SMEs in Africa in order to scale and be regional champions. The multi-faceted approach that RENEW takes from the Exchange, to the Asset Management Division and finally the Shared Growth Services team fascinated me and I knew that I was part of a team that had a compelling vision and took a pragmatic approach in investing.&nbsp;People ask me what I’m most proud of on this journey. The answer is simple: my constant evolution and growth as an individual while staying true to my long-term vision and values. While the journey has led me back to Kampala, I can say with confidence that I’m excited about the adventure ahead, wherever it will lead me.&nbsp;&nbsp;

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A Globetrotter Who Found Her Way Back to Uganda 

<h1 style="text-align:center;">ANDE Helps RENEW-Backed Company Become Gender-Smart</h1>&nbsp;On December 15, 2021, ANDE announced the winners of the Gender-Smart Investing Capacity Building Facility funds, an activity under the ANDE Gender Equality Initiative (AGEI). RENEW, along with four other organizations, were picked to advance their gender lens investing strategies. The funds, provided by the United States Agency for International Development (USAID), targets investors who are committed to advancing gender equality through investments into SGBs. Each of the five organizations are slated to receive up to $30,000 and support SGBs operating in India, Brazil or the East and Southeast Asia, Andean or Eastern African regions.&nbsp;Learn more about this announcement in ANDE’s recent press release: <a href="https://www.aspeninstitute.org/news/press-release/ande-gender-smart-investing/">ANDE Announces Winners of the Gender-Smart Investing Capacity Building Facility</a>.<figure class="image image_resized" style="width:100%;"><img src="/uploads/desta_713214ebe3.jpeg"></figure>

On December 15, 2021, ANDE announced the winners of the Gender-Smart Investing Capacity Building Facility

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ANDE Helps RENEW-Backed Company Become Gender-Smart

<h1 style="text-align:center;">CBDC: the Next Big Disruption&nbsp;</h1>&nbsp;Digital currencies generally refer to acceptable means of payment completed through electronic forms. The last couple of years have seen a record number of entrants into the digital currency space, which has largely been dominated by cryptocurrencies, whose value seems to keep rising with every bout of human acceptance. In Africa, monthly <a href="https://www.investopedia.com/terms/c/cryptocurrency.asp">cryptocurrency</a> transfers to and from Africa under $10,000 increased 55% over the past year, reaching a peak of $316M in June (1). Also, according to the 2020 Global Crypto Adoption Index from blockchain analytics firm Chainalysis, South Africa, Kenya and Nigeria are among the world leaders in peer-to-peer cryptocurrency trading (2). Accordingly, Nigeria recorded weekly peer-to-peer volumes between $5M and $10M. Kenya and South Africa followed with an average of between $1M and $2M per week (3).<figure class="image image_resized" style="width:100%;"><img src="/uploads/CBDC_de233e6c9b.jpg"></figure>The statistics above solidifies one thing – <a href="https://www.investopedia.com/terms/b/blockchain.asp">blockchain</a> technology is here to stay! And the reality of this statement begs the question of how we can fully maximize the benefits that blockchain technology brings. Over the last couple of years, the biggest issues on acceptance have centered on two main factors. Firstly, the erratic nature of these cryptocurrencies being mined, and secondly, the unregulated nature of these cryptocurrencies, which is where the Central Bank Digital Currency comes in.The Central Bank Digital Currency (CBDC) is a form of blockchain technology that assumes the benefits of having a digital payment system but is particularly used as a virtual form of a country’s fiat currency. Simply put, it is an electronic record or digital token of a country's official currency. The major difference between this and the regular cryptocurrency is that the CBDC is typically heavily regulated by an individual country’s central bank, given it closely represents the country’s fiat currency. The reality is, central banks across the world now face stiff competition with their country’s currency due to the increasingly rapid nature of acceptance of cryptocurrencies. Currently, there are more than 87 countries exploring the possibilities of having their own CBDC (4).&nbsp;African countries are currently closely monitoring the global trends, with Nigeria now leading the pack to become the first African country to create its own CBDC, effectively becoming only the 7th country in the world to develop its own crypto asset, with the U.S. still in the research stage and China currently in its pilot phase.The importance of these digital currencies in Africa cannot be over emphasized, largely due to some of its benefits, the first of which is its ability to facilitate financial inclusion. For example, according to a report by Enhancing Financial Innovation and Access (EFInA), only 64% of Nigerian adults were financially included, while 36% of Nigerian adults (which translates to 38 million) were completely financially excluded as of 2020 (5). An individual country’s digital currency would typically allow rolling out of the USSD (Unstructured Supplementary Service Data) version of the e-currency as an alternative to downloading the digital wallet for people who do not have access to the internet. This would allow for people without any level of sophistication whatsoever to still be able to use the e-payment system.Secondly, and perhaps most importantly, the CBDC helps to create a relatively easier system of payment. In essence, the CBDC is expected to create a more secure, faster and cheaper means of carrying out financial transactions and currency exchange. This could be a major game changer for cross border trade as it could drastically reduce the cost of doing business with other countries as there are typically no middlemen with blockchain technology. An exciting possibility is the creation of one unique digital currency which can be used for cross-border trade in Africa, with acceptance by other African countries. For years the dream has remained elusive for East and West African regional blocs to create common currencies that will improve trade among member states. This could finally start looking like a not too far reality for the region as a lot of African countries have started showing some genuine interest in blockchain technology, and a willingness to explore its potential benefits. For example, in April, the Ethiopian government confirmed that it had signed a deal to create a national database of student and teacher IDs using a decentralized digital identity solution (6). The deal involves providing IDs for 5M students across 3,500 schools which will be used to store educational records. This deal is perhaps the largest deal to be signed by a government and has been making waves in the crypto-asset industry. Akin to this, Ethiopia has also adopted a Digital Transformation Strategy, where the government explicitly underscored the willingness to adopt a decentralized ledger technology that underpins cryptocurrencies. This is specific to the agricultural sector with the aim of benefiting farmers who are currently getting minimal amounts for the hardest work they put in the value chain. The adoption of the technology will allow traceability of transactions and is expected to force companies to ensure that their farmers adhere to Fairtrade Standards. In addition to the agricultural sector, the country’s Digital Transformation Strategy also incorporates the use of this technology in the tourism sector.In conclusion, Africa may become the next big digital currency market – leapfrogging the migration from cash to credit cards, and moving directly into digital currencies. While the emergence of digital currencies presents several challenges in regards to global adoption, due to its privacy and security concerns, it clearly has benefits that cannot be completely overlooked, especially for Africa. We at RENEW are closely monitoring developments, to ensure we can take advantage of opportunities that these developments may create for the IAN in the not-too-distant future. &nbsp;Reference;<ol><li><a href="https://www.dw.com/en/africas-quiet-cryptocurrency-revolution/a-55199637">https://www.dw.com/en/africas-quiet-cryptocurrency-revolution/a-55199637</a></li><li><a href="https://news.bitcoin.com/ukraine-russia-south-africa-nigeria-cryptocurrency-adoption/">https://news.bitcoin.com/ukraine-russia-south-africa-nigeria-cryptocurrency-adoption/</a></li><li><a href="https://blog.chainalysis.com/reports/2020-global-cryptocurrency-adoption-index-2020">https://blog.chainalysis.com/reports/2020-global-cryptocurrency-adoption-index-2020</a></li><li><a href="https://www.atlanticcouncil.org/cbdctracker/">https://www.atlanticcouncil.org/cbdctracker/</a></li><li><a href="https://efina.org.ng/our-work/research/access/">https://efina.org.ng/our-work/research/access/</a></li><li><a href="https://www.appsafrica.com/cardano-launches-blockchain-deployment-in-ethiopia-with-5m-students/">https://www.appsafrica.com/cardano-launches-blockchain-deployment-in-ethiopia-with-5m-students/</a></li></ol>

The Central Bank Digital Currency (CBDC) in Africa and why we are watching closely 

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CBDC: the Next Big Disruption 

<h1 style="text-align:center;">Ethiopia is Moving Towards Data Protection</h1>&nbsp;Ethiopia lacks a unified and comprehensive legal framework that governs privacy and data protection. However, there are protections scattered throughout different legislations, including the Constitution, the Criminal Code, the Civil Code, the Computer Crime Proclamation, and the Freedom of the Mass Media and Access to Information Proclamation. Even though the country doesn’t have a comprehensive data protection regulation nor a national data protection body, the regulatory bodies under these sector-specific legislations have the power to regulate data protection issues within their regulatory scope.However, the protections provided throughout these scattered legislations are not comprehensive. Specifically, considering the current digital world, a country typically has a comprehensive data protection system.&nbsp;In this context, the government of Ethiopia, through the Ministry of Innovation and Technology, recently took the initiative to draft a personal data protection proclamation. This draft personal data protection proclamation, which is the first by its nature in Ethiopia, is expected to be approved by the Council of Ministers this year (1). The proclamation, once enacted, will be vital in regulating the use and protection of personal data. In this blog, we summarize what this draft proclamation will cover.<figure class="image image_resized" style="width:100%;"><img src="/uploads/ethipia1_778f456404.jpg"></figure><h3>The Regulator&nbsp;</h3>The Ethiopian Data Protection Commission (the “Commision”) is envisioned under the draft proclamation as a national data protection institution. The Commission is proposed as a self-governing body accountable to the House of People's Representatives (HPR). The HPR also appoints the Commission's commissioner and deputy commissioners. The draft proclamation emphasizes the Commission's institutional independence, requiring commissioners to act with total independence and impartiality, neither seeking nor accepting orders.The Commission is charged with a wide variety of regulatory responsibilities. These include overseeing the implementation of the data protection law, keeping a register of data controllers and processors and undertaking audits of practices and policies of data controllers and processors, investigating complaints, and conducting search and seizure, among others. Furthermore, the draft proclamation also envisions the possibility that the Commission may be entrusted with additional roles in sector-specific data protection schemes.<h3>Rights of Data Subjects</h3>The draft proclamation contains fundamental data subject rights including the right to be informed, right of access, right to rectification, right to erasure, right to object to processing, right not to be subject to automated decision making, restriction right and right to data portability.<h3>Data Processing Requirements</h3>The draft proclamation envisages two levels of criteria for the authorized handling of personal data. First, it specifies the broad parameters for legitimate processing. Any processing will be lawful if it is based on the data subject's consent, which must be free, informed, explicit, unambiguous, and capable of withdrawal and granted before the start of the processing. It also provides other grounds for authorized processing, such as the fulfillment of contractual commitments, vital interests of the data subject, and public interest. Secondly, it defines the circumstances under which sensitive personal data, as well as data belonging to children, may be treated, setting of organizational and technical security measures, data protection impact assessments, prior authorization and data protection by design. Though the requirements may apply for various circumstances, failures to meet these requirements would make the processing unlawful. There will also be general requirements for personal data processing to be lawful including prior registration of data controllers and processors and appointments of data protection officers.&nbsp;<h3>Exemptions for Certain Categories of Data Processing</h3>An exemption for certain categories of data processing is provided in the draft proclamation. All of the exemptions concern the processing of personal data undertaken in the public interest. These are:&nbsp;<ul><li>When the processing is done for national security, defense, or public security purposes, including when the Prime Minister grants or certifies an exemption thereof;&nbsp;</li><li>When the processing is to prevent, investigate, and prosecute crimes, as well as the execution of penalties;&nbsp;</li><li>Processing to safeguard the general public interest, including the state's economic interests;&nbsp;</li><li>Processing to uphold judicial independence and judicial proceedings;&nbsp;</li><li>Processing for purposes of protecting data subjects or the rights and freedoms of others; and</li><li>Processing for purposes of historical, statistical or scientific research.</li></ul><h3>Data Breach Notification Requirements</h3>When a data breach occurs, the draft proclamation specifies two levels of notification: notification to the Commission where the breach is likely to constitute a "risk" to an “individual’s" rights and freedoms and notification to the data subject (the individual whose personal data is breached) when it’s likely to pose a high risk to the rights and freedoms of the individual. In principle, notification of the data breach should be provided to the Commission and data subjects within 72 hours unless the data controller has a reason for the delay.<h3>Transborder Data Transfer&nbsp;</h3>The provisions of the draft proclamation are the direct reflection of the General Data Protection Regulation (GDPR). The GDPR is the comprehensive data protection regulation of the European Union (EU) but applies to data controllers and processors in jurisdictions outside the EU provided they handle the personal data of EU citizens. When considering adopting personal data protection laws, many countries are considering laws in line with the GDPR for a variety of reasons. One of the reasons is to enable transborder personal data flow while avoiding statutory inconsistencies.&nbsp;The draft proclamation stipulates possible grounds by which the transborder transmission of personal data is allowed. Accordingly, the transmission of personal data from Ethiopia is permitted only if the third-party jurisdiction (any country other than Ethiopia, international organizations, and its subordinate bodies) provides an adequate level of data protection. The Commission will decide whether a third-party jurisdiction has an adequate degree of protection by taking into account two layers of considerations: general and specific.&nbsp;The general consideration encompasses all factors relating to a specific or group of data transfer procedures. The type of the data, the purpose and length of the intended transfer, and the state of the rule of law in the third-party jurisdiction are all vital particular concerns. It is worth noting that the Commission may restrict, suspend, or impose limits on transfers to third-party jurisdictions judged to have adequate levels of protection to preserve the data subject's rights and freedoms.&nbsp;There are, however, exceptions where personal data can be transferred to a third-party jurisdiction without meeting the adequate standard assessment by the Commission. These are: (i) when the data subject gives explicit consent to the proposed transfer after being informed of the lack of appropriate protection in the third-party jurisdiction; (ii) when the transfer is required to achieve certain legitimate aims of the data subject, data controller, or both, as well as for matters of public interest; and (iii) when the transfer is from a public register.The draft proclamation further provides the possibility of limited transfer of personal data to the third party jurisdiction, when the data subject gives his or her agreement to the transfer and elements of the data are omitted or reduced. However, authorization by the Commission may be required.&nbsp;<h3>What Happens if the Data Protection Laws are Breached?</h3>Under the draft proclamation, data subjects can file a complaint with the Commission if they believe their rights have been violated. In addition to the data subjects, if the Commission has any doubt about the contravention of the proclamation or any subsidiary laws, it can launch an investigation or cause an investigation to be initiated. Unless the Commission has reason to suspect or doubt the complaint (i.e. the existence of bad faith), it is required to investigate the case. Furthermore, the Commission is obligated to come up with a solution within a reasonable time frame, giving the data subject the option of going to court if the data subject is dissatisfied with the decisions of the Commission.&nbsp;The data subjects have the right to file an appeal to the Commission when they are unsatisfied with the decision rendered by a data controller. However, the time to appeal is limited and the Commission may dismiss the case for various reasons. Moreover, if the parties are not satisfied by the decision rendered by the Commission they can appeal to the Federal High Court.&nbsp;There are scenarios under which a third party (mediator) engaged on behalf of the Commission may investigate the appeal of the data subject. If the Commission does not authorize a mediator to investigate and settle the parties’ disagreement, it will conduct its investigation and render a decision. Even though filing a complaint is personal, the draft proclamation allows for a proxy. Hence, an agent can convey a client's case on her/his behalf in a written form unless the Commission requires other forms of presentation. The draft proclamation imposes a duty on the Commission to provide adequate assistance to complaints in putting their grievances in writing.<h3>What is Next?&nbsp;</h3>The draft proclamation has been completed by the Ministry of Innovation and Technology and is expected to be presented to the Council of Ministers this year. Once approved by the Council, it will pass to the House of People’s Representatives for final ratification. It will then be published in the Federal Negarit Gazette, marking its coming into force. A number of steps are expected to be taken before and after the enactment in order to operationalize the regulatory body. Creating awareness and building a legal infrastructure suitable for data protection are expected to be the biggest assignments for the government, post enactment. (1) <a href="https://www.capitalethiopia.com/news-news/first-structured-personal-data-protection-proclamation-in-the-making/">https://www.capitalethiopia.com/news-news/first-structured-personal-data-protection-proclamation-in-the-making/</a>.

Ethiopia is in the Process of Enacting a Data Protection Act 

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Ethiopia is Moving Towards Data Protection 

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

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

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RENEW’s Legal Corner: December 2021

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

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


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Ethiopia: IFRS Status and Tips for Businesses

<h1 style="text-align:center;">A CSR Opportunity in Addis</h1>TAPCOO (Tesfa Addis Parents Children Cancer Organization), a nonprofit organization (NPO) in Addis Ababa, Ethiopia, was established by parents of children with cancer and other individuals who have an interest in helping children with cancer and their families who have no place to stay in Addis Ababa during their children’s clinical treatment.<figure class="image"><img src="/uploads/2021_10_13_15_56_42_d6c049a08d.jpg"></figure>The organization recently invited the RENEW team to their care center in Addis Ababa. A cohort of 16 team members traveled to the center and donated clothes, children’s books and sanitary items to the families that are&nbsp; staying at the center. We spent a few memorable and impactful hours with them and saw firsthand what the wonderful home provided to children from across Ethiopia who are undergoing cancer treatment.<figure class="image"><img src="/uploads/2021_10_13_15_54_37_d4e0d3216f.jpg"></figure>They have beautiful, clean and spacious rooms where moms can stay with their children while they're receiving treatment at the Black Lion Hospital in Addis Ababa. Dads are housed in a separate part of the facility but are still close enough to support their wives and children through this challenging time of their lives. In addition, the organization has various projects that enable parents to earn extra money while their children are receiving treatment.<figure class="image"><img src="/uploads/2021_10_13_15_50_43_0631353c7e.jpg"></figure>The home currently houses 150 children in their Addis Ababa facility and has branches in two other major cities in Ethiopia. Though recent data is unknown, according to a <a href="https://bmccancer.biomedcentral.com/articles/10.1186/s12885-021-08014-0">2015 source</a>, hospital records in Ethiopia show about 6,000 new cases of pediatric cancer each year.&nbsp; According to the World Health Organization, approximately 400,000 children and adolescents of 0-19 years old are diagnosed with and suffer from cancer each year around the world (<a href="https://www.who.int/news-room/fact-sheets/detail/cancer-in-children">World Health Organization, 2021</a>).&nbsp;&nbsp;To find out more or to consider donating, check out <a href="http://tapcco.org/contact-us/">http://tapcco.org/contact-us/</a>

A visit to the Tesfa Addis Parents Nonprofit Organization 