<h1 style="text-align:center;">September Resource Blog</h1>Our September Resource Blog takes a look at our favorite articles from this past month. Read through the below to learn more about venture capital, selling family businesses and the story of See’s Candies (one of Warren Buffet’s early investments).<ul><li><a href="https://larrysiegeldotorg.files.wordpress.com/2019/07/siegel_venture-capital.pdf">The History and Future of Venture Capital Investing</a>: Are you curious how venture capital has evolved into a backer of some of the common brands that we use or depend on? This article takes you through the history of the industry. Throughout the article, the author tries to answer if venture capital (VC) is a good investment and whether VC investors can expect the same returns as in the past. (Laurence Siegel)</li><li><a href="https://www.nytimes.com/2019/08/09/your-money/whats-left-after-a-family-business-is-sold.html">What’s Left After a Family Business Is Sold?</a>: After so much attention to running things, little thought goes into what comes next after a family business is sold. This article describes stories from multiple families who sold their business and then went on to do many things, including managing money by investing in other businesses. (New York Times)</li><li>The Full See’s Candies Story: People &amp; Product: The story of See's Candies. See's was one of the early investments made by Warren Buffett. “Buying See’s Candies was not only a good investment for us, it was a positive learning experience. We discovered that we had purchased a company that held itself to a high standard of business ethics – product quality, service integrity, and the right sort of relationships with employees and suppliers. See’s Candies became our model for investment in other quality companies… [See’s was] a company that taught us early a vital lesson about the way to do business.” – Warren Buffett. (Intelligent Fanatics)</li></ul>Interested in learning more about a specific topic? Contact us and let us know what interests you at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a>.<figure class="image"><img src="/uploads/resources_0_0e60e0a394.jpg"><figcaption>Image Source: Toggl: <a href="https://toggl.com/business-resources/">Business Resources and Useful Links</a></figcaption></figure>&nbsp;&nbsp;

Our favorite articles for the month of September.

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September Resource Blog

<h1 style="text-align:center;">Press Release: RENEW &amp; the IAN Close Investment in a Tour and Safari Company</h1><a href="https://renewcapital.com/sites/default/files/final_press_release_-_travel_-_aug_21_2019.pdf">Download the Full Press Release.</a>Denver C.O. and Addis Ababa, Ethiopia, August 21, 2019 -- RENEW’s <a href="../../impact-angel-network/impact-angel-network.html">Impact Angel Network</a> (IAN) have closed their second investment from the recently capitalized <a href="press-release-renew-ian-commit-capital-all-women-fund.html">Women-Owned Business Investment Fund</a>, which was set up to invest in female entrepreneurs in Ethiopia and Uganda. The second investment will be made into a company that supports tourism in Ethiopia, which will partner with Travel Ethiopia PLC (<a href="https://www.travelethiopia.com/">Travel Ethiopia</a>). Travel Ethiopia was founded by Samrawit Moges, who is also the Managing Director.Samrawit Moges graduated from Addis Ababa University in 1983 with a degree in journalism. At that time, Ethiopia was under a socialist regime and it was compulsory to enter a lottery for employment after graduation. Samrawit was assigned to the sole tour company in Ethiopia (the government-owned National Tour Operator (NTO)). Though it was not her intent to work in tourism, once placed there, it became her passion. After the socialist government was overthrown in the early 1990s, Samrawit resigned from the NTO and established Travel Ethiopia in 1994 with her now late husband.Travel Ethiopia is a private, eco-minded tour and safari company which offers a variety of tour packages, with varying experiences, durations and price points, for travelers wishing to explore Ethiopia. The company’s tours are full-service, with multilingual guides, a fleet of vehicles and (where needed) camping gear. Their mission is to provide a high standard of services to its clients while allowing them to enjoy a unique experience and taste of Ethiopia, its culture, history and natural environment.<figure class="image"><img src="/uploads/skyline_f7b9ec9989.png"></figure>As a member of the responsible tourism network, Travel Ethiopia tries to minimize negative social, economic and environmental impact and generate economic benefits for local communities. They’re especially committed to contributing to women’s empowerment in Ethiopia. The company was the first tour agency in the country to hire permanent female guides.“The investment and collaboration with RENEW certainly will take Travel Ethiopia one step up,” said Samrawit Moges.“Samrawit has a rare combination of grit, elegance, and confidence,” says Matt Davis, Partner at RENEW. “Samrawit was front-and-center during The Exec’s Program sessions, and she was extremely determined to implement what she learned. This is exactly the type of owner we’re looking to partner with. And she has an incredible passion for shaping the travel industry in Ethiopia - cleaning it up and making it top-tier. As a woman, it’s hard enough to make it work in Africa, but watching Samrawit in action, if there’s anyone that can make it happen, it’s her.”About the Women-Owned Investment FundRENEW and the IAN committed capital to a fund dedicated to investing in women-owned and led companies in Ethiopia and Uganda. The fund is considering investments in other female entrepreneurs, pending completion of due diligence. The fund was designed by RENEW and the IAN to address social and financial barriers holding back female entrepreneurs in Africa. The fund, which supports the <a href="https://sustainabledevelopment.un.org/?menu=1300">Sustainable Development Goals</a> (SDGs) and will support job creation for women and youth and empower women entrepreneurs in Ethiopia and Uganda, was made possible by RENEW’s partnership with Global Affairs Canada under the Accelerating Business Growth (ABG) project.<a href="press-release-renew-ian-commit-capital-all-women-fund.html">Click here for the full Press Release</a>About the Impact Angel Network and RENEWThe 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 due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, is 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 at 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="../../index.html">www.renewcapital.com</a>.

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Press Release: RENEW & the IAN Close Investment in a Tour and Safari Company

<h1 style="text-align:center;">August Resource Blog</h1>Our August Resource Blog takes a peak at some of the topics we go over during the <a href="https://www.renewcapital.com/companies">CFO100 Program</a>. Take a few minutes and read through the articles below for a look into business forecasting, managing your cash flow and the strategic role of CFOs.<ul><li><a href="https://hbr.org/2015/05/outsmart-your-own-biases">Outsmart Your Own Biases</a>: When it comes to forecasting and making business decisions, we all face the challenge of biases that limit our vision and hamper our decision-making process. Most of us tend to be overconfident in our estimates. This article shares various strategies to build scenarios and use other tactics to avoid biases in decision making. (Harvard Business Review)</li><li><a href="https://quickbooks.intuit.com/r/financial-management/10-tips-managing-cash-flow/">10 Tips for Better Managing Cash Flow</a>: Cash flow is important for all businesses, but it is critical for early startups. If you cannot manage your cash flow within the first year, you will likely not survive the second year. This article outlines 10 tips to manage your cash flow. (Quickbooks)</li><li><a href="https://www.mckinsey.com/~/media/McKinsey/Business Functions/Strategy and Corporate Finance/Our Insights/Strategy and corporate finance special collection/Final PDFs/McKinsey-Special-Collections_RoleoftheCFO.ashx">Building a better partnership between finance and strategy</a>: The growing strategic role of CFOs may create tension with top strategists or CEOs in small and medium-sized businesses. That’s a missed opportunity for teaming up to improve company performance. Working together, CFOs and CSOs/CEOs have the stature to challenge biases and influence how the top team makes decisions to improve a company’s performance. (McKinsey &amp; Company)</li></ul>Interested in learning more about a specific topic? Contact us and let us know what interests you at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a>.<figure class="image"><img src="/uploads/training_1_9e44c6f479.jpg"></figure>

Business forecasting, managing your cash flow and the strategic role of CFOs

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August Resource Blog: 2019

<h1 style="text-align:center;">Press Release: RENEW &amp; the IAN Close Investment in Diaper Company</h1><a href="https://latest-api.renewcapital.com/uploads/Press_Release_Kijani_FINAL_457b9dc5ff.pdf">Download the Full Press Release.</a>Denver C.O. and Addis Ababa, Ethiopia, July 17, 2019 -- RENEW’s <a href="https://www.renewcapital.com/what-we-do/investing">Impact Angel Network</a> (IAN) has made their first investment in Uganda from their recently capitalized women-focused investment fund. The fund was set up to invest in female entrepreneurs in Ethiopia and Uganda, and the first company to receive an investment is Kijani Baby (<a href="https://www.kijanionline.com/">Kijani</a>).Kijani is a cloth diaper company founded and led by Valerie Muigai and her husband, Mugai Ndoka. Ms. Muigai launched Kijani in 2013. After buying cloth diapers for her first child, Ms. Muigai learned how to make her own diapers for their second child. When the couple moved to Uganda, Ms. Muigui brought the extra diaper fabric and began making diapers for friends as baby gifts, at which point she realized there were no modern cloth diapers available in the Ugandan market. The couple saw an opportunity and established Kijani Baby.Kijani is Swahili for green, and was chosen to reflect the company’s commitment to environmental sustainability. Kijani’s vision is to provide a high-quality, affordable, environmentally-friendly alternative to disposable diapers and to provide positive employment opportunities for Ugandan women. The company aims to create well-paid jobs and a good work environment for its employees.<figure class="image"><img src="/uploads/kijani_collage_b3cf8f84d7.jpg"><figcaption>Image Source: <a href="https://www.facebook.com/kijaniuganda/">Kijani Baby - Uganda/ East Africa Facebook Page</a></figcaption></figure>“We at Kijani are very excited to begin this partnership with RENEW,” said Valerie Muigui. “This investment will be instrumental to scale our production and improve our systems, so we can grow and make washable diapers affordable and accessible for more families in East Africa.”“As an entrepreneur myself and a mother of an infant daughter, I really respect Valerie and what she has built at Kijani Baby,” said Laura Davis, partner at RENEW. “We are excited to partner with Kijani to help the company expand in East Africa, and I will continue to use the company’s high-quality products to diaper our little one.”RENEW and the IAN committed capital to a fund dedicated to investing in women-owned and led companies in Ethiopia and Uganda. The fund is considering investments in other female entrepreneurs, pending completion of due diligence. The fund was designed by RENEW and the IAN to address social and financial barriers holding back female entrepreneurs in Africa. The fund, which supports the <a href="https://sustainabledevelopment.un.org/?menu=1300">Sustainable Development Goals</a> (SDGs) and will support job creation for women and youth and empower women entrepreneurs in Ethiopia and Uganda, was made possible by RENEW’s partnership with Global Affairs Canada under the Accelerating Business Growth (ABG) project.<a href="https://latest-api.renewcapital.com/uploads/Press_Release_Kijani_FINAL_457b9dc5ff.pdf">Click here for the full Press Release</a>About the Impact Angel Network and RENEWThe 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 due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, is 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 at 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="../../index.html">www.renewcapital.com</a>.

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Renew Capital Angels invested in Kijani Baby, a cloth diaper and baby products company launched in 2013 to address Uganda’s need for modern, high-quality and environmentally-friendly cloth diapers and baby products. The company now sells baby products in Uganda and international markets. Kijani Baby is committed to offering positive employment opportunities for Ugandan women.

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Part of RENEW’s women-focused fund and the first investment in Uganda.

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Press Release: RENEW & the IAN Close Investment in Diaper Company

<h1 style="text-align:center;">Desta is Like Family</h1><a href="https://latest-api.renewcapital.com/uploads/RENE_Ws_2019_2020_Impact_Report_7f2975da8d.pdf">Impact Report - 2019</a>Tadelech Buto's story (Desta Manager). This blog is an excerpt from our 2018 Impact Report.Tadelech Buto has been working at Desta in Ethiopia for several years. With previous experience in the textile industry in Ethiopia, she started as a supervisor at the company, controlling one line with 48 workers. Now two children and five years later, she manages all the garment production at the company which means overseeing 350 employees and the entire sewing process. She is also responsible for the key role of training new employees.Tadelech originally heard about Desta through a friend who was working with the company at the time. Now looking back, she believes that the company excels in several areas including quality production, competitive salaries and good employee working conditions. She recently commented, “Desta is like a school for all of us. Most of us came without the knowledge that we have now.” In particular, she likes the consistency of the work, citing that in other companies the production regularly starts and stops.Like many women, her children are a key part of her life. Now 4 years old and 18 months, respectively, she is grateful she was able to take maternity leave with both of her children’s arrivals and come back to work at Desta after. In the most recent case, her return to the company also came with a promotion to production manager.When asked about why working at Desta has been important, Tadelech commented, “Developing my self confidence makes me happy. Before working for Desta, I was living with my parents. However, now I have my own home with my husband and children.”<figure class="image image_resized" style="width:100%;"><img src="/uploads/4_0_b7bee1218f.jpg"></figure>

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Desta is Like Family

<h1 style="text-align:center;">A Tour Worth Giving</h1><a href="https://latest-api.renewcapital.com/uploads/Final_Impact_Report_2018_1b12d67377.pdf">Read our 2018 Impact Report</a>A blog by <a href="https://www.linkedin.com/in/laura-davis-25764430/">Laura Davis</a> (RENEW Partner &amp; Co-Founder of the IAN). This blog is an excerpt from our 2018 Impact Report.I am a natural born tour guide. But not every tour brings me as much joy as the one I regularly get to give at Desta for RENEW’s Ethiopia visitors. Why? There are a few reasons. 1) The company is always a beehive of activity. 2) There’s always something new to see or some new factory configuration in an effort to squeeze a bit more efficiency out of a workspace that is bursting at the seams with more than 650 employees. 3) I can’t recall one of literally 100’s of people I’ve taken to Desta who hasn’t been impressed with the dynamic company and the impact that grows alongside it. I like the smiles on the women’s faces. I like the beat of the music playing in the background. I like the energy of the place, and I am proud of the small role that I have played on the RENEW team and as an investor alongside a family of hardworking, ethical, caring, incredible people, who have built one of the largest domestically owned and managed garment facilities in Ethiopia.<figure class="image"><img src="/uploads/pg_16_laura_96bc300944.jpg"></figure>My involvement with the company started a long time ago. From our apartment balcony in 2012 in Addis, Matt (my husband and partner) and I could see this busy factory, and we wondered who owned it, and what they were making behind the walls. A few months later, we unknowingly ran across the same family while searching for a place to work out. They owned the Life Fitness franchise for Addis and all of East Africa and operated a large gym in our neighborhood.We introduced ourselves and years later after many coffees and meals together, we entered into a partnership, bringing the Impact Angel Network along to invest in their growing garment factory.I remember delivering injera from another of our portfolio companies, Mama Fresh, to the Ethiopia Heritage and Culture Camp typically held in Virginia each summer. I sat purposefully beside Mr. Bekele, the father of the family and the Chairman of the Board, in a very obvious effort to build a relationship with the family. His English was somewhat limited, and my Amharic was even worse. That day he turned to me and said two words: “joint venture?”. And rather than correct him with the nuances of private equity, I just nodded my head.<figure class="image"><img src="/uploads/img_1833_desta_0_e803d0932b.jpg"></figure>The family doesn’t need a ton of handholding, but we lend our support where we can with marketing and branding, governance and financial management.In my opinion, the company is a dream related to the SDGs. Textiles in Africa are, and will continue to be, an increasing employer. When I first visited Desta, there were less than 200 employees; now they employ more than 650 and we expect that to grow to well over 1,000 in 2019.While to some of us sewing a t-shirt or polo shirt isn’t the sexiest of jobs, research shows that every job held by a female supports several household members. Each member of the household likely has better access to clean water, health care and education.Desta is a storybook investment, and we need 1,000’s of SME investments like it to meet Africa’s job gap. Yes, 652 jobs is a drop in the bucket, but it’s a start. It’s my start; it’s the Impact Angel Network’s start; it’s the Bekele family’s start.

A blog by Laura Davis (RENEW Partner & Co-Founder of the IAN)

A Tour Worth Giving

<h1 style="text-align:center;">An Impact Investment in an African SME, from Start to Exit</h1>A wise investor once gave me a piece of advice. To paraphrase, he said, “Any idiot can invest money, but few know how to get it back.” When I started investing, I used to get excited about closing deals and reaching the point where capital exchanged hands. After working for months (sometimes even years) on a deal that ended with signed legal agreements and wired funds, I felt like we had finally accomplished something, and as such, would make a big deal about this moment. Thinking that this was the ultimate indicator of success, we’d pour ourselves drinks, take selfies, and issue a press release to mark the momentous occasion! But, in the back of my mind as we were celebrating, the wise investors’ advice still rang true. Soon after the close, we would get swept into portfolio management, the roller coaster of entrepreneurship and doing business in frontier markets: a game not for the faint of heart, especially if you invest in startups and early-stage companies like the ones we back in Africa. Now, seven years later and on the other side of the investment equation with a lot more grey hair and wrinkles around my eyes, we had our first exits. Reflecting on the journey, I thought it might be helpful to share a few observations from our experience investing in a small and medium enterprise (SME) from start to exit.The first observation is about clarifying the importance of exits. Most investors plan their exits before they invest, using tools like put options, drag-along and tag-along rights, etc. But many of the companies we meet, screen and train in our Investing 101 for companies do not understand exits or why their investment partners might want to exit - even larger companies who are already in discussions with serious investors. We have found that while planning for an exit is important, explaining an exit is critical - and not just to the target company, but to their lawyer, their accountant, their family members, government stakeholders, and pretty much everyone that is within earshot of the deal.The challenge is that most stakeholders get excited about closing, as I used to. Government agencies report deals closed and FDI attracted in Africa as an indicator of economic growth and success. The development community, also a significant stakeholder which hires firms like RENEW to help educate and invest in SMEs in Africa, love seeing capital come into local businesses. And these are important indicators to measure and track, but so few projects last long enough for the real magic moment, which is usually five years down the road when it happens and not immediately at closing. And thus we are left with a situation where many companies in Africa, especially social entrepreneurs and SMEs that struggle to attract capital, do not understand the true importance of an exit. So let’s explain.If closing an investment is akin to the start of the game, an exit is when you actually score a goal. I have found that the misunderstandings around exits hurt companies and countries, most notably when the critical time comes to begin exiting an investment. Often this is because the business of investing is a bit of a mystery. I believe there should be an entire training for non-finance stakeholders just on the importance of exits. While the idea that investors seek to make money is intuitive to most, the way an equity fund works is relatively new. It is an unfamiliar concept to many that a fund manager has a fixed period of time to find and invest the money they raised into good companies, and then recover that money in a fixed amount of time with a great return. And, while I believe a closed-end equity fund structure in Africa isn’t the best structure for the investment landscape of frontier markets, it is a common structure for equity investors, and one that stakeholders need to understand so they can work with it and attract more funding to their country. The more equity a country and a company attracts, often the better positioned it is for growth.<figure class="image"><img src="/uploads/exit_image_0_18a85873a9.png"></figure>Why are exits good? A good investor that builds a track record of successful exits attracts more capital and can make more investments. Companies in which investors exit often attract more capital, grow, create more jobs, pay more taxes, and provide greater value to customers. Countries where investors realize exits attract more capital because investors see that others have done it and local businesses benefit from this reputation.So exits are not just something that needs to be planned before you close an investment, but something that needs to be discussed regularly with multiple stakeholders throughout the life of the investment and, just as much, projects that seek to leverage private investment to achieve development objectives like the Sustainable Development Goals (SDGs).Entrepreneurs should understand that an exit by an investor is not a divorce but a graduation; hopefully a hand-off to the next level, be it to a larger investor, a strategic partner, or back to the owners themselves. Parties should be thrown for exits. Governments should know that an exit from their country is an indicator that their country is conducive to sustainable investing. They should give out awards to funds that exit their investments, because that event alone will attract the interest of serious investors more than any roadshow they do around the world. And development partners should design private sector development projects with timeframes long enough to see exits and chalk those up as major wins that resulted from their support.Since 2012, RENEW has been operating in East Africa, testing and perfecting an investment model that gets capital into SMEs trapped in the missing middle, helps them scale up and then gets that capital out with a good financial and social return for investors. After seven years of investing in the East African region, I am pleased to say that SME investing can be successful and exits are possible. I hope we see many more exits in the months and years to come, and I hope all stakeholders cheer, not just investors, when an exit happens. It’s the real score in the sport of investing and also enables the impact we are also seeking to achieve as success begets more investments targeting such goals as job creation by SMEs in East Africa.About the Impact Angel Network and RENEWMembers of the Impact Angel Network seek to realize both social impact and financial returns through investments in small and medium enterprises (SMEs) that are engines of economic growth and job creation in Africa but that often lack capital due to their size. IAN members believe that targeting employment through SMEs, dollar-for-dollar, can help reduce poverty in a more sustainable way than charity.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 for a project entitled Accelerating Business Growth (ABG). This project targets sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.

A few observations from our experience investing in a small and medium enterprise (SME).

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An Impact Investment in an African SME, from Start to Exit

<h1>Made in Ethiopia</h1><a href="https://latest-api.renewcapital.com/uploads/Final_Impact_Report_2018_1b12d67377.pdf">Read our 2018 Impact Report</a>A blog by <a href="https://www.linkedin.com/in/lulit-negash-b0186975/">Lulit Negash</a> (RENEW Portfolio Manager). This blog is an excerpt from our 2018 Impact Report.I started my career at RENEW as a portfolio manager five years ago. My major responsibility focuses on supporting the post investment work at our portfolio companies. Prior to RENEW, I had worked as a consultant helping research and write business plans for companies, but I wanted more. I wanted to get in deeper and experience the power of the private sector, and I believed that working at an investment firm would give me that experience. As a portfolio manager, my job is to help the companies generate a return on investment while also creating an impact. One of our key measurements for impact is the number of jobs created, which is the backbone of any developing country.RENEW strives to help grow SMEs and turn them into a market leader by focusing on four elements, which we firmly believe are the keys to success: Governance, Financial Management, Sales and Marketing and Recruitment.<figure class="image"><img src="/uploads/pg_14_lulit_need_to_crop_0_e9b7f0295c.jpg"></figure>According to research done by the International Labor Organization, SMEs play a key role in job creation, providing two-thirds of all formal jobs in developing countries and up to 80% in low-income countries*.There are many instances when someone asks us why we invest in SMEs since they are riskier and take a lot of energy when you can just invest in larger, more established companies. Our response to this is even though investing in SMEs is a lot riskier and takes a lot of energy and patience, if it is done well, the end result is significantly more rewarding. Personally, seeing the companies at the pre-investment stage and the changes during post-investment is the exciting part of my work. Knowing the money that came through the IAN coupled with the work we do has the capacity to change a company’s reality is something I enjoy seeing.Growing up in Addis, the capital of Ethiopia, I have experienced the recent changes and the shift of the labor force from rural areas to urban cities in search of a better life. Currently, there is a large number of youth migrating from the rural areas to the city to work in the construction, textile, and other manufacturing industries.<figure class="image"><img src="/uploads/img_1833_desta_780238c18e.jpg"></figure>Being Desta’s portfolio manager, I get to have a first-hand look at how one SME can impact the lives of more than 650 employees. The factory workers are mostly women who are from the outskirts of Addis or rural areas. Desta provides job opportunities for these women, but they also engage in soft and hard skills training to help them become experts in what they do and to improve their lives. For an outside customer, the main concern might be the quality of the garment and timely completion of orders or price of an order. But when you visit the factory, there is much more than a quality shirt with an affordable price tag. You see each and every individual working away to be able to support their family. Many have come a long way from their original homes to be able to experience the city life and improve their family’s livelihood. The Desta team helps them realize their dreams and support them as much as possible. They do this by providing transportation service to work and back and on the job training that can help them improve their skills. Desta also provides the opportunity for growth. We have seen several of the factory workers who joined the company at entry level grow and get promoted to become line supervisors at the factory. These are loyal and driven employees who are inspirations to other women.Although my role as the portfolio manager of the company limits me to high-level activities related to finance, governance, and management support, once in a while after our Board meetings, I take a sneak peek around the factory to see the workers and products. That is when I experience a deep feeling of contentment and accomplishment. Although my work might not directly impact individual workers, I know I am a part of the story. I see the quality of the products and know these are the type of clothes we normally import from abroad, but we have the capability to make them in Ethiopia, and my heart swells with pride. I am proud to see the “Made in Ethiopia” tags on the garments and to know that RENEW and the IAN is part of one of the largest indigenous garment factories in Ethiopia.

A blog by Lulit Negash (RENEW Portfolio Manager)

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Made in Ethiopia

<h1 style="text-align:center;">Desta: Building Sustainability</h1><a href="https://latest-api.renewcapital.com/uploads/Final_Impact_Report_2018_1b12d67377.pdf">Read our 2018 Impact Report</a>An Interview with Eyob Bekele (Desta Owner and General Manager). This blog is an excerpt from our 2018 Impact Report.According to Eyob Bekele, the General Manager of Desta PLC, “The Impact Angel Network’s investment keeps us on our toes and helps us stay focused to achieve the direction we want to go.”What direction is that? The family’s vision is for Desta to compete internationally and that vision is coming alive as part of a company expansion in a town called Butajira, outside of Addis. “Our current factory was never designed to be a garments facility, but Butajira is,” Eyob continued. “To increase our ability to compete with any company worldwide, we need a proper setup and Butajira is the answer. The first shed is completed, training workers have started and, in the factory, we have set up four lines.”<figure class="image"><img src="/uploads/pg_12_eyob_ad3289a373.jpg"></figure>The Bekele story is a classic story of transition. “My family wanted to enter into manufacturing after many years of trading. Our father has always wanted us to be internationally competitive and to do so, we knew we needed to move beyond trading,” Eyob said recently.“We were initially importers of plastic shoe soles from Italy, among other things, and we decided to start manufacturing plastic shoes and shoe soles in 1993. We slowly added new elements to our manufacturing including laces and cords. Then in 2010, the plastic shoe market was saturated, and we decided as a family that it was time to move on to a new market. At the time, the Ethiopian Government was encouraging people into horticulture and textiles because of the competitive labor market we have here. Because we already had the cord business we chose textile and garment and moved into knitting cotton fabric. Initially, we shipped the greige, raw cloth we knitted at Desta to Italy, but that market quickly closed as the Italians found they could get competitive, fully dyed fabric in Eastern Europe. Thankfully, at the time, we started getting orders for garments. We would make the fabric, outsource the dying, cutting and sewing and then ship the finished products to Italy. But that business had its challenges including really long lead time and in some cases compromised quality from all the outsourcing. Since we were already getting orders, we decided to enter the garments business fully in 2012. In 2013, we set up a few lines, began training workers and started to take more orders. We quickly realized when we made the garments, the knitting we could do did not justify the machines, because much of the finished fabric still needed to be imported. So we closed the knitting department and focused on garment production only. Then we started to expand. American and European buyers came and the more they came, the more we expanded. Our customers thankfully love us. They know we are committed to delivering no matter what.”<figure class="image"><img src="/uploads/pg_13_desta_0_4a1d890c1f.jpg"></figure>Eyob believes that sustainability must be the backbone of Desta. “We will not achieve our plans without sustainability. Whatever Desta does should have a profound impact to support the social and environmental ecosystem”. I want all stakeholders from investors to buyers to employees to our neighbors to feel like Desta is the right choice. Our workers have to feel like it is their company. When we are fully operational at Butajira, we will be able to achieve that including zero liquid discharge. We may even be the first to implement wastewater treatments related to garment production in Ethiopia. We will even have zero discharge related to human waste, and we will have rainwater collection at the new facility.”There are many things Desta does to help employees know they are part of a family including visiting their workers at home. “Their social problems are our social problems. We try to go and have a discussion with each worker. If they have a problem, we support them as much as we can. We provide a sustainable income so they can support their families. We work to create a friendly, family environment. Our workforce is typically ages 18-25 so, I believe we should be seen as parents or older siblings to them. We do a lot of soft skills training including, in some cases, training people to use a toilet, and how to avoid unwanted pregnancies and sexually transmitted diseases”.“We are committed to hiring people with disabilities including the deaf. We have a family member who has a disability, and we feel like just because you are disabled doesn’t mean you cannot work productively. We aim to employ 30-50 workers with a disability at any one time which is about 5-10% of our labor force.”“The women in Desta’s workforce play a significant role from the bottom to the top of the organization. About 90% of our workforce are women. A few have started as a cleaner and are now in management. We take women empowerment seriously and invest in soft skills,” Eyob said.

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Renew Capital Angels invested in Desta PLC, a textile and apparel manufacturing operation located in Ethiopia. The company produces and exports fabric and garments and provides cut-and-sew, knitting and embroidery services to domestic and international clients. Desta is committed to fair treatment of its employees and adherence to guiding principles of sustainability, setting it apart from the trajectory this industry has taken in many other low and middle-income countries.