<h1 style="text-align:center;">With 2020 Behind, Onwards to 2021</h1><a href="https://www.renewcapital.com/resources/blogs/2020%20in%20Review">2020</a> was a roller coaster year for many around the world, especially here in East Africa, but in the end, we all weathered the storm and now we're charging ahead with ambitious plans for 2021.Many of you have been following us for years, and in some ways, you have helped us build RENEW from a two-person team working from our apartment in Addis, into one of the most active investment firms in East Africa. Even though it hasn't been the smoothest ride - and we still have some uphill battles to go - we are dead-set on building what we believe will become one of the largest, and most successful investment firms on the continent of Africa. Everyone at RENEW embraces the mission to change the way the world sees Africa. And we know we can only do this by serving you, our stakeholders, and building success stories. We have not done that consistently, but we will never give up.During the last weeks of December and into January we worked on our RENEW Annual Management Plan for 2021. At the start of the second day, we read our 5-year strategic plan to ensure the goals we set for the year are aligned. Our plans for 2021 build on our successes and lessons learned in 2020.&nbsp;<figure class="image"><img src="/uploads/sunrise_0_d045492687.jpg"></figure>&nbsp;We wanted to share our high-level goals for 2021 with you:<ul><li>Summary of Our Corporate Goals - We aim to continue to strengthen our internal systems and strengthen our marketing and sales division.</li><li>Summary of our Development Goals - We aim to secure projects that will help improve the ecosystems, create jobs and empower women across East Africa. We also aim to continue our policy and ecosystem work in Ethiopia with an emphasis on building gender equality across management teams and in multiple segments of the private sector.</li><li>Summary of our Investment Goals - We aim to close more than 5 investments, strengthen our asset management function and exit investments. We also plan to enhance our Impact Angel Network experience and continue to grow the network.</li></ul>Of course, there are measurable targets under each one of these broad objectives for the year, and each division at RENEW develops its quarterly objectives and key results aligned to these annual goals. Then we execute!Here's to a healthy, successful, fresh and peaceful 2021. Here's to you, our stakeholders, who believe in our vision of growing businesses, building nations and leaving a legacy. Onwards!

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With 2020 Behind, Onwards to 2021

<h1>Book Review: Prosperity Paradox</h1>Why do some countries develop in a generation and others languish in poverty and dust for hundreds of years? No book or perspective can ever tell the whole story, but as an investor who has dedicated the last 10 years of my life to building the private sector in East Africa, I found great hope, helpful insights and a practical framework from Clayton Christensen’s book Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. How satisfying that the book, published in 2019 and co-authored by Efosa Ojomo and Karen Dillion, has an ORANGE cover? Orange is my signature color and one of the primary colors of RENEW’s brand, so I was immediately drawn to the book! In this case, you can judge the book by its cover.&nbsp;<figure class="image"><img src="/uploads/ppnew2_84c669a3d4.jpg"></figure>&nbsp;The book details a framework that challenges many preconceived notions of development and could revolutionize the economic situations for millions across the continent of Africa if entrepreneurs, development organizations, philanthropists, government officials and investors were to implement this framework.I would distill the framework down into three key takeaways. This is my personal summary - you might discover more:<ul><li>Use “Disruptive” Innovations - Other innovations that Christensen has defined throughout his career at Harvard like efficiency innovations and sustaining innovations are good, but not great for an economy. Efficiency innovations free up cash flows but rarely create new jobs. This is the nature of resource-related innovations. Sustaining innovations ensure a company continues to maintain its market, often by adding bells and whistles to make sure the product maintains its competitive edge in the light of new market entrants. But disruptive innovations create new markets, making non-consumers into consumers, creating employment and giving cause for forward and backward integration that often positively impacts infrastructure and policy. My take - don’t just copy and paste models that work in the East or West, in Africa. Rather, start by asking what will it take to create a market here?</li><li>Focus on Turning Non-Consumers into Consumers - Speaking of market creations, Christensen spends a fair amount of the book detailing case studies from companies like Singer, Kodak, Bank of Italy, Ford, Sony, Indomie and the like that build companies that produce products and services that don’t try to steal consumers from other companies, but rather bring new consumers into the market because of the value of their creation. The end of the book also includes an encouraging list of companies around the world that are creating markets by building disruptive innovations. My take - instead of looking at business as fighting for a bigger piece of a fixed-sized pie, ask how can we build something that makes the pie even bigger.</li><li>Ask if We are Solving the Jobs to Be Done - Does the product or service solve the problem for which the company was hired to do? It’s not always as clear as an entrepreneur might like to think. The authors provide the example of a newspaper in an airport. Does a passenger buy the newspaper ahead of the flight to find out the latest news or as an insurance policy in case he or she is seated next to a pesky passenger he or she doesn’t want to speak to? My take - many times a successful product or service that works in one market falls on its face in Africa. The job to be done here might be different - a well dug in one location to help prevent women from having to carry heavy jugs multiple kilometers might have eliminated their bonding time with peers, so it never gets used. Ask, what's the job the customer needs to be done here in Africa? Not, here's what we did in other countries, so it should work here.</li></ul>Christensen and his colleagues also provide some specific advice for each stakeholder intermingled throughout the great case studies and stories in the book. Here I try to summarize a few of the things the book highlights for each stakeholder group.For Entrepreneurs<ul><li>Look for opportunities to create new markets. Be sure to focus on creating markets by creating products that address the needs of non-consumers. Identify pockets of non-consumption by looking at skill, time, wealth, access, etc. and know that existing data does not predict non-consumption.</li><li>Don’t fight against bad policies, lack of infrastructure and corruption...use them. From the book and my own experience in Ethiopia, I know that is a losing battle that consumes way too much energy. The book says to focus first on your market-creating (disruptive) innovation, and if you are committed, the other things will likely follow. In some cases, you will end up building the infrastructure, supply chain, etc. yourself.</li><li>Know what job your customers are hiring you for. It’s not always as clear cut as you might think. Ask yourself, does the product or service solve a job my customers need to get done? And if you don't know what that is, start to build up a very strong primary research function within your due diligence team. The information you're looking for is likely not available. Long conversations over tea and coffee will be the best way to understand that job before investing millions into an idea that might not be what the customer wants (almost every well drilling NGO should read that again).</li></ul>For Development Professionals and Philanthropists<ul><li>Stop drilling wells - We all know friends and organizations that have been heartbroken by the terrible issues surrounding lack of infrastructures such as access to power and clean water across Africa. But rarely does it work over the long term to address those problems from a philanthropic perspective. We end up keeping people in uninhabitable places and/or wasting resources because infrastructure is not owned and maintained by the community. Thousands of wells dug with well-intentioned grant dollars lie in ruin across Africa. Christensen’s answer: Let the private sector create a market-disrupting innovation that pulls non-consumers into a marketplace and addresses the issues with a private-sector solution. This isn’t an overnight solution, but perhaps it is time to put more resources towards investing with the private sector vs. flushing grant dollars down wells and toilets. As I like to say, every decent job we create through investment in a local company provides more access to clean water and healthcare.</li><li>Support cultural changes rather than institutional changes - This is hard to do. I get it. But start with the end in mind, and support initiatives that you think will get you there. I wish the book spent more time focusing on what this could/should look like.</li></ul>For Policy Makers<ul><li>Let innovations pull the right policies and infrastructure in place - The authors share stories from developing countries across the world we’d like to forget. We’ve all seen those well-intentioned infrastructure projects that go nowhere because they aren’t in line with what the private sector and the community needs or will use. Rather, is there a way to focus on innovations and let necessary infrastructure and policies follow? The book goes into great detail about how the United States and other countries were before market innovations like Henry Ford’s affordable Model T, which helped pull America’s highway system into existence. This story is well known, and the authors go into many other unknown and overlooked examples of market innovations pulling infrastructure and proper policy into existence.</li><li>Remember good laws are not enough - Christensen opines that institutions reflect what people value, and therefore leaders and policymakers should focus on changing culture where necessary in order to impact institutions. He puts it another way “institutions are a reflection of the culture, behavior and norms.” His advice? Whether you are a policymaker, investor, entrepreneur, or development professional, don’t wait to get institutions right; rather focus on innovation. In the end, most successful institutions grow from culture.</li></ul>For InvestorsThe following are from the book, but it’s slightly difficult to know where the book’s perspective ends and my own begins.<ul><li>You must take a long term approach - If you think you are entering a developing country to make a quick buck, maybe look elsewhere. I know firsthand that building markets take determination and grit, and the book supports that.</li><li>It’s not for lack of resources - Resources already exist in Ethiopia and across Africa. They just need to be developed and properly utilized. Money, natural resources, human resources, you name it, they exist but have a plan to develop them.</li><li>Be prepared to build your own supply chain - Have a strategic plan for where you start investing and know that you can’t just build a hospital. You need to build the infrastructure to make the hospital run, a healthcare worker training school, a patient education and outreach team...you get the idea.</li><li>Look for market-creating innovations (disruptive innovations) - Not that other investments shouldn’t be done, but if/when you find market-creating innovations, and you have the stomach to see them through, you’ll likely find the legacy building financial returns and social impact you crave.</li></ul>In summary, disruptive innovations create new markets by making non-consumers into consumers. The book gave me great hope that building 100M USD companies in Africa is well within reach for RENEW and for entrepreneurs across the continent.If you haven’t read the book, you should.

A must-read for policymakers, entrepreneurs, development professionals, philanthropists and investors in emerging markets

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Book Review: Prosperity Paradox

<h1 style="text-align:center;">RENEW Welcomes Additions to the Management Team</h1><hr>&nbsp;RENEW Welcomes Additions to the Management Team&nbsp;Denver, CO and Addis Ababa, Ethiopia, February 2, 2021 -- RENEW is pleased to announce the following additions and advancements to the team at RENEW:<ul><li><a href="https://www.linkedin.com/in/eziethen/">Emily Ziethen</a> has been promoted to chief operating officer at RENEW.</li><li><a href="https://www.linkedin.com/in/christophe-humbert/">Christophe Humbert</a> has been promoted to group chief sales and marketing officer for RENEW’s shared growth services team.</li><li><a href="https://www.linkedin.com/in/jcoelofse/">JC Oelofse</a> joins RENEW as group chief operating officer for RENEW’s shared growth services team.</li><li><a href="https://www.linkedin.com/in/pranay-shrivastava-23a72616b/">Pranay Shrivastava</a> joins RENEW as group chief finance officer for RENEW’s shared growth services team.</li></ul>RENEW, an impact investment and management consulting firm based in East Africa since 2012, announces further expansion with new executive team members and an internal promotion. This includes additions to RENEW’s Shared Growth Services team including JC Oelofse as Group COO, Pranay Shrivastava as Group CFO and Christophe Humbert as Group Chief SMO. RENEW has also promoted Emily Ziethen to the role of COO at RENEW.Emily Ziethen, who has been with RENEW since September 2014, has been promoted to RENEW COO. Emily directs internal operational management, monitoring and evaluation, external reporting and development project management. Prior to joining RENEW, Emily worked as a fund accountant for Greenspring Associates, a growth-stage venture capital firm, where she was responsible for the financial reporting, communications and management of multiple funds. In 2020, Emily received her MBA from the University of Chicago Booth School of Business with Honors and was the recipient of The Rustandy Center on Social Sector Innovation’s 2020 Social Impact Leader award.Christophe Humbert joins RENEW as Chief Marketing &amp; Sales Officer for the Shared Growth Services team after working for one of RENEW’s portfolio companies, ET Fresh. Christophe brings 20 years’ experience specializing in negotiations, forecasting, procurement, import-export, business planning, sales and sequencing. With a strong passion for strategically leading results-driven teams, gained from his experience in the retail and meat industry supply chains, Christophe’s pragmatic attitude and attention to detail helps optimize the projects he’s leading. Christophe is joining RENEW from Majid Al Futtaim, based in the United Arab Emirates, where he led strategy, sourcing and contract negotiations for the company’s import division.<figure class="image"><img src="/uploads/skyline_c4e485e41f.png"></figure>&nbsp;JC Oelofse joins RENEW’s Shared Growth Services team as Group COO, bringing 30 years’ experience in designing strategies, products, services, experiences and ecosystems. JC has a profound interest in uncovering latent, unmet user needs and has the ability to transform research into simple, actionable solutions. This curiosity is matched with sensitivity to new trends and cultural changes in society, resilience and adaptability to new contexts, environments, projects and countries. JC is joining RENEW from AEO (PTY) LTD, where he served as the Managing Director overseeing the strategic integration of two companies.Pranay Shrivastava joins RENEW’s Shared Growth Services team as Group CFO. Pranay is a dynamic professional with more than 6 years of experience in private equity, investment banking, equity research, financial analysis, corporate strategies and investor relationship management. Over the course of his career, he has held various roles in the financial and investment industry and brings a wealth of knowledge to this new role. Pranay joins the RENEW team from Kenafric Industries in Nairobi, Kenya where he served as a business and financial analyst to the company.“We are implementing an enhanced investment strategy at RENEW and also expanding into more countries in East Africa. We are lucky to have such a great group of professionals join the firm to help us execute on our new strategy. Each one brings an impressive amount of skill and passion for the work,” Matthew Davis, CEO of RENEW, recently said. “We are also excited to have Emily step into the role of RENEW COO. Her commitment to our vision and her impressive management skills made her an obvious match for the role. With this team, and with the rest of the RENEW group, I am confident we will continue to build a world-class investment firm and help investors see Africa as the next great investment market.”About the Impact Angel Network and RENEWRENEW’s Impact Angel Network (IAN) is one of the most active private equity investors in Ethiopia. Its members seek to achieve both significant positive social impact and financial returns through investments in small and medium enterprises (SMEs) in Africa, a proven engine of economic growth and job creation which often lack capital and management capacity due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, the most effective and sustainable way to reduce poverty.RENEW, with its largest office in Addis Ababa, Ethiopia, manages the IAN’s investment operations and provides investment advisory and consulting services in support of its investments. RENEW’s work in Ethiopia was piloted with USAID and is currently undertaken with financial support from the Government of Canada provided through Global Affairs Canada. The project, Accelerating Business Growth, aims to promote sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.&nbsp;###&nbsp;To find out more, please visit <a href="https://renewcapital.com/">www.renewcapital.com</a>.&nbsp;

RENEW is pleased to announce the following additions and advancements to the team

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RENEW Welcomes Additions to the Management Team

<h1 style="text-align:center;">2020 in Review</h1>As we start a new year, it’s one of our traditions at RENEW to look back and remember the high points of the last 12 months. Here are some of the highlights of 2020:<ul><li>January - We hit the ground running in January with a trip to the UK to meet with investors while our East Africa team prepared companies to meet Impact Angel Network (IAN) members during the February Econ-Tourism trip to Ethiopia and Uganda.</li><li>February - Members of the IAN traveled to Ethiopia and Uganda on RENEW’s <a href="https://www.renewcapital.com/resources/blogs/Econ-Tourism%20Trip%202020">Econ-Tourism Trip</a> where they met with 16 entrepreneurs.</li><li>March - We celebrated International Women’s Day with a look at RENEW’s <a href="https://www.renewcapital.com/resources/blogs/RENEW%E2%80%99s%20Gender%20Equality%20Report%20Card">Gender Equality Report Card</a> and a blog authored by four women who work at RENEW.</li><li>April - When the first case of COVID-19 showed up in Ethiopia at the end of March, we began to work with our portfolio companies to develop contingency plans in the event of a prolonged economic slowdown. We shifted from looking at deals during our monthly <a href="https://www.renewcapital.com/apply">Members’ Call</a> to keeping investors abreast of the emerging situation across East Africa.</li><li>May - In response to a growing need to help companies beyond our pipeline and portfolio to make it through COVID-19, we launched a Telegram channel, <a href="https://t.me/OrangeBusinessNetwork">Orange Business Network</a>, and began to produce and share critical resources like training videos, tools and information for the East Africa business community. We also took our <a href="https://latest-api.renewcapital.com/uploads/RENEW_LLC_Investment_Seminar_Series_cbf868ea76.pdf">investment workshops</a> online to help curb the spread of COVID-19 and to expand our reach to more businesses in need of support. At the end of the month, members of the <a href="https://www.renewcapital.com/what-we-do/investing">Impact Angel Network</a> funded a third investment in Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a>, which continues to play a critical role in slowing the spread of the virus, and has become one of the largest e-commerce companies in Ethiopia.</li><li>June - We published our <a href="https://www.renewcapital.com/resources/blogs/Celebrating%20our%20Impact">2019-2020 Impact Report</a>! This year's report was a photographic journey through a year of investing with RENEW in East Africa. Thousands of people around the world enjoyed seeing pictures of impact and investing in East Africa.</li></ul><figure class="image image_resized" style="width:100%;"><img src="/uploads/ezgif_com_gif_maker_6f6b429047.gif"></figure><ul><li>July - Political unrest sparked by the assassination of a political activist put the country on stand-still as the government turned off the internet and left millions in the dark and disconnected from the rest of the world. Despite this, companies like Deliver Addis pivoted and many companies found ways to continue to do business and weather the political unrest.</li><li>August - the Internet was restored and our team began to line up some excellent investment opportunities that would consume our work for the second half of the year as RENEW and the IAN began a new investment strategy that focused on building stronger middle management teams across our portfolio companies.</li><li>September - After five months of running contingency planning webinars for entrepreneurs, we analyzed poll data from these workshops, taking a deeper look into the effects COVID-19 has had on Ethiopian SMEs. We learned valuable insights into how female and male managers and owners responded differently to crises like COVID-19. These underscored the importance of building gender-balanced executive teams in companies - which is part of RENEW and the IAN’s new investment strategy.</li><li>October - We <a href="https://www.renewcapital.com/about/teams">grew our team</a> by bringing on Paul Reynolds as head of asset management, and Kirsten Newman was promoted to RENEW’s general counsel.</li><li>November - RENEW’s Matthew &amp; Laura Davis, and Dagmawit Shiferaw were featured on <a href="https://youtu.be/rb4aFE6Ukww">EBS’s Ethio-Business Show</a>, talking about RENEW’s investments in Ethiopia and the critical importance of the development community ecosystem that is supporting the private sector in Ethiopia. We also announced an investment into Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a>, despite the global pandemic and domestic challenges.</li><li>December - We closed the year by building a pipeline of companies for potential investments in 2021, and began expanding out of Ethiopia into the region; adding members to our Uganda team and building a new investment team in Rwanda.</li></ul>February 2021 will mark nine years RENEW and the Impact Angel Network have been in East Africa. The IAN is the most active SME investment group in Ethiopia and continues to expand and invest in new companies across East Africa. Despite the challenges of 2020, we believe we learned a lot, made it through with our heads held high and we’re better off because of the many lessons we learned.We are most grateful to our partners at Global Affairs Canada and USAID who make our work in Ethiopia, Uganda and Rwanda possible. Both have charged into the world of blended finance and are helping to develop new, more sustainable ways to create leverage and impact in Africa. We are also grateful for our fearless and dedicated investors who continue to believe in the potential of the continent and in entrepreneurship to drive positive change. We are grateful to our entrepreneurs, who have shown perseverance through an unbelievably challenging year in an already challenging environment. And lastly, but not least, our team at RENEW - you remain loyal to our clients and our companies working tirelessly to help plant the seeds for a vibrant economy in the decades and centuries to come.Happy New Year...now let’s get back to investing!The RENEW Team<a href="https://www.linkedin.com/in/matthew-davis-a948772/">Matthew Davis</a>, <a href="https://www.linkedin.com/in/paulreynolds5/">Paul Reynolds</a>, <a href="https://www.linkedin.com/in/laura-davis-25764430/">Laura Davis</a>, <a href="https://www.linkedin.com/in/justin-reesor-019a942a/">Justin Reesor</a>, <a href="https://www.linkedin.com/in/eziethen/">Emily Ziethen</a>, <a href="https://www.linkedin.com/in/tsegamlak-solomon-921175a2/">Tsegamlak Solomon</a>, <a href="https://www.linkedin.com/in/kirsten-newman-10301aa7/">Kirsten Newman</a>, <a href="https://renewcapital.com/team/teddy-fantahun">Teddy Fantahun</a>, <a href="https://www.linkedin.com/in/dagmawit-shiferaw-8665943b/">Dagmawit Shiferaw</a>, <a href="https://www.linkedin.com/in/filseta-asrat-4b5615158/">Filseta Asrat</a>, <a href="https://www.linkedin.com/in/mary-adoi-0317b0b8/">Mary Adoi</a>, <a href="https://www.linkedin.com/in/tamirubelayneh/">Tamiru Belayneh</a>, <a href="https://www.linkedin.com/in/ca-shail-bhandari-272484128/">Shail Bhandari</a>&nbsp;

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2020 in Review

<h1 style="text-align:center;">A Small but Important Step in Ethiopia's Relationship with its Growing Private Sector</h1>Since the mid-1970s, Ethiopia has gained the reputation of being a challenging country to do business in. Despite the amazing progress the country has made over the last 20 years, the country still ranks 159 out of 190 in the World Bank’s <a href="https://www.doingbusiness.org/en/rankings">Ease of Doing Business</a> ranking. Different reasons have contributed to this challenging environment, including the lack of transparency and the inconsistency in the application of the country’s laws by the different administrative bodies of the government, and what some refer to as a communist hangover - the government has traditionally viewed the private sector as a corrupt enemy versus the engine that drives prosperity. As a foreign investor operating in Ethiopia, RENEW has had firsthand experience dealing with these challenges, directly or indirectly, through our portfolio companies. In addition to these challenges, the lack of a formalized grievance handling mechanism has created uncertainty in our day to day operations.<figure class="image"><img src="/uploads/tsegablogimage_0_95eb967b0c.jpg"></figure>However, following the government’s adoption of an economic policy in favor of the private sector (see our recent blog on the <a href="https://www.renewcapital.com/resources/blogs/The%20Ethiopian%20Business%20Environment%20in%20Light%20of%20the%20Homegrown%20Economic%20Reform%20Program">Homegrown Economic Reform Program</a>) and the enactment of new investment laws (<a href="https://www.africalegalnetwork.com/ethiopias-new-investment-law-key-changes/#:~:text=New%20Rules%20on%20Work%20Permit,the%20operation%20of%20its%20business.&amp;text=In%20addition%2C%20the%20New%20Proclamation,a%20work%20permit%20in%20Ethiopia">LINK</a> to the major changes), which followed the Reform Program, the government introduced an investor grievance and an investment dispute resolution mechanism. As per the new investment laws, an investor with any kind of grievance, related to his/her investment in Ethiopia, against the decision of any Federal Government executive body, is entitled to submit a complaint to the Ethiopian Investment Commission (EIC) to get it resolved.Despite the enactment of this privilege under the investment proclamation, the implementation has remained unclear until recently. The EIC, in the presence of the Commissioner and other stakeholders, developed and launched a systematic and formalized investment grievance handling mechanism referred to as the Investment Grievance Management Procedure (IGMP), which has been informally operational since 2019, but was formally launched in December 2020. According to the Investment Commission, IGMP is an early warning and tracking mechanism to identify problems that arise from decisions made by the federal government in relation to changes of laws, breach of contracts, expropriation, and/or inaction of the government in case of third party interventions. This allows the federal government to respond to grievances in a timely manner as per the country’s laws, regulations and international investment agreements.ProcedureSo how would an investor use this new service? The team at RENEW met with the EIC to learn how the process works. Here’s what we know.First, a complaint must be submitted to the IGMP against any final decision made by a Federal Government executive body, and the following three cumulative requirements need to be met:<ul><li>The complaint must be submitted by an established or operational investor in Ethiopia;</li><li>The complaint must be directed towards a Federal Government agency in regards to a potential violation of the rights and protections guaranteed to investors in domestic laws or international investment treaties;</li><li>The issue has become a grievance and a policy, regulation or administrative intervention is needed to address it.</li></ul>Next, once a grievance is filed to the IGMP against a decision made by the EIC or any other Federal Government executive body, the unit undertakes a technical and problem-solving session involving consultation and engagement with the relevant Federal Government executive agency/agencies. If the unit is unable to resolve the investor’s grievance through its technical and problem-solving session, it refers the case to the Ethiopia Investment Board.If the grievance goes to the Investment Board, which is chaired by the Prime Minister, it is reviewed and a final decision is made.All of this sounds well and good, but how long will this process take? Will the government really act as an honest broker, accusing itself of wrongdoing? If found that the grievance is legitimate, who will pay for the lost revenues and damage the government inflicted wrongly on the company? While we see this process as a great step forward in Ethiopia’s goal to improve its doing business environment, like many things, the process needs to be streamlined, tested, and the people working in it need to be empowered to make decisions. Otherwise, it becomes yet another bureaucratic step that the private sector must go through to fight a government that doesn’t support its growth.The introduction of a grievance mechanism, if it actually works effectively, will be a huge relief for investors whose investments have been put at risk by the different arbitrary and obscure administrative decisions undertaken by the different government agencies. RENEW has first-hand experience of such decisions impacting our companies. This will provide a platform for foreign investors already registered in Ethiopia to have their complaints heard and resolved, which could result in the reinvestment of their returns. It can also be considered a step forward in the country's attractiveness for foreign investors and could serve as a hook to attract new investors to the country.

Ethiopia’s investor grievance mechanism

Ethiopia

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A Small but Important Step in Ethiopia's Relationship with its Growing Private Sector

<h1 style="text-align:center;">Short Stories of African Businesses who Persevered Through 2020</h1>2020 was a challenging year for businesses all around the world. But in Africa, where the government safety net is extremely fragile and companies are already faced with insurmountable challenges like frequent power outages, months of waiting for critical imports, broken supply chains, internet outages and political instability, the COVID-19 pandemic, which brought much of the world to its knees, could have been the straw that broke Africa’s private sector’s back...but it didn’t.Below are some short stories on how some of RENEW’s portfolio companies [1] weathered the storm.&nbsp;<figure class="image image_resized" style="width:96.37%;"><img src="/uploads/newyear3_4ca5e2398a.jpg"></figure><ul><li>Desta - Western markets all but shut down in 2020; very few people ventured to malls to shop for the season’s new line of clothes which had a ripple effect around the world and especially on the textile supply chain. In countries like Ethiopia, which are desperately trying to develop a textile industry, the ripple effect was felt hard. Desta, which the IAN made an investment into in 2015, was no exception to this. In addition to orders being delayed, they also had to protect over 1,300 workers and educated and safeguarded the local community where they worked to ensure COVID did not spread. Not only did the company adopt safety measures for their staff, but they also produced and distributed face masks to organizations that serve their community and donated more than 5,000 face masks to the community at large. Desta’s management used a slow few months to invest in more infrastructure, which paid off when the West began to reopen and supply chains restarted. They hired and trained 470 new employees at their Butajira factory and have become one of the largest employers in that region. You can read more about their recent expansion in their blog post.</li><li>dVentus - In collaboration with RENEW, engineers from dVentus developed a ventilator prototype based on locally sourced materials in Ethiopia. Although the machine wasn’t needed due to a surprisingly low number of hospitalizations in Africa from COVID, the team demonstrated how adaptable and creative the private sector can be when the need presents itself.</li><li>Kijani Baby - This year, despite the harsh lockdown measures undertaken by the Ugandan government, Kijani Baby, our reusable cloth diaper company, was able to develop new products such as training pants for toddlers and quick-dry swimming diapers. They also started selling their products in Kenya and continued to focus on the U.S. and U.K. markets.</li><li>METAD - The coffee company opened their new state-of-the-art coffee processing facility in February 2020, employing 52 permanent employees and 225 temporary and contract workers. The METAD team had a record-breaking volume from their 6,800+ out-growers, which was about 3x what they've been processing for the last six years. METAD continues to develop projects with leaders and elders in order to continually give back to their local community. Read more about the new factory <a href="https://www.facebook.com/692180905/posts/10157519683085906/">here</a>.</li><li>Roadrunner | Deliver Addis - Ethiopia’s premier online food delivery company had a banner year. Thanks to the creativity, skill and speed of Feleg Tsegaye and the Deliver Addis team, the company quickly scaled up services, expanded their online store to include groceries and other consumer products, weathered an internet blackout for an entire month, and still came out hitting daily records for deliveries. The IAN saw the growing demand for e-commerce in Ethiopia sparked by COVID and made two investments to help the company scale up.</li><li>Queen of Sheba | Travel Ethiopia - The tourism industry was hit hard by COVID-19, but Travel Ethiopia wasted little time to pivot and repurpose their vehicles to support government and other private sector clients. As part of those measures, Travel Ethiopia secured a contract with the FDRE Ministry of Health to rent four of its idle vehicles to the Ministry in its effort to fight COVID-19.</li></ul>We are proud that as of June 30, 2020, through the investments made by the Impact Angel Network with support from Global Affairs Canada and USAID, we have created 2,114 jobs, helped support 2,936 jobs, supported 7,700 smallholder farmers, and attracted $45 M USD ($57.1M CAD) to companies through our work in East Africa. We’re extremely proud of all the hard work and the resiliency of our companies that went into 2020. We are cautiously optimistic about the accomplishments we’ll see in 2021!

A snapshot of what happened with our portfolio this year

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Short Stories of African Businesses who Persevered Through 2020

<h1 style="text-align:center;">5 Reasons We Remain Long on Ethiopia</h1>When considering investing in Ethiopia, it is impossible to overlook the country's recent challenges including the outbreak of the desert locust (<a href="https://www.theguardian.com/global-development/2020/nov/16/war-ethiopia-locust-swarm">LINK</a>), COVID-19, regional tensions over the Grand Ethiopian Renaissance Dam (GERD) (<a href="https://foreignpolicy.com/2020/12/03/ethiopia-needs-united-states-honest-broker-blue-nile-dam-dispute-gerd-egypt-sudan/">LINK</a>) and the unrest that has occurred in 2020, especially the latest conflict and war in the northern parts of the country between the federal government and the Tigray People's Liberation Front (TPLF) (<a href="https://www.washingtonpost.com/world/africa/ethiopia-tigray-war-aiby/2020/12/04/98b1b95e-35a8-11eb-9699-00d311f13d2d_story.html">LINK</a>). But it’s important to look beyond the headlines and recognize the progress that’s been made since RENEW opened an office in 2012. Here are our top five reasons why we remain long in Ethiopia.&nbsp;<figure class="image image-style-align-center image_resized" style="width:87.84%;"><img src="/uploads/skyline_5_9e9c12f56a.jpg"></figure>1. Investment Law ReformIn 2019, Ethiopia began to implement a new economic policy reform (the Homegrown Economic Reform Agenda). The major goal of the reform program is to open the country’s market for the private sector and to make the country more business-friendly (read our analysis on this reform <a href="https://www.renewcapital.com/resources/blogs/The%20Ethiopian%20Business%20Environment%20in%20Light%20of%20the%20Homegrown%20Economic%20Reform%20Program">here</a>). The Ethiopian government plans to undertake measures that will allow the private sector to take the wheel in leading the economy and includes measures to improve the country’s ranking in the World Bank’s <a href="https://www.doingbusiness.org/en/rankings">Ease of Doing Business</a> ranking.Under the Ease of Doing Business initiative, the government took steps to change its investment laws (the Investment Proclamation and Investment Regulation), which were in effect since 2012. The new investment laws lifted the majority of the sector restrictions that were imposed on foreign investors, improved administrative complications and introduced dispute settlement mechanisms. By way of example, the new investment laws saw the opening of transport services, education, health, cement manufacturing, and wholesale and retail trades via electronic commerce, among others. The new investment law also adopted a negative listing approach; it lists 33 areas that are reserved for domestic investors and anything outside of these areas are now open to foreign investors.2. Improving InfrastructureDuring the last decade, Ethiopia has invested in infrastructure improvements. Having nine major rivers with several tributaries, the country holds one of the highest hydropower potentials in Africa. Based on that, the government has invested in hydroelectric power generation projects such as the GERD, which will be the largest hydroelectric power dam in Africa once it’s fully functional.In addition to power generation, the government has been involved in other infrastructure development projects, including the Addis Ababa-Djibouti railway project, the industrial zone development projects that are being undertaken across the country and the road projects that connect Ethiopia with neighboring countries. As Ethiopia is a landlocked country, the railway line and the road projects connecting the country to Djibouti and other ports will increase the accessibility of Ethiopian products to the international market.3. Privatization of Key SectorsOne part of the Homegrown Economic Reform Agenda is the privatization of some government enterprises, which had a monopoly in controlling the country’s markets. Ethio Telecom, which is the only telecom operator in the country, is a government-owned enterprise that is currently selling part of its membership interest to international operators. In addition to selling part of Ethio Telecom, the government also issued two new licenses for telecom operators. Different international operators have shown an interest to participate in the bid for these newly issued licenses. This will increase the addressability of telecom services to the unconnected portion of the population. In total, the Government of Ethiopia aims to raise at least $7.5 billion USD from selling assets from the sugar industry, telecom, railroads and other infrastructures.[1]The other sector that is currently experiencing a change in control is the financial sector. The financial sector has historically remained closed to foreign nationals, regardless of their origin. However, a few months after the new administration took power, the sector was opened up to foreign nationals of Ethiopian origin (diasporas). Going forward, the government has pledged to take measures to open the financial sector to foreign investors.4. Regional Integrations and AfCFTAOn March 21, 2018, the African Union member states signed the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda in order to boost trade, economic growth and integration among African countries. The Agreement established a free trade area, a protocol on trade in goods, and a protocol in trade in service. Ethiopia ratified the agreement and deposited the ratification document on April 10, 2019.The agreement gives free access to the market of member countries. Member states are obliged to progressively eliminate tariffs or charges on goods and services originating from member states. As a result, products originating from Ethiopia will have access to the markets of the countries that have ratified the agreement. As of 2020, 28 African countries have ratified the agreement, including: Ghana, Kenya, Rwanda, Niger, Chad, Congo Republic, Djibouti, Guinea, Swaziland, Mali, Mauritania, Namibia, South Africa, Uganda, Ivory Coast (Côte d’Ivoire), Senegal, Togo, Egypt, Ethiopia, The Gambia, Sierra Leone, Sahrawi Republic, Zimbabwe, Burkina Faso, São Tomé and Príncipe, Gabon, Equatorial Guinea and Mauritius. Protocols which relate to intellectual property rights, investment and competition policy are underway.From the regional integration perspective, Prime Minister Dr. Abiy Ahmed brokered a peace deal with Eritrea, which ended the Ethio-Eritrea border conflict that lasted for more than two decades. This resulted in the opening of borders between the two countries and ensured the free movement of people and goods. In addition, the Eritrean ports are now one of the main outlets for Ethiopian products. This resulted in Prime Minister Abiy receiving the <a href="https://www.nobelprize.org/prizes/peace/2019/press-release/">2019 Nobel Peace Prize</a>.5. Macroeconomic TrendsAnother reason to remain long on Ethiopia is the country’s track record for being one of the fastest-growing economies in the world. As per the World Bank Report, the Ethiopian economy has experienced a strong, broad-based growth averaging 9.9% growth from 2007/08 – 2017/18.[2] When compared to the regional average of 5.4%, the Ethiopian economy has been growing exponentially. Though the growth rate will inevitably slow as a result of the pandemic and the conflict, there are signs that the growth rate may still be positive.In terms of population, Ethiopia is the second-most populous nation in Africa with a population of 110,000 million people. Sixty percent of the population is of working age, entailing the availability of an inexpensive labor force. In addition, with the growing population, there is also an increase in the middle-income population. This is expected to increase the domestic demand for goods and services.Ethiopia is also endowed with fertile land suitable for the production of coffee, pulses, oilseeds, cereals, flowers and various fruits and vegetables. Coffee holds the biggest share of Ethiopian agricultural products sold to the international market, and Ethiopia is currently Africa’s largest producer of coffee.Overall, with these development trends, Ethiopia aims to achieve the status of a lower-middle-income country by 2025, joining countries like India, Bangladesh and Vietnam.[3] Of course, there are still a number of bottlenecks that the government is expected to tackle in order to achieve that status, but we remain hopeful.

Looking beyond the 2020 challenges at the investment opportunity

5 Reasons We Remain Long on Ethiopia

<h1 style="text-align:center;">It’s That Time of Year... For Financial Optimization</h1>During the last quarter of each year, many around the world spend time preparing for the Christmas holiday and tax season! If you are in the United States, there’s an option to optimize your impact investing with a vehicle called a donor-advised fund (DAF).According to a recent article in Axios (<a href="https://www.axios.com/covid-19-spurs-generosity-among-holders-of-donor-advised-funds-7894b4f9-04c5-4b00-87f1-2b52df090e0a.html?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosdeepdives&amp;stream=top">COVID-19 spurs generosity among holders of donor-advised funds</a>) more than $120B sits in DAFs and in 2020 at Vanguard Charitable, donors made $1.3B in grants, which was about 25% higher than 2019.Accredited, entrepreneurial-minded givers from the United States can invest in companies in East Africa with RENEW from a DAF which would have the potential of earning a return on their charitable capital. It may be helpful to think of a DAF as a philanthropic checkbook. A donor transfers assets (e.g., cash, securities, other rights or assets) into a DAF account with a non-profit organization (like divisions of <a href="https://www.schwab.com/donor-advised-fund">Charles Schwab</a> and <a href="https://www.fidelitycharitable.org/open-account.html">Fidelity</a>, <a href="https://www.impactassets.org/our_products/donor-advised-fund">ImpactAssets</a>, the <a href="https://www.ncfgiving.com/open/">National Christian Foundation</a> and <a href="https://impactfoundation.org/open-an-account">ImpactFoundation</a>) that is set up to manage DAFs and facilitate transfers into and out of DAFs in line with IRS rules. Donors then receive a charitable deduction in the amount of the value of the assets transferred to the DAF in the year in which they make the deposit. The funds sit in the account until the donor is ready to make grants to charitable entities or to make impact investments. Any returns earned on the investments are returned to the DAF and can be reinvested or donated.&nbsp;<figure class="image image_resized" style="width:97.28%;"><img src="/uploads/sunset_ethiopia_0_1eef1006e0.jpg"></figure>To make impact investments using a DAF, you’ll need to work with an intermediary like ImpactAssets or Impact Foundation, organizations that specialize in the work necessary to diligence and make an investment using a DAF. This is possible, even if your DAF is held at Schwab or another institution.ImpactAssets is an independent public charity first launched in 2001 by Calvert Foundation. The primary tool of ImpactAssets is known as the Giving Fund, an enhanced DAF that facilitates investments of $25,000 or more and provides socially responsible and impact investment options – enabling philanthropists to both “give and invest for the greater good.”Impact Foundation is an intermediary that can facilitate charitable investments of $100,000 or more. Impact Foundation was founded to provide a streamlined way to fund transformational businesses, make loans to charity, and grow the amount you have to give away. Impact Foundation has a working partnership with the National Christian Foundation to assist NCF donors in making private equity and venture capital investments.Want to learn more? Here are some more resources:<ul><li><a href="https://renewstrategies.formstack.com/forms/daf_for_impact_investing">Download an Interview with Sally Boulter of ImpactAssets</a></li><li><a href="https://drive.google.com/file/d/1JF7QJfASnwqf31gWmkWX8wQfWhgvCFPx/view">Download RENEW’s DAF Q&amp;A</a></li></ul>Contact us at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> if you have questions. And if you aren’t already a member, we invite you to <a href="https://renewstrategies.formstack.com/forms/renew_investor_accreditation_form">apply to join the Impact Angel Network</a>.*The information contained in this blog and the resources linked above is for informational purposes only and no representation is made that the information is accurate or complete, nor should it be relied upon as such. In addition, this information is not intended as legal or tax advice. For such advice, please consult your attorney or tax advisor.

For U.S. Investors: Should a DAF be part of your impact investing planning?

It’s That Time of Year... For Financial Optimization

<h1 style="text-align:center;">Press Release: Roadrunner Technology Solutions Attracts Investors Despite Challenges</h1>&nbsp;<a href="https://latest-api.renewcapital.com/uploads/Press_Release_Roadrunner_FINAL_f7a7e698b8.pdf">Download the Full Press Release</a><hr>&nbsp;Roadrunner Technology Solutions Attracts Investors Despite Domestic and Global Challenges&nbsp;Denver, CO and Addis Ababa, Ethiopia, November 19, 2020 -- Despite the global COVID-19 pandemic and domestic challenges in Ethiopia, Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a> (the d/b/a name of Universal Courier Services PLC), continues to see rising demand for its services and is pulling ahead to become one of Ethiopia’s largest and fastest-growing e-commerce platforms. This strong growth has helped the company attract a follow-on investment from RENEW’s <a href="https://renewcapital.com/what-we-do/investing">Impact Angel Network</a> (IAN) and attract interest from a number of venture and equity investors eyeing the tech sector in Ethiopia as an up-and-coming opportunity in Africa. Deliver Addis is a pioneer in the e-commerce space and has been delivering since 2015. Over the past three years, the Company has expanded significantly, delivering food to tens of thousands of consumers from 140+ restaurants and, through its online marketplace, is now selling groceries, flowers and other consumer goods.Since receiving an initial investment from the IAN in 2017, the company has expanded their online offerings and their delivery capabilities. Since April, the company has been growing at an impressive rate and has been able to acquire new customers throughout the pandemic, which has caused a major cultural shift with consumers ordering food rather than eating in a restaurant. The company has been supporting economic recovery initiatives throughout COVID-19 for small and medium-sized enterprises (SMEs) by expanding their range of products and services. Deliver Addis has also been continuously improving on their technological capability to help customers discover better places and products around them, as well as expanding and enhancing their current fleet and logistical capabilities.&nbsp;<figure class="image"><img src="/uploads/rr_press_release_0_16642eabe2.png"></figure>"E-commerce and companies like Deliver Addis are seeing a rise in demand around the world due to COVID-19,” noted RENEW’s CEO, Matthew Davis, recently. “But, even without this, the company is growing as Ethiopian consumers are coming online and the world’s 12th largest populated country begins to privatize key sectors of their telecom and banking sector. Because of this, Deliver Addis and Roadrunner are well-positioned to capture a market we believe will continue to experience considerable growth in the coming years."“The future looks bright for Deliver Addis as we continue to focus on customer acquisition and provide high-quality services to our customers in Ethiopia,” said Founder and CEO of Deliver Addis, Feleg Tsegaye, recently. “We’re grateful for the Impact Angel Network’s continued commitment to our vision and growth as we continue to grow the leadership team and create additional employment opportunities for youth and vulnerable groups."The investments made by the Impact Angel Network have been made possible because of RENEW’s partnership with <a href="https://www.international.gc.ca/global-affairs-affaires-mondiales/home-accueil.aspx?lang=eng">Global Affairs Canada</a> (GAC). RENEW’s blended finance partnership with GAC aims to support high potential, responsible SMEs in Ethiopia, providing them with the tools, resources and training they need to attract and efficiently use finance to grow, thereby enabling them to play a stronger role in the Ethiopian economy.About the Impact Angel Network and RENEWThe <a href="https://renewcapital.com/what-we-do/investing">Impact Angel Network</a> is one of the most active private equity investors in Ethiopia. Its members seek to achieve both significant positive social impact and financial returns through investments in small and medium enterprises (SMEs) in Africa, a proven engine of economic growth and job creation that often lacks capital due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, the most effective and sustainable way to reduce poverty.RENEW, with its largest office in Addis Ababa, Ethiopia, manages the IAN’s investment operations and provides investment advisory and consulting services in support of its investments. RENEW’s work in Ethiopia was piloted with USAID and is currently undertaken with financial support from the Government of Canada provided through Global Affairs Canada. The project, Accelerating Business Growth, aims to promote sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.&nbsp;###&nbsp;To find out more, please visit <a href="https://renewcapital.com/">www.renewcapital.com</a>.