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 The new directive No. FXD/79/2022 has repealed Directive No.FXD/73/2021, which was issued less than five months ago.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 Under the repealed directive, this requirement used to be 50%.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

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

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RENEW’s Legal Corner: January 2022

<h1 style="text-align:center;">RENEW’s Legal Corner: February 2022</h1>RENEW’s Legal Corner is designed to keep you updated with the regulatory progress and changes&nbsp;happening throughout the different jurisdictions in which RENEW operates. This month has seen several regulatory changes in Ethiopia, Rwanda and Uganda. Below are the highlights:<figure class="image"><img src="/uploads/097_A9519_bd9d899233.jpg"></figure><hr>ETHIOPIA<h3>The Regulation that Defines the Activities and Structure of the Ethiopian Holding Company Comes into Effect</h3>The Ethiopian Holding Company (EIH) was formed as a sovereign wealth fund by Proclamation No. 1263/2021. On January 31, 2022, the regulation that defines its activities and structure was issued in the Federal Negarit Gazette, which in effect brings the EIH to life. The regulation is cited as “The Definition of Objectives and Function of the Ethiopian Investment Holding Council of Ministers Regulation No. 487/2022.” Below are a few things we learned about the EIH:<ul><li>What is EIH? - EIH is a sovereign wealth fund that holds state-owned enterprises under an umbrella. It is structured as a holding company that holds shares, debentures, bonds and securities in enterprises that are in its ownership. In addition to structuring currently existing state-owned enterprises, EIH will also invest in businesses and investment opportunities as it sees profitable.&nbsp;&nbsp;</li><li>Accountability - The EIH will be accountable to the Prime Minister of the country.</li><li>Legal Status - EIH and its subsidiaries will be considered as private business organizations disregarding the shareholding percentage of the government.</li><li>Objectives - EIH is mainly established for the following reasons:<ul><li>To serve as a strategic investment arm of the government;</li><li>To introduce professional management and best corporate governance practices to maximize the value of government assets; and</li><li>Provide a strategic vehicle to attract foreign investment.</li></ul></li><li>Capital - EIH is established with an authorized capital of 100B ETB (approximately $2B USD).</li><li>Source of Funds - EIH sources its funds from:<ul><li>A pool of state-owned assets administered by EIH;</li><li>Returns and revenues of the investment of its assets;</li><li>Proceeds from the sale of its assets;</li><li>Loans and issuance of transferable securities; and</li><li>Other resources allocated to it and approved by the Board.</li></ul></li><li>Governance - EIH will be managed by a Board of Directors consisting of six members appointed by the Prime Minister of the country. The Prime Minister will chair the Board. Each board member will be appointed for a term of three years, which could be renewed. The Board will have a regular meeting every month.&nbsp; Decisions of the board will be made with a simple majority vote, however, in case of a tie, the chairperson shall have a casting vote. EIH will have a CEO reporting to the Board of Directors, who will have an ex-officio non-voting seat on the Board.&nbsp;</li></ul><h3>AfCFTA Hit an Important Milestone to Enhance Intra-African Free Trade</h3>African intra-regional trade accounted for just 17% of Africa’s exports in 2017 (1). This compares with 59% in Asia and 69% in Europe. However, the African Continental Free Trade Area (AfCFTA), which Ethiopia signed along with 53 other African members and subsequently ratified in April 2019, is projected to increase this figure with a potential to lift 30M people out of extreme poverty (2).&nbsp;The agreement’s purpose is to boost trade, economic growth and integration among African countries. It establishes a free trade area that provides member countries with free access to the markets of other members. For that effect, member states are obliged to progressively eliminate tariffs and similar charges on goods and services originating from member states. This month has seen the member states concluding their negotiation on the ‘rules of origin’. The adopted rules could cover 87.7% of goods on the tariff lines of the AU member states.&nbsp;Although trading under the AfCFTA had started officially on January 1, 2021, the problems regarding rules of origin remained unresolved, making it difficult to identify products that could enjoy the preferential tariff regime under the agreement (3). Now the member states have agreed on 87.7% of rules of origin and once member states publicize these rules at the national level, the free trade area is expected to be active.Once fully implemented, AfCFTA will create the largest free trade area in the world measured by the number of countries participating. The agreement connects 1.3B people across 55 countries with a combined GDP valued at $3.4T (4).&nbsp;<hr>UGANDA<h3 style="text-align:justify;">Uganda and Tanzania Ink Final Oil Drilling and Pipeline Deal</h3>Uganda and Tanzania have agreed on the “final investment decision” in a landmark $10B deal for crude oil production in East Africa. TotalEnergies EP Uganda, CNOOC Uganda Limited, the Uganda National Oil Company (UNOC) and the Tanzania Petroleum Development Corporation (TPDC) will all be working together to develop the East African Crude Oil Pipeline (EACOP) that will cross the ten districts in Uganda. The major oil project that is on Lake Albert is expected to yield significant results that boost the energy and mineral development sector. It will mainly involve setting up oil fields, developing the pipeline network in Uganda and exporting the rest of the oil through Tanzania to the coastal ports. The government has also made several infrastructural improvements to the Albertine region where the oil project is based by constructing an airport in Hoima district and completing more than 700km of the road network. According to an article in FurtherAfrica, government geologists estimate Uganda’s gross reserves at 6B barrels, while recoverable oil is seen at 1.4B barrels (5).<hr>RWANDAIMF says Rwanda’s Economic Outlook is Positive in a January 2022 ReportRwanda entered into a three-year Policy Coordination Instrument (PCI) with the International Monetary Fund (IMF) in June 2019. The PCI is a non-financial instrument that any member of the IMF can utilize. It’s designed to help support member countries implement macroeconomic policies and receive IMF advice and guidance, in an effort to facilitate policy reforms and catalyze financing from other, non-IMF sources. As part of the PCI, the IMF visits Rwanda on an annual basis, holds discussions, collects data and prepares a report on the outlook for Rwanda and progress under the PCI.The IMF released its most recent report in January 2022 following its fifth review of the PCI (6). In the report, the IMF states that Rwanda’s medium-term outlook is positive with GDP growth projected at 10.2% for 2021. The economy had strong improvements in 2021 coming out of the COVID-19 pandemic due in large part to the country’s vaccination efforts, continued government support programs and reopening of economic activities. In the medium term, GDP growth is predicted to gradually slow back to 7.5% (similar to pre-COVID levels). That said, the IMF cautioned that Rwanda must still address several issues stemming from the pandemic - namely protracted unemployment and rising poverty, particularly for women - to ensure the country’s economic recovery continues and that the social and economic progress Rwanda has made over the past twenty years is not lost.&nbsp;Under the PCI, policy recommendations from the IMF included a continued focus on fiscal spending to support social policies and recovery from the pandemic, balanced with advancing growth-friendly policies and safeguarding financial stability. In addition, the IMF noted that continued focus on advancing the Sustainable Development Goals, particularly by supporting human capital and climate change-readiness and adaptation, will be key to enabling a sustainable and inclusive recovery from COVID.&nbsp;&nbsp;<h3 style="text-align:justify;"> Rwanda’s National Budget Increased by 16%</h3>The Government of Rwanda has proposed a 16% increase to the national budget in a revised proposal presented to parliament last week. The approximate $610M increase will be geared towards offering support to public institutions and helping them successfully execute their projects in key sectors such as agriculture, health and education. The government’s expenditure policies in fiscal year 2021/22 are guided by the National Strategy for Transformation priorities and objectives (7) with 58.7% of the resources allocated to economic transformation which includes most of the priority private sector areas such as agriculture, energy, hospitality and financial services.&nbsp; Social transformation takes up 27.2%, catering for access to electricity and clean water. The Minister of Finance and Economic Planning mentioned that he is very confident the increase in national spending from the original $366M to $428M will be beneficial to the economy after carrying out numerous surveys on how Rwanda can mitigate the financial loss suffered during the COVID pandemic. The recovery of the different economic activities across the country will ensure a steady and gradual rise to the country’s domestic revenues.<hr>Footnotes:<ol><li style="text-align:justify;">&nbsp;<a href="https://www.brookings.edu/blog/africa-in-focus/2019/02/22/figures-of-the-week-increasing-intra-regional-trade-in-africa/">https://www.brookings.edu/blog/africa-in-focus/2019/02/22/figures-of-the-week-increasing-intra-regional-trade-in-africa/</a></li><li style="text-align:justify;">&nbsp;<a href="https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area">https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area</a></li><li style="text-align:justify;"><a href="http://www.xinhuanet.com/english/africa/20220130/fc286d5fb2dd405980a48f06ca489019/c.html">http://www.xinhuanet.com/english/africa/20220130/fc286d5fb2dd405980a48f06ca489019/c.html</a></li><li style="text-align:justify;">&nbsp;<a href="https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area">https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area</a></li><li style="text-align:justify;"><a href="https://furtherafrica.com/2022/02/02/totalenergies-cnooc-make-final-decision-on-10-bln-uganda-tanzania-oil-project/">https://furtherafrica.com/2022/02/02/totalenergies-cnooc-make-final-decision-on-10-bln-uganda-tanzania-oil-project/</a></li><li style="text-align:justify;"><a href="https://www.imf.org/en/Publications/CR/Issues/2022/01/13/Rwanda-2021-Article-IV-Consultation-and-Fifth-Review-Under-the-Policy-Coordination-511923">https://www.imf.org/en/Publications/CR/Issues/2022/01/13/Rwanda-2021-Article-IV-Consultation-and-Fifth-Review-Under-the-Policy-Coordination-511923</a></li><li style="text-align:justify;">&nbsp;https://www.minecofin.gov.rw/news-detail/government-to-spend-frw-38-trillion-in-2021-22-fiscal-year</li></ol>Photo by Imran Mazar

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

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RENEW’s Legal Corner: February 2022

<h1 style="text-align:center;">Lessons Learned from the GAC &amp; RENEW Blended Finance Event</h1>On Tuesday, October 26, Global Affairs Canada (GAC) and RENEW co-hosted a learning session titled “A Blended Finance Project in Ethiopia, Start to Finish: What Did We Learn?”. The learning event explored the Accelerating Business Growth (ABG) program, which ran in Ethiopia from May 30, 2016 to May 31, 2021, supported over 6,700 jobs and helped facilitate over $79M CAD in financing to SMEs trapped in the “missing middle”. ABG was designed by RENEW and GAC, and implemented by RENEW.&nbsp;&nbsp;During the webinar, four different stakeholders shared their experience with ABG and the lessons they learned from the blended finance project: GAC, the donor; RENEW, the project manager; Ethiopian SMEs, the local beneficiaries; and investors, the private capital providers.&nbsp;&nbsp;The lessons learned have been captured in the <a href="https://drive.google.com/file/d/1eL9zLckuX2a-yxdg0jSJHOby3MGFTvVD/view?usp=sharing">ABG Program Summary</a>, which also provides a high-level overview of the program’s objectives, results, case studies, and more.&nbsp;Some of the noteworthy lessons learned include:<ul><li style="text-align:justify;">From GAC (The Donor): Blended finance (BF) is a new model needed to close the funding gap to achieving the SDGs. While the awareness of BF is growing as a tool for accomplishing the SDGs, significant pushback still exists within donor government organizations when implementing innovative BF models. Donors’ systems and cultures still favor and are better positioned to work with big NGOs with a traditional lens to development.</li><li style="text-align:justify;">From an ABG-supported SME (Local Beneficiary): Practical, hands-on training for SME executives (i.e., The Exec’s Program) is essential and not available in the market. While training is good, more active support with implementation and regular touchpoints and refreshers would increase longer-term impact on SMEs and local beneficiaries.</li><li style="text-align:justify;">From Impact Investor (International Beneficiaries): International impact investors need full-service investment advisors operating in-county, like RENEW, to carry out BF program services in order for SME investing to work. There is growing desire but a larger pipeline is desired that spans multiple countries.</li><li style="text-align:justify;">From RENEW (Project Manager): For other BF project managers, be careful not to get overburdened with reporting - you serve two masters and it is important to align, where possible, the impact metrics and reporting to both at the onset of the project. Otherwise, sizable resources will be spent reporting to both masters.&nbsp;</li></ul><figure class="image"><a href="https://drive.google.com/file/d/1eL9zLckuX2a-yxdg0jSJHOby3MGFTvVD/view"><img src="/uploads/Screen_Shot_2021_10_19_at_4_20_22_PM_66c0dd7057.png"></a></figure>Several more interesting and valuable insights on organizing, implementing and managing blended finance models and projects are provided in the <a href="https://drive.google.com/file/d/1eL9zLckuX2a-yxdg0jSJHOby3MGFTvVD/view?usp=sharing">ABG Program Summary</a>; we encourage you to read it!&nbsp;And, in case you missed the ABG Learning Event, please feel free to watch a <a href="https://www.youtube.com/watch?v=rhPs8DVpbe4">recording of the webinar</a> uploaded to our YouTube channel.&nbsp; &nbsp;

Perspectives from four blended finance stakeholders: donors, investors, SMEs and project manager

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Lessons Learned from the GAC & RENEW Blended Finance Event

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

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

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RENEW’s Legal Corner: November 2021

<h1 style="text-align:center;">Reflections After a Recent Visit to Addis</h1><h3>Jonathan Baker, an investor with RENEW, shares his background and motivations for impact investing.&nbsp;</h3>Tell us about your background?​My career started in management consulting in the late 80s. My primary role was on the business development side where I brokered the insights of some very smart colleagues amongst C suite executives around the world. Whatever cachet conveys with, “I was a management consultant” is not mine to claim. I was a glorified “sales guy” whose job was to grow the firm’s client base. The firm, Corporate Executive Board, had a successful IPO in 1999. In 2001, I was able to pivot to investing in start-ups across a broad spectrum of industries (renewable energy, life sciences, SaaS, consumer goods, IT &amp; various technology plays). My very first investment was a terrific success; that was unlucky as it led me to believe I had the “Midas Touch,” and it took several&nbsp;subsequent investments (i.e., total losses) for me to grasp just how hard start-up investing can be.<figure class="image"><img src="/uploads/JB_1_907d6aef21.jpeg"></figure>How did you learn about RENEW and the Impact Angel Network?&nbsp;After hearing I had done some small-scale investing in Ethiopia (also total losses), a mutual acquaintance, David Grizzle, introduced my wife, Julie, to Laura Davis. Julie had come alongside an NGO in Ethiopia that was helping women rebuild their lives after prostitution. In 2015, Laura helped Julie find employment for these women.&nbsp;&nbsp;Why are you interested in Ethiopia? Tell us about some experiences in Ethiopia? What do you remember about your first visit?&nbsp;I first came to Ethiopia in 2009 and was completely smitten. So much so I returned with my entire family (six of us!), and we lived there for three months. What struck me, and has stayed with me, is the depth of relationships Ethiopians have with each other. In the fast-paced world of the West, we have lost the joy of just being together without distraction.What lessons did you learn from your first investments in Ethiopia?The primary reason my initial, personal investments failed in Ethiopia was because of some unfounded assumptions on my part.&nbsp; Basic business principles (accounting, finance, governance, operations, etc.) were missing AND I did not stay on the ground with these companies to help them. I wrote a check, got fewer and fewer updates as time went on and then I stopped hearing from them altogether. Granted these were very small investments, but (at least) two principles hold. First, failure to define and agree upon frameworks and methods of business processes prior to investing won’t end well, regardless of the smarts and integrity of the entrepreneur being backed. Second, given how much time this first part takes, if you are not on the ground, cheek to jowl, day in and day out, having close, substantive, “in the weeds” exchanges, you will not be able to effectively assess and prioritize what needs to happen next.<figure class="image"><img src="/uploads/JB_2_8ee906aa5b.jpeg"></figure>What motivates you to be involved in impact investing?Like any human, I can’t see the suffering of extreme poverty. Over the years, I have gotten involved with various international aid efforts – everything from drilling freshwater wells to medical education and training for people working with very sick children. While this work has been life-changing for its recipients, it hasn’t changed the circumstances surrounding them. Investing in viable enterprises and seeing them through to ever-expanding horizons of success displaces poverty and its concomitant miseries. As a businessman, I see profit and ROI as the only reliable markers to identify which businesses are viable. The aim in impact investing is to make money, but if I do, I know it will ultimately replace suffering with opportunities for other humans to flourish.&nbsp;

Jonathan Baker, an investor with RENEW, shares his background and motivations for impact investing. 

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Reflections After a Recent Visit to Addis

<h1 style="text-align:center;">A Blended Finance Project in Ethiopia, Start to Finish: What Did We Learn?</h1>We recently published a <a href="https://drive.google.com/file/d/1h3dztXbnlp1dIQRDVsC3reLXBN3fXVUr/view?usp=sharing">program summary</a> for the Global Affairs Canada Accelerating Business Growth (ABG) project, which ran in Ethiopia from May 30, 2016 to May 31, 2021. The summary provides a high-level overview of the program’s objectives, results, case studies, and more.&nbsp;&nbsp;<figure class="image image_resized" style="width:59.73%;"><a href="https://drive.google.com/file/d/1h3dztXbnlp1dIQRDVsC3reLXBN3fXVUr/view?usp=sharing"><img src="https://lh3.googleusercontent.com/k3xVoFDyjTbOc-7jFpZP-8v0bs8LinAK7w-jrCdzMMoBaaVE9nvN6q5VPUKXE8He7sltAn27Uz0wrsiQqSPWeTr13BlAanRCA7dHzNtQkQIyzAu16R6_B8Xedh8LIXeUvoBg3fog=s1600"></a></figure> In partnership with Global Affairs Canada, the ABG program helped mobilize $79.6M CAD of capital for and supported 6,744 jobs in SMEs that were a part of the program. Of the 6,744 jobs supported (60% of which were for women), 2,632 jobs were created over the life of the program.Five years of implementation of ABG in Ethiopia was a meaningful journey and a significant learning experience. What is clearer now more than ever is the importance of the private sector and development sector working together to implement blended finance solutions such as ABG that address the constraint of SMEs, and of persisting through challenges, no matter the scale.We invite you to <a href="https://teams.microsoft.com/registration/22T3OmbKiEGoDHvv7nBQpg,WaMFc_bLZ0-fk4_df0G0Mg,IybsuXl5mEWes-lNfFW3lQ,xwQfs94gCE-9BGlHA8zMnQ,iEXNRl_Sv0iyyGUSNJsmfA,PAUQ1sVH3U-2xzl31lFCzA?mode=read&amp;tenantId=3af764db-ca66-4188-a80c-7befee7050a6&amp;skipauthstrap=1">join us virtually</a> on Tuesday, October 26 from 9 to 10:30 AM EST (4 to 5:30 PM EAT) for a learning session hosted by GAC and RENEW to:<ul><li>Recognize the role that GAC played in shaping Ethiopia’s investment landscape and SME ecosystem;</li><li>Hear from ABG project beneficiaries and stakeholders about their experience and gain further lessons learned and ideas for future blended finance projects; and</li><li>Share lessons learned and discuss best practices to advance blended finance models to develop SME ecosystems in SSA.&nbsp;</li></ul>Be sure to <a href="https://teams.microsoft.com/registration/22T3OmbKiEGoDHvv7nBQpg,WaMFc_bLZ0-fk4_df0G0Mg,IybsuXl5mEWes-lNfFW3lQ,xwQfs94gCE-9BGlHA8zMnQ,iEXNRl_Sv0iyyGUSNJsmfA,PAUQ1sVH3U-2xzl31lFCzA?mode=read&amp;tenantId=3af764db-ca66-4188-a80c-7befee7050a6&amp;skipauthstrap=1">register today</a> to secure your spot for next week’s learning event.&nbsp; &nbsp;

Download a project summary and join us Oct. 26 to learn more

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A Blended Finance Project in Ethiopia, Start to Finish: What Did We Learn?

<h1 style="text-align:center;">Results from a 5-year, innovative finance project in Ethiopia</h1>In 2016, Global Affairs Canada’s (GAC’s) Accelerating Business Growth (ABG) program set out to do something innovative and challenging: Develop Ethiopia’s capital markets and accelerate the formation of its private sector by supporting investments and the growth of small and medium enterprises (SMEs). A number of private sector projects were already focusing on building the “demand-side” through startup incubators, accelerators and technical assistance. But ABG focused on building the “supply-side” by organizing, mobilizing and managing innovative pools of finance for SMEs. Using blended finance, ABG lowered the risks for investors and mobilized new sources of capital for SMEs.&nbsp;The ultimate outcome of the ABG program was “stronger and more sustainable job creation, including those for low-skilled workers, men, women and young adults, through a dynamic and growing small and medium business sector in Ethiopia” with the target of supporting Ethiopian women- and men-owned SMEs in attracting more than $52M CAD of capital to scale their businesses and supporting 5,000 jobs for low-skilled workers, including men, women and young adults.Interested in learning more? Join us on Tuesday, October 26, 2021 at 9AM Eastern (4PM East Africa) to unpack lessons learned from this blended finance project. <a href="https://teams.microsoft.com/registration/22T3OmbKiEGoDHvv7nBQpg,WaMFc_bLZ0-fk4_df0G0Mg,IybsuXl5mEWes-lNfFW3lQ,xwQfs94gCE-9BGlHA8zMnQ,iEXNRl_Sv0iyyGUSNJsmfA,PAUQ1sVH3U-2xzl31lFCzA?mode=read&amp;tenantId=3af764db-ca66-4188-a80c-7befee7050a6&amp;skipauthstrap=1">REGISTER HERE</a>.<figure class="image"><img src="/uploads/097_A2825_0131b43ee9_67f1305f8d.jpg"></figure>Where most private sector interventions focus on the “demand-side” of the private sector through initiatives that support microenterprises, incubators and accelerators, ABG focused on developing the “supply-side” or capital formation side of the private sector. Where most interventions have struggled to organize and mobilize additional sources of capital for creating impact, ABG built and expanded new sources of capital for SMEs, including global and local angel networks and the formation of new blended finance vehicles. ABG also focused on SMEs because SMEs are the greatest contributor of new job growth in frontier markets like Ethiopia.&nbsp;By focusing on capital formation and mobilization for SMEs, the project addressed a systemic issue in Africa known as the “missing middle” - a gap in the capital markets between microfinance and formal investment funds and banks where few sources of capital exist. The ABG project built a stronger supply-side of capital for Ethiopian SMEs, or “rungs” in the capital market to fill the missing middle. ABG then trained SME owners and executives on business skills to attract and improve performance once they received capital.&nbsp;After five years of implementing the project, ABG helped mobilize $79.6M CAD of capital for SMEs, supported 6,744 jobs, including 2,632 created jobs, of which 60% or 4,069 were for women.&nbsp;<figure class="image"><img src="/uploads/abg1_256718a170.png"></figure><figure class="image"><img src="/uploads/abg2_7faea8945d.png"></figure>The ABG team is proud to have impacted Ethiopia’s private sector and achieved numerous stated project targets and complementary indirect outcomes. The project also helped influence policies, trained over a thousand companies, created a local angel network, and launched awareness programs that we believe will generate impact for years to come. A detailed summary of these ABG project results is provided below.&nbsp;<hr>SUMMARY OF RESULTS ACHIEVED BY THE PROJECT:<ul><li style="text-align:justify;">Reached and surpassed the project’s ultimate outcome indicator by supporting 6,744 jobs over the course of the project, on the target of 5,000, of which 4,070 or 60% are held by women.</li><li style="text-align:justify;">Realized a financing leverage ratio of 9.7x by supporting Ethiopian SMEs in attracting $79.6M CAD of financing, exceeding the project target of $52.5M. Of this, $19.1M or 24% was attracted by women-led businesses.</li><li style="text-align:justify;">Designed and developed the Women-Owned Business Investment Fund (Women’s Fund) specifically for investing in women-owned SMEs, trapped in Ethiopia’s financing missing middle. The fund invested in Queen of Sheba, a partner of Travel Ethiopia; an eco-minded tour and safari operator that has a deep commitment to Ethiopia’s environment, wildlife and community development.</li><li style="text-align:justify;">Successfully trained and graduated:<ul><li style="text-align:justify;">Five cohorts of The Exec’s Program, graduating 93 executives, of which 44 (47%) are women. 93 exceeds the project target of 75.</li><li style="text-align:justify;">Five cohorts of The CFO100 Program, graduating 130 finance professionals, of which 50 (39%) are women, exceeding the project target of 100.</li><li style="text-align:justify;">Facilitated in-person and online private equity investment seminar incubator training sessions, attended by 1,238 SME business owners and representatives, of which 433, or 35% are women. This result exceeds the project target of 650 by nearly double.</li></ul></li><li style="text-align:justify;">Expanded the Impact Angel Network (IAN) into Canada by training potential investors on the opportunities of investing in Ethiopian SMEs, engaging with local angel groups and ultimately registering an additional 93 members over the course of the project, of which 19 are Canadian (20%).</li><li style="text-align:justify;">Due to an increased focus on gender equality, the team developed the Women in Finance (WIF) peer to peer support series during the second year of the project, aimed at energizing and empowering women finance professionals and executives in Ethiopia who face cultural and professional barriers. 10 total events were facilitated, in various formats and settings, and were attended by 328 women.</li><li style="text-align:justify;">Launched an edutainment platform known as Chigign, aimed at raising awareness of and building interest in entrepreneurship and angel investing in Ethiopia. The TV series was broadcast on national television (FANA TV), and involves entrepreneurs looking to raise seed capital pitching their ideas to a panel that includes RENEW’s Laura Davis and other local angel investors. This program, which started as a concept under ABG, has reportedly been viewed by 40 million watchers. RENEW recently partnered with the World Bank’s Gender Innovation Lab to design a research program to measure Chigign’s content to optimize it and increase female participation in the entrepreneurial ecosystem.</li></ul>

Outcomes from our project with Global Affairs Canada (GAC)

Results from a 5-year, innovative finance project in Ethiopia

<h1 style="text-align:center;">An in-depth interview with Feleg Tsegaye of Deliver Addis</h1>​​For more stories, download our recent<a href="https://latest-api.renewcapital.com/uploads/RENEW_2020_2021_Impact_Report_web_5e1a98866d.pdf"> Impact Report</a>, and read an abbreviated version of the following story called “Scaling Delivery to Meet Pandemic Demands” on page 18 of the report.While many companies watched demand for their products and services screech to a halt, Deliver Addis, Ethiopia’s premier online food delivery company, had a good year. Founder Feleg Tsegaye and the Roadrunner/Deliver Addis team responded quickly at the start of the pandemic with creativity and speed to scale the company’s services and expand their online store beyond restaurant takeout to include groceries, household supplies and other consumer products.&nbsp;Here’s what Feleg had to say during a conversation in the first quarter of 2021. Most of it is more applicable than ever as the pandemic continues in new forms throughout the globe.&nbsp;<figure class="image"><img src="/uploads/DA_pic_b9dbe91ad4.png"></figure>Q: First, can you tell me your personal story of the pandemic and your business?&nbsp;The pandemic was unexpected. We had been waiting to see when the pandemic might hit Ethiopia. It seemed like the rest of the world was getting hit first. We bought out a stock of N95 masks the day before the first case was announced in Ethiopia. Within a day of the first documented case, restaurants started calling and saying that foot traffic went to zero within hours. And they were concerned about their livelihoods. Some closed within the first 24 hours and haven’t reopened. It had a very immediate effect.&nbsp;We ended up reducing our prices by 30% to make it easier for people to order. Most people were looking to conserve whatever income they were making because they were not sure what might happen tomorrow. We did what we could to reduce that financial impact to people. We worked with restaurants by providing guidance on how to help prevent Covid-19 transmission within restaurants and provided education to our consumers on how to avoid transmissions. For other restaurants, we helped them come up with a temporary, low priced menu in order to encourage people to order. So, we did a number of things outside of delivery just to make sure that the ecosystem itself could remain somewhat stable. We expanded our fleet by 60% to fulfil orders and to provide more opportunities.&nbsp;It was an interesting time, there was not a lot of precedent, it helped us in the long run and it helped us to help other businesses as well. Most restaurants didn't have to lay off a lot of people. We at least provided some kind of stop gap when many restaurants were feeling the pinch.&nbsp;Q: What is your outlook for your business? What do the next few years look like?A sentiment that is widely held in the tech community is that Covid-19 accelerated the adoption of tech based services and products by 3-7 years. Technology can be a bigger part of our lives even more so than it used to be. For us, our goal is to be as accessible to as many people as possible. For the business as a whole, we are going to expand pretty significantly. Especially in terms of labor and staffing so we look forward to a transformed organization along with the transformed environment that we now find ourselves in.&nbsp;Q: What is the process that you went through as an entrepreneur?&nbsp;It was really trial and error in the beginning. We didn’t have a lot of historical precedent to say what would work and not work. But the fact that we were there to answer the calls of other restaurants and business owners and just reassure them that there was a way through it changed our relationship with our vendors. Yes, we have a business relationship, but at the same time, we all needed to make sure that we all survived and lived to see another day. So I think it allowed me to step outside of the business perspective and really be there for the businesses which were struggling.Q: Are you familiar with the phrase “Standing Ground”? What does it mean to you as an entrepreneur?Yeah, not sure if there’s a specific context to that phrase, other than communicating the importance of resilience. In our case, we couldn't just stand our ground, we had an even greater responsibility given the work that we did, to become more available to people and to prevent people from putting themselves at risk when trying to get food and supplies. Rather than just standing ground, we had to push forward despite the headwinds. We had to launch grocery services and find ways to get people what they wanted rather than forcing them to go to them. We had to push forward as much as we could.&nbsp;As an e-commerce business, connectivity is pretty important to what we do. We could function during the pandemic because we had the bare necessities. When the internet was shut down for 3 weeks with the uncertainty of when it may come back, it prevented us from having operational visibility that we are used to and allowing consumers to reach us.&nbsp; We took some notes from old air traffic control procedures whereby every plane and designator and other details would be written on a piece of paper and have a board in which air traffic controllers would reorder these planes as they were landing. We sent out a blast text and asked our customers to text us your orders. We used these pieces of paper and a large conference table subdivided into different sections based on the status of the order at that time. This paper would go to each of those stations on the tables manned by a specific individual until it was completed. We used that to manage orders, even when we couldn't tell where our drivers were. It took a little bit of creativity.&nbsp;Q: What was the hardest part of 2020/2021 so far for your business?&nbsp;I think the labor force. Staffing has always been a challenge. Because you are trying to bring on people who are not used to formal employment, they may be used to doing things under table or in an undocumented fashion. And as you try to bring them into the formal workforce, there are a&nbsp; lot of people who may not be ready for it. In emerging markets when the economy is growing rapidly, people want to see themselves in it.&nbsp;Q: What support for these challenges did you receive?Thanks to the Impact Angel Network, we were able to raise some additional capital. Especially since we had to reduce prices, we needed to make sure that we were still able to pay and compensate our team fairly. We are in a sector that thrived during the pandemic compared to other sectors, so it was really on our shoulders to support the larger community. Whether that is broadening the consumer base or advising the restaurants based on the feedback we get from customers. We were at a point where we needed to help those individuals who were struggling because if many restaurants close then that would also come to us. We developed a symbiotic relationship during that time, where everyone was trying to figure out how to get through each month.&nbsp;Q: How has your business shifted or pivoted to adapt?Adding grocery services and other deliverable items broadened the use case for our service. Customers who can’t afford to order for every meal or who don't want to do that for other health reasons, can have the option to order ingredients they will use to cook. In Ethiopia, there is even greater value addition because you often find yourselves going to multiple stores to find anything that you need to prepare any recipe you may want.&nbsp; But in our case, we could tell you what a retailer does or doesn’t have without you having to go to find out.&nbsp;Q: What do you think is the most important thing that you learned as an entrepreneur from the global pandemic?&nbsp;Always be prepared for a rainy day. You have no idea what is coming around the corner and so the only thing you can do is be as proactive as possible. So expect that the internet might get shut down or a key team member could come down with Covid-19. You need to continue to build these contingency plans to address these things that might happen.In emerging markets, you become quickly aware of what could go wrong or how things can quickly change. It's a daily reality depending on what sector/country you are operating in. I think it just continued to reinforce that for us. Whereas for others who are used to things always working, those individuals were most hit. A lot of things they may have taken for granted weren’t there. I think Ethiopia prepares you for these situations. But you realize that this is a great life skill rather than just the business you are in now.&nbsp;Q: Anything else to say about resilience? Or how to build a resilient company?This is tough because there are different types of resilience. Financial is one but also the mental resilience as well. I think as a leader, you need to stay optimistic during these times because people look up to you to set the tone in terms of how they should feel about their jobs and situations that affect everyone as a whole. So you need to be prepared to help lead them through those times. It's not always about business but also making sure that they are still feeling positive despite the challenges they are facing and letting them know they are not alone in this; that at the end of the day, you will do everything that you can to make sure that this impacts them as little as possible. That helps people continue in their jobs without worrying about what the future might hold.&nbsp; Picture by Ian Christmann: <a href="www.ianchrismann.com">www.ianchristmann.com</a>&nbsp;Disclaimer: This blog is provided as a recounting of the IAN’s and RENEW's interactions with Deliver Addis and the happenings at Deliver Addis. It is not intended as performance data related to the IAN’s investment in Deliver Addis and is not indicative of other companies in the IAN’s portfolio, their social impact or the performance of investments in them. Any discussion of Deliver Addis's achievements, performance or social impact is no guarantee that such outcomes, performance or impact will be realized by Deliver Addis in the future, or by other IAN portfolio companies or other investments managed by RENEW, now or in the future.

Modernizing e-commerce and logistics in Ethiopia in partnership with Deliver Addis.

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Scaling delivery to meet pandemic demands

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An in-depth interview with Feleg Tsegaye of Deliver Addis

<h1 style="text-align:center;">A Dreamer from Nigeria&nbsp;</h1>"Dreams are extremely important. You can do it only if you can imagine it." This was said during a training, in a small lecture room at the University of Lagos, in Nigeria, which introduced me to the world of investments and finance. At the time, I was just an ambitious young student from the Obafemi Awolowo University, Ile-Ife, Nigeria, devoting a 6-month period to a 130-mile, biweekly interstate trip, to learn everything required to break into the world of finance. I had just returned from my first trip abroad, which doubled as my first ever work/volunteering experience, and I was extremely fired up to secure my next adventure. Over the next few years, I held roles in New Delhi, London, Lagos, and Accra, and my next stop was Addis Ababa! This was in no way a coincidence, and I'll tell you why!<figure class="image"><img src="/uploads/Screen_Shot_2021_09_08_at_10_55_19_AM_db24d3cc6f.png"></figure>I grew up in the small town of Ijede, Lagos State, Nigeria, and luckily, I was exposed early on to the importance of education, and its capacity to be the wings to fly to the topmost height and achieve the loftiest goals. Private equity had always been a dream for me, fueled by the infamous achievements of Wall Street and the role of FDIs in Africa’s development, but I was never oblivious to the difficulties in landing a PE role. I had taken up five different roles, in five different cities, over the course of five years in preparation: business analysis, sales, project finance, investment finance and management consulting. The business analysis and sales roles were to acquire client relationship management skills after which I moved on to the investment finance role to build core skills needed to thrive in finance, and finally a role in management consulting to understand the strategic and operational side of building a business. During these five years, I developed an uncanny level of strength, learned the ability to convert setbacks into learning opportunities and the cross-cultural experience allowed me to truly appreciate the value of diversity. In December 2020, I received an offer to join RENEW, and it was the perfect way to wrap up a year that tested every form of resilience in me.My time at RENEW has been nothing short of challenging and exciting. I have had the opportunity to meet truly talented and amazing individuals. The team’s diversity (a team of about 24 people from 10 different nationalities), exposes me to unique perspectives and contributions. I currently have the privilege of working closely with the investment team and the SGS team, supporting the investment process alongside Diana, Tamiru, Lincoln, Mary and Dagi, while learning from amazing coaches like JC and Pranay.At RENEW, every day is different, and this is what makes it so exciting to work here as there is always something to look forward to. The exemplary leadership style of Matt and Laura has made working here such a dream and the culture is simply sensational. Everyone is given an equal level of respect irrespective of their level or position and this creates a very healthy working environment as every team member knows that their views will always be respected and acknowledged.RENEW’s vision is to be the most successful SME investment firm in Africa, and we have assembled not just an army of dreamers, but dreamers with a track record of success, and this fuels my excitement for the future of the firm and the journey ahead. From my experience, I’m confident that if you can dream it, then you can do it!