<h1 style="text-align:justify;">Tom Scriven, General Counsel and Partner of RENEW LLC, has earned the prestigious Chartered Financial Analyst® (CFA®) designation.</h1><figure class="image"><img src="/uploads/cfalogo_registered_aa0e3db8b0.jpg"></figure>The CFA charter represents a tradition of upholding the highest standards of education and integrity in the investment profession. The charter is recognized globally by employers, investment professionals and investors as the definitive standard by which to measure the competence, integrity and dedication of serious investment professionals.As an attorney and consultant, Tom has advised U.S. and international clients on transactions and projects that aim to optimize financial and/or social returns. His work includes attracting and supporting investments in frontier markets, financial analysis and strategic planning. Prior to joining RENEW, Tom served as an associate with the law firm Morgan, Lewis &amp; Bockius. In this capacity, he advised prominent private equity clients and other leading financial services firms, and Global 500 companies involved in mergers and acquisitions, joint venture transactions, government investigations and private litigation. Tom received his J.D. from the University of Virginia School of Law and his bachelor's degree, summa cum laude, in political science from Houghton College. He studied finance at the University of Michigan, Dearborn College of Business.“I am honored to become a CFA charterholder,” Scriven said, “and to apply the principles and knowledge learned during the last three years of rigorous study and exams to support investments in promising companies in sub-Saharan Africa.”About CFA Institute: The <a href="https://www.cfainstitute.org/">CFA Institute</a> is the global association for investment professionals. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 115,000 members, who include the world’s more than 100,000 CFA charterholders, in 138 countries and territories, as well as 138 affiliated professional societies in 60 countries and territories. More information may be found at <a href="http://www.cfainstitute.org/">www.cfainstitute.org</a>.About RENEW: RENEW is an experienced facilitator of an innovative investment model that brings the development community, the host government, foreign investors, and local companies together around a shared common interest: to grow the private sector in African economies while creating lasting change for its communities through job creation and positive social impact. RENEW’s public-private partnership model lowers the transaction costs, which normally prevent foreign investors from investing in SMEs located in frontier markets. RENEW organizes and supports medium-sized investments made by the Impact Angel Network (IAN), the largest North American-based impact angel network for Africa. RENEW acts as the IAN’s in-country support team and provides consulting and investment services that span across all aspects of the investment process. RENEW’s model seeks to reduce the costs and risks foreign investors experience when investing in developing countries, and to increase the local awareness and strength of the business community in an effort to attract larger equity investments for its companies.

RENEW is excited to share the great news.

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Tom Scriven Earns Prestigious Chartered Financial Analyst® Designation

<h1 style="text-align:center;">The Angel Investment Exchange</h1>Thursday evening brought a stellar crowd to RENEW's new office on the second floor of Galani Cafe in Jacros, where we officially launched RENEW's Angel Investment Exchange (also referred to as “The Exchange”), and kicked off the Accelerating Business Growth project that is undertaken with financial support of the Government of Canada, provided through Global Affairs Canada. Thanks to everyone who came out to celebrate the launch, and to the Embassy of Canada in Ethiopia for co-sponsoring the event.The Exchange, the focal point of the five-year ABG project, will bring local SMEs through an intensive executive management-training program and help them connect with international investors and markets. The goal is for businesses to scale into market leaders, enabling them to play a stronger role in the Ethiopian economy and create sustainable job growth.<figure class="image"><img src="/uploads/gac_abg_launch_party1_6b46781e00.jpg"></figure>Whether you were able to attend the event to learn more about the project or not, we wanted to follow up with information about what's next...City Partners: We are currently signing memorandums of understanding with City Partners in Addis Ababa and Hawassa. Other cities in Ethiopia will be coming soon. If you are interested in being a City Partner to learn about private equity and in turn help companies become investment ready, please contact Bethlehem Bogale at <a href="mailto:bbogale@renewcapital.com">bbogale@renewcapital.com</a>Businesses: Want to learn more about our Investment Challenge? Plan to attend our Investment Challenge meeting on Thursday, December 8, 2016 at The Exchange. RSVP to Bethlehem Bogale at <a href="mailto:bbogale@renewcapital.com">bbogale@renewcapital.com</a>.CFO 100: Are you a senior accountant with your company? Interested in expanding and growing your business acumen and financial skills? Stay tuned for more information regarding how you can participate in CFO 100.Investment Pitch: In February 2017, a select group of businesses will showcase their investment plan to members of the Impact Angel Network who will be visiting Addis Ababa. Interested in presenting? Be sure to attend an Investment Challenge meeting beforehand.We look forward to working with you to accelerate business growth in Ethiopia!

A toast to the official launch of the ABG Project!

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The Angel Investment Exchange

<h1 style="text-align:center;">Tebita’s Contribution to Humanity</h1>One of our favorite things to do at RENEW is to share the accomplishments achieved by our portfolio companies with our members and the greater impact investing community. While there are several that come to mind across the portfolio, this blog will take a closer look at East Africa Emergency Services LTD (EAES) and their most noteworthy client, Tebita Ambulance and Pre-Hospital Emergency Service PLC (Tebita), the first and only private ambulance service in Ethiopia.Members of RENEW's global Impact Angel Network (IAN) closed an investment in EAES in May 2015. EAES serves providers of emergency medical services and training in East Africa, Ethiopia in particular, in order to ensure that international and domestic clients have access to reliable, high-quality emergency care. EAES works in partnership with local firms such as Tebita by offering business development, procurement and administrative support. The investment seeks to help medical service companies operate more efficiently and to free them up to focus on their core functions, primarily caring for patients in crisis. In meeting this need, EAES and Tebita, together, aim to improve access to quality emergency services for thousands across East Africa. And they have been doing just that.<figure class="image"><img src="/uploads/eaestebita_blog_e8ef63b97b.jpg"></figure>Looking back at 2016, the Tebita/EAES partnership has produced positive social impact in Ethiopia by not only providing critical emergency services and ultimately saving lives, but also by educating the local and global communities on the ability individuals can have, be they bystander, emergency responder or angel investor, in changing the course of emergency care in Ethiopia. Here are just a few examples:<ol><li>To date, Tebita has a fleet of eleven ambulances, has provided ambulance services to more than 40,000 clients and emergency training to more than 25,000 trainees. “Tebita” is Amharic for “drop,” a message to force every citizen to think about his or her drop of contribution to humanity. And there is no one who believes in this idea more than Tebita’s CEO and founder, Kibret Abebe Tuffa.</li><li>In June 2016, Kibret attended Europe’s leading forum on international development - European Development Days. As a panelist, Kibret spoke on Tebita’s fight to save lives, as well as the role that social enterprises can have in furthering development goals. “Without responsible private sector involvement, tackling social problems is like clapping with one hand.”</li><li>In October 2016, Ethiopia’s Minister of Health, Dr. Kesete Brehane Admasu, honored EAES and Tebita with the “Extraordinary Award For Dedication and Exceptional Contribution On Health And Social Service in Ethiopia” at their annual conference, and named Kibret an Ambassador of Health and Social Service. Tebita is the only private sector company to be recognized with this award.</li></ol><figure class="image"><img src="/uploads/eaestebita_blog2_25922f3a89.jpg"></figure>RENEW and the IAN are proud to be part of EAES and Tebita’s amazing and impactful story, and we hope that everyone finds inspiration in the actions Kibret takes every single day to positively change and save lives of so many.

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Renew Capital Angels invested in East Africa Emergency Services LTD (EAES), which partners with Tebita Ambulance. The company helps ensure that international and domestic clients have access to reliable, high-quality emergency care in Ethiopia. Tebita is the first private-sector ambulance company in Ethiopia.

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Celebrating how one company has saved and positively changed the lives of so many.


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Tebita’s Contribution to Humanity

<h1 style="text-align:center;">Accelerating Business Growth Project</h1>As many of you know, RENEW operates under an innovative public-private partnership that allows us to do smaller investments than traditional private equity investors on the continent of Africa. This model helps bridge the financing gap and addresses the economic "missing middle" that stalls economic growth in most frontier markets. Under this type of partnership, the development community covers some of RENEW's operating expenses so RENEW can provide members of the IAN high-quality investment management services without charging exorbitant fees relative to the size of the investments being considered. Starting in 2013, RENEW began testing this business model with the U.S. Government, which resulted in seven investments and 1,100 jobs supported by the IAN's portfolio. But, that was just the start - investments take years to develop and nurture. So, thanks to the Canadian Government through Global Affairs Canada (GAC), RENEW will be able to scale up our support for the IAN and continue providing high-quality investment services in Ethiopia for the next five years under the Accelerating Business Growth (ABG) program.The goal if this partnership is to ultimately increase awareness and understanding of private equity investing in Ethiopia, increase the number of investments being made in Ethiopian SMEs by addressing the current financing gap, and create sustainable job growth.THE EXCHANGE:RENEW is pleased to officially announce the launch of a vital investment and business acceleration project. The project, formally called Accelerating Business Growth (ABG), is made possible through the public-private partnership between RENEW and Global Affairs Canada (GAC). ABG includes a number of strategic components including a national Investment Challenge, Finance Incubators and The Angel Investment Exchange (also referred to as “The Exchange”). The Exchange will be the focal point of the project and the goal of the Investment Challenge. The Exchange will bring high potential companies, called small and medium enterprises (SMEs), through an intensive executive management-training program and help them connect with international investors and markets. The goal is for businesses to scale into market leaders enabling them to play a stronger role in the Ethiopian economy.<figure class="image"><img src="/uploads/training_26f9c8d0ca.jpg"></figure>The Exchange aims to support 50 companies, which will be selected during the Investment Challenge, over the course of the next 5 years. The Exchange will focus on building financial management, environmental social and governance best practices, legal, operations and marketing strategies. “Most companies in Ethiopia, even large companies, agree that they would benefit from additional management disciplines and training to compete in the international market. After years of working with companies in Ethiopia and making our share of mistakes, we’ve found some of the secrets to success for companies. The Exchange will be the place where we work with companies to understand these secrets. For those willing to do the hard work, success is almost guaranteed,” says Matthew Davis, partner at RENEW. These “secrets” will help companies transform into market leaders and ultimately lead to sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.WHY RENEW:RENEW is an experienced facilitator of an innovative investment model that brings the development community, the host government, foreign investors, and local companies together around a shared common interest: to grow the private sector in African economies while creating lasting change for its communities through job creation and positive social impact. RENEW’s public-private partnership model lowers the transaction costs, which normally prevent foreign investors from investing in SMEs located in frontier markets. RENEW organizes and supports medium-sized investments made by the Impact Angel Network (IAN), the largest North American-based impact angel network for Africa. RENEW acts as the IAN’s in-country support team and provides consulting and investment services that span across all aspects of the investment process. RENEW’s model seeks to reduce the costs and risks foreign investors experience when investing in developing countries, and to increase the local awareness and strength of the business community in an effort to attract larger equity investments for its companies.<figure class="image"><img src="/uploads/canadian_crew_5ac4b431f7.jpg"><figcaption>Photographed: Ambassador Philip Baker, Parliament Secretary Karina Gould, members of their team, as well as members of the Mama Fresh and RENEW teams.</figcaption></figure>BLENDED FINANCE:A growing school of thought proposes that SMEs in developing countries are key drivers of long-term stability and growth. By providing jobs, paying taxes, and producing, buying and selling local goods and services, SMEs act as the backbone or engine of an economy. Unfortunately, SMEs struggle to grow in many developing countries, and as a result, microbusinesses and large conglomerates dominate the country’s economic pyramid. While the excitement for SMEs is there, both from public and private sector actors, many aid-centric projects are underperforming and few investments are being made into SMEs in developing countries by private investors - leading to a financing gap or what is commonly referred to as a “missing middle”. RENEW is pioneering an innovative public-private partnership model that stimulates direct investments into promising SMEs. RENEW recently partnered with the Canadian Government to implement a novel approach that leverages the private sector to create sustainable economic development.The public-private partnership model (where the interests of the development community so clearly align with the local private sector and the investment community) represents a new field of development that is rapidly growing. The type of financing RENEW and GAC are helping mobilize – broadly called <a href="https://renewcapital.com/blog/2016/blended-finance">blended finance</a> – offers investors the opportunity to create sustainable social impact and financial returns through investments in companies that operate in high impact and fast growing countries, such as Ethiopia. These trends, along with Ethiopia's rapidly expanding private sector, could help position ABG to be a flagship project in the development sector.Our investment strategy closely aligns with the goal and targets in the Ethiopian Government’s Growth and Transformation Plan II and the government's overall desire to help Ethiopia industrialize and become a middle-income country by 2025.

RENEW to work with Global Affairs Canada in Ethiopia under new public-private partnership.

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Accelerating Business Growth Project

<h1 style="text-align:center;">Blended Finance 101</h1>MINDING THE GAP:In 2015, the United Nations released a multi-faceted plan of action for the world to meet 17 Sustainable Development Goals (SDG) and 169 targets by the year 2030. These goals range from clean water and sanitation to gender equality and quality education, with one of the more ambitious goals being the complete eradication of poverty, in all of its forms. It will require an enormous undertaking to achieve all 17 SDGs, and part of the challenge lies with the funding gap that is present in most developing countries, which is estimated to be “between $1.9 trillion and $3.1 trillion each year between now and 2030.”* The development community at large recognizes that significant additional financial resources will need to be mobilized over the coming 15 years. However, current political climates across many developed countries hint at foreign aid cuts instead of increases, raising the question “where will this needed capital come from?”<figure class="image"><img src="/uploads/un_sdg_0_51da451f50.png"></figure>CUE THE PRIVATE SECTOR:It is the belief of many that private sector investment will play an important role in assisting frontier economies address the development funding gap that they are currently facing. The reason is that many private investors (from equity funds to investment bankers) are increasingly looking to developing countries for their next investment opportunity. Emerging markets have historically offered strong investment returns, something that has not been ignored by savvy investors. “Private equity investment in emerging markets reached $57 billion in 2014, with increased interest from LPs resulting in fundraising totals far exceeding previous years.”**Emerging markets are truly on the cusp of a “perfect storm” for economic growth - young demographics, a growing middle class and increasing incomes - which will likely continue to translate to spectacular economic growth, even in the double digits for some countries. In fact, overall growth rates in frontier markets are exceeding that of developed, “with projections of market growth of 4.0% in 2015 and 4.5% in 2016, compared to 2.0% and 2.2% for advanced economies over the same period.”**So, let’s recap: we have a development funding gap, a need for traditional aid needs to be delivered in more effective ways, and a private sector that is increasingly becoming a major player in economic growth for frontier markets. What happens next?THE BLENDING OF TWO FINANCES:Development funders and private sector actors are joining forces under what is commonly being referred to as blended finance. You’re probably saying to yourself, “Great! Another buzzword I have to memorize” and wondering how the substance and meaning behind this phrase differs from others like “venture philanthropy” or “impact investing”? <a href="https://www.linkedin.com/in/joanmlarrea">Joan Larrea</a>, CEO of Convergence, does a great job in defining this relatively new term in her publication in <a href="http://impactalpha.com/sizing-up-blended-finance-a-guide-to-a-new-financing-approach-to-fuel-sustainable-development/">Impact Alpha</a>, Sizing Up ‘Blended Finance’: A Guide to a New Financing Approach to Fuel Sustainable Development:“Boiled down, blended finance simply encourages more private sector investment by being strategic with the money already at work from official development assistance and philanthropic sources. Blended finance transactions combine funding from development institutions, philanthropic entities, and profit-seeking investors and puts that capital to work in a way that is aligned with the UN’s Sustainable Development Goals (SDGs).”Joan goes on to elaborate that there are three defining characteristics in any blended finance activity, including 1) the deal is intended to yield a financial return, 2) the transaction contributes towards achieving SDGs in a frontier economy, and 3) the development funders are the catalytic force behind the deal.It is this third point where a lot of the magic happens. Investment opportunities that normally be passed over by large venture capital firms (for being too small), or passed over by microfinance institutions (for being too large), are now seeing the light of day. What’s painfully obvious but often overlooked is that these small- to medium-sized enterprises (SMEs) represent the backbone of any developing or developed economy, and without them, a missing middle in the economic pyramid is created, resulting in unstable or stagnant growth. Finally, with the assistance of governments, foundations, donor agencies, development and commercial banks, and private investors, these SMEs are given access to much-needed capital, which in turn allows them to scale operations, create sustainable jobs, grow into market leaders and attract additional sources of financing.KEY STAKEHOLDERS &amp; PLAYERS:There are several key stakeholders in the blended finance field. Governments agencies, such as USAID, GAC or DFID, and philanthropic institutions, such as the Bill &amp; Melinda Gates Foundation or The Rockefeller Foundation, play an important role given their higher tolerance for investment risk and lower return expectations (relative to commercial or investment banks). These institutions deploy their capital using a range of investment instruments and securities, accounting for $135.2 billion in OECD Official Development Assistance in 2014.**Blended finance provides private sector investors and lenders the opportunity to reduce the uncertainty and costs related to high-risk investments in an emerging market by leveraging the financial support, project administration, and local expertise that development funders can provide, allowing for a wider range of investment activities to take place.**This relationship between the private sector and public sector can also be categorized under a public-private partnership model, which RENEW and the Impact Angel Network currently use in Ethiopia. By working with development funders who cover the high transactions costs of operating in an emerging market, RENEW is able to manage a diverse portfolio of companies, be our investors eyes and ears on the ground in-country, source an exciting pipeline of investment opportunities and connect U.S. angel investors with driven entrepreneurs, all without charging a management fee.If you’re interested in learning more about RENEW, the Impact Angel Network or our unique business model, then be sure to stay tuned for an upcoming announcement of a new partnership between RENEW that pretty perfectly exhibits the power of blended finance.

How the “blending” of development funding and private sector investments could lead to sustainable economic growth.

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Blended Finance 101

<h1 style="text-align:center;">Back to the Source: Cotton</h1>In December 2015, members of the Impact Angel Network closed an investment in a family-owned textile and apparel manufacturing facility, Desta PLC. Established in 1992, Desta PLC is a multi-faceted company that oversees several production lines, including embroidery, knitting, cut-and-sew, fabric and garment manufacturing. The company’s dedication to quality and timely service has garnered trust and confidence from domestic and international customers.One could say, though, that this dedication is not only applied to Desta’s customers but its employees as well. At any given time, Desta employs more than 550 individuals, mostly young men and women, and ensure that each day they have access to a healthy subsidized meal, a fair wage, a medical nurse, team trainings and opportunities for advancement. Desta is committed to the 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. Desta is accredited by international standard and compliance organizations. It passed an audit by BSCI (Business Social Compliance Initiative), proof that Desta has created suitable working conditions and takes care of employees. In addition, Desta undergoes a social audit twice a year by SGS, a leading inspection and certification company headquartered in Switzerland. Worldwide Response Accredited Production has also certified the company.<figure class="image"><img src="/uploads/cotton_blog5_216389c621.jpg"></figure>The company’s commitment to sustainability and corporate responsibility is assisting Desta in becoming a market leader in an industry that is just now starting to take hold in Ethiopia and the East Africa region. While the first textile mill in Ethiopia was established nearly 80 years ago, the entire cotton-textile-apparel (CTA) value-chain has been one of the country’s least developed industries, only marginally contributing to the country’s GDP. The reasons for this are many, but two significant causes are lower cotton cultivation rates and a lack of vertical integration across the value chain (1).If you know anything about Ethiopia and the important role that agriculture plays in its GDP, this may actually come as a surprise. While cotton has long been considered a “cash crop” that is grown by commercial and smallholder farmers alike, cotton cultivation has yet to reach its full potential. Ethiopia currently cultivates only 3% of the total 2.6 million hectares that are suitable for cotton production, and out of 84,000 hectares of land that are under cotton cultivation, only 35,000 hectares are irrigated while the remaining is rain-fed (2). This translates directly into the country’s export figures. In 2012, total CTA exports amounted to roughly $27.2M, of which only $4.7M was directly from cotton production (1) - as a comparison point, coffee exports for the same year amounted to $694.6M (3). In addition to lower cultivation rates, up to 70% of cotton that is grown in Ethiopia and the East Africa region is exported to other countries (1). To date, only a handful of textile and garment manufacturers are vertically integrated from “dirt to shirt,” leaving the remaining facilities to import costly raw materials from other countries and stunting the overall textile industry (1).Bringing this point closer to home, 60-70% of what Desta produces is made from 100% cotton or a cotton blend. Of these cotton products, only about 20% is actually made from locally grown Ethiopian cotton, while the remaining 80% is made from imported cotton or polyester-cotton blends. However, this reliance on expensive imports may not be for long. Global sourcing for apparel is currently undergoing a significant realignment due to a rise in labor wages in China, the world’s largest textile exporter; buyers are now looking elsewhere to source apparel (1). So, where might these buyers be looking? You guessed it - Ethiopia.<figure class="image"><img src="/uploads/dsc_0159_10ddd9e6bc.jpg"></figure> To put this in context, the East Africa region currently produces approximately $1B in cotton products (cotton fiber through apparel) on an annual basis, whereas China exported $159.6B in garments alone in 2012 (1). “If one-half of one percent of China’s current garment exports were to relocate, this would represent a near doubling in the value of all CTA exports from East Africa” (1). And Ethiopia is well positioned to take advantage of this shift. The country is rapidly becoming a top destination for textile manufacturing on account of competitive labor costs, government incentives, and low energy costs. Companies such as H&amp;M, Tesco, Gap, Belk, and Walmart, among others, are now sourcing textile products from the country (4).In light of these global shifts, the government of Ethiopia has recently taken steps to further ensure the future success of the sector in naming the CTA industry, across the entire value chain, as a priority sector under the Growth and Transformation Plan II (GTP II). According to <a href="http://allafrica.com/stories/201607151027.html">AllAfrica</a>, the country plans to “increase cotton output from the land productivity level of 15 quintals/ha in 2015 to 28 quintals/ha by 2020. In the long-term, Ethiopia has set out to become self-sufficient in lint cotton supply” by the completion of GTP II. The country is also taking advantage of initiatives such as the Africa Growth and Opportunity Act (AGOA), Common Markets of East Africa (COMESA) and other bilateral trade agreements with Western countries that offer free trade benefits and access to the global and regional markets. And to ensure that facilities are taking full advantage of these agreements, the Ethiopian government has established a National AGOA Center under the Ministry of Trade to help companies better utilize AGOA.In strengthening the cotton cultivation segment of the CTA value chain, Ethiopia will not only support full integration of the important textile industry (one that is expected to significantly contribute towards Ethiopia’s future GDP), but it will also positively affect food and income security for rural populations. “In addition to production for the value chain, by-products include cotton oil and cotton seedcake for home use and cattle feed. Cotton production for smallholder farmers has a strongly positive impact on food security through raising rural incomes. It is highly suitable to be grown in rotation with other staple crops and provides the cash necessary for the farmer to invest more heavily in food crops” (1)All in all, the continued development of the CTA value-chain not only positively affects textile manufacturers, like Desta PLC, but it will also economically benefit the country and the lives of the farmers who are involved in cotton cultivation.

The RENEW team takes a closer look at the cotton, textile, apparel value chain and its role in Ethiopia’s economy.

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Back to the Source: Cotton

<h1 style="text-align:center;">Back to the Source: Coffee</h1>&nbsp;AN INTRODUCTION TO KAFFAKaffa, Ethiopia, from which the term “coffee” is derived, is the birthplace of coffee, according to many experts including <a href="http://www.ncausa.org/About-Coffee/History-of-Coffee">The National Coffee Association</a>. To this day, the Kaffa region in the southwestern part of Ethiopia remains one of the strongest coffee-producing regions in the country.The legend goes that Kaldi, an Ethiopian goat herder, first discovered coffee after he noticed his goats became energetic upon eating cherries from a certain tree. Kaldi shared this knowledge with the monks of a local monastery, who made a drink with the berries and enjoyed its invigorating properties. Soon, the findings of coffee spread from Ethiopia to the Arabian Peninsula and then on to Europe. The earliest credible evidence of either coffee drinking or knowledge of the coffee tree appears in the middle of the 15th century, in the Sufi monasteries of Yemen.(1) By the 16th century, coffee had reached the rest of the Middle East, Persia, Turkey and Northern Africa before spreading to Europe, Indonesia, and finally to the Americas.<figure class="image"><img src="/uploads/dsc_0854_4341a7fdef.jpg"></figure>As it has been since the 16th century, Ethiopia remains one of the largest producers of Arabica coffee beans in the world. RENEW and the Impact Angel Network (IAN) are proud to be a part of this important tradition through our investment in METAD Agricultural Development PLC (METAD), an Ethiopian specialty coffee company founded in 2012 by Aman Adinew. With a vision for crop-to-cup coffee, METAD aims to not only strengthen Ethiopia’s coffee reputation amongst sophisticated consumers in the international market, but also help local farmers improve the quality and value of their harvested crop. In pursuit of this vision, METAD seeks to become the leading specialty coffee brand by offering global and domestic consumers with the highest quality, 100% Ethiopian Arabica coffee.METAD’s coffee cultivation, harvesting and primary processing occurs at farm sites 75 kilometers beyond Yirgacheffe, deep in the heart of some of Ethiopia’s best coffee country. METAD’s 200-hectare Hambela and Gedeb farm and processing sites include washing stations, a dry mill, a huller, beds for sun drying, and warehouses for storage to handle all of the pre- and post-harvesting coffee activities.<figure class="image"><img src="/uploads/view_of_hambela_processing_site_0_5b205d80d6.jpg"></figure>COFFEE CULTIVATIONAs a whole, coffee's production process and value chain are very complex, much like viticulture. The two main species of coffee grown for coffee production today are Arabica and Robusta, with Arabica coffee being indigenous to the mountains of the southwestern highlands of Ethiopia.The Ethiopian coffee value chain starts with farms, like METAD, that grow and harvest red cherries - the coffee fruit and seed (see photo below). Farms either sell the harvested cherries to independent processors or process the crop themselves. A processor has two options: 1) select the highest quality red cherries and dry them on raised drying beds (what is called sun-dried, unwashed or natural coffee) and hull them on location, or 2) remove the pulp from the coffee cherries by using a wet mill and dry the coffee seeds, covered in their parchment. These two types of processing techniques, also known as primary processing, are crucial to the ultimate quality and character of the coffee.In Ethiopia, the processor then sells the dried coffee seeds (or beans) to exporters on the Ethiopia Commodity Exchange (ECX) platform. The exporter cleans, polishes, and bags the coffee beans for export shipping. Finally, an importer, broker or roaster imports the coffee beans into the consuming country, after which they will be roasted and be made ready for consumption.<figure class="image"><img src="/uploads/bts_metad_56d665a740.jpg"></figure>WHAT MAKES SPECIALTY COFFEE "SPECIAL"?Coffee can be broadly defined as specialty or commercial grade. Specialty coffee, a term first coined back in 1978 by Erna Knutsen of Knutsen Coffee Ltd., in the simplest definition refers to special geographic microclimates that produce beans with unique flavor profiles.(2) There is a fundamental understanding that specialty coffee beans will always be well prepared, freshly roasted, and properly brewed; one that the Specialty Coffee Association of American (SCAA) has standardized and enforced. The SCAA is considered to be the world’s coffee authority and the largest coffee trade association, with nearly 5,000 members located in more than 40 countries who represent every segment of the specialty coffee industry.The SCAA defines specialty coffee in its green stage as “coffee that is free of primary defects, has no “quakers” (under-ripe or under-developed attributes), is properly sized and dried, presents in the cup free of faults and taints and has distinctive attributes.”(3) In general terms, “specialty coffee is coffee from a known geographic origin that commands a premium price above commercial grade coffee due to its high quality and particular attributes that it possesses.”(4) In the case of METAD, the company produces Yirgacheffe specialty coffee, the quality of which METAD continually ensures at its coffee lab, the first and only private, state-of-the-art coffee quality control facility on the African continent that is <a href="http://www.prnewswire.com/news-releases/metadkabu-coffee-quality-laboratory-becomes-africas-first-private-specialty-coffee-association-of-america-certified-lab-208654311.html">certified by the SCAA</a>. Specialty coffee from this region is considered to be, by some, the highest quality in the world - an opinion that has been gaining popularity over the past several years.<figure class="image"><img src="/uploads/dsc_0739_1_998d048eb3.jpg"></figure>Demand for coffee is poised to hit a record in 2017, as people around the world and in developed markets are increasing their java consumption. Global coffee consumption is expected to grow by 1.2% over the upcoming year, leading to higher prices for coffee beans. “The price for Arabica coffee futures was up 20% in June 2016, marking the biggest monthly gain since February 2014.”(5) Citigroup even estimates that Arabica coffee prices could reach $1.50 per pound by the second half of 2017. To meet this increasing demand for high-quality coffee, international roasters are seeking out traceable and single-source producers in smaller sub-regions of the world. Similar to wine, consumers are willing to buy coffee at a premium if it’s from specific regions, is certified fair trade or organic, is naturally sun-dried, etc. According to a survey conducted by the National Coffee Association, the retail value of the U.S. coffee market alone is estimated to be $48 billion dollars with specialty comprising approximately 55% value share.(6) It is these overall trends that suggest sustained momentum for specialty coffee growth.BRINGING IT BACK TO THE SOURCEIt’s no wonder that with Ethiopia being the epicenter of Arabica coffee, and it ranking among some of the fastest-growing economies in the world, the country is quickly becoming a target for foreign investors seeking attractive returns in the coffee value-chain, as well as domestic and export market opportunities. In fact, coffee is one of Ethiopia’s largest export commodities, with over 55% of the coffee produced in the country sent outside its borders.(7)According to a <a href="https://d3n8a8pro7vhmx.cloudfront.net/eatradehub/pages/860/attachments/original/1433149069/Ethiopian_Coffee_Industry_Value_Chain_Analysis_2010.pdf?1433149069">USAID analysis</a> of the Ethiopian coffee value-chain, coffee generates “70 percent of Ethiopia‘s foreign exchange earnings and provides livelihoods for 15 million Ethiopian smallholder farmers.” The industry employs several hundred thousand workers in processing coffee cherries across hundreds of washing stations and hulling mills around the country.In Ethiopia, government institutions are responsible for the state coffee plantations with approximately 8,000 permanent employees and an estimated 50,000 seasonal jobs.(8) Coffee generates a considerable number of employment opportunities on farms, in the processing plants and in the transport sector. In Ethiopia, coffee constitutes a very important source of seasonal employment for many poor people and most agro-processing employees are women. Altogether, METAD employs 38 permanent staff and several-hundred seasonal staff, 70% or more of which are women. Additionally, they have purchased from, partnered with and/or supported more than 3,500 out growers to provide best practices on growing, harvesting and selling coffee. METAD also creates further social impact in the community surrounding the farm sites by sponsoring a school with over 600 children, constructing new community facilities (such as a school and community center) and working with development partners to build and install new wells.<figure class="image"><img src="/uploads/used_b2a1709f7c.jpg"></figure>Smallholder farmers, those whose plots are less than five hectares (ha), account for 95% of the country’s coffee output.(9) In fact, “average plot sizes do not exceed two ha,” wherein coffee yields remain stubbornly low compared to that of Colombia (1/3 their yield) and that of Costa Rica (1/4 their yield).(10) The country’s remaining 5% of output is produced by plantations, which average more than 50 ha in planted area, and which have been privatized by the government in recent years.”(11) However, because of the predominance of smallholders, the average yield per hectare for all cultivated land is no more than 700 to 800 kg.(12)According to the USDA Foreign Agricultural Service’s <a href="http://gain.fas.usda.gov/Recent GAIN Publications/Coffee Annual_Addis Ababa_Ethiopia_5-12-2014.pdf">2014 Ethiopia Coffee Annual Report</a>, the major reasons for the low coffee production are:<ol><li>Ethiopian coffee farm management system and agronomic practices are traditional and fail to inject new technologies into the country’s coffee production system. In addition, extension services provided to smallholder farmers are inadequate.</li><li>Inadequate use of improved seeds as the supply is limited to areas located near coffee research centers and universities in the country.”</li><li>Historically, there has been a lack of a designated government institution to provide technical support for coffee production. At one time, there was a specialized government agency supporting the production and marketing of coffee. However, it was “dissolved many years ago, leaving the sector with little institutional and technical support from the government.</li></ol>The Government of Ethiopia, though, has recently noted this problem and plans to restructure the coffee development sector by making it a priority value-chain under its Growth &amp; Transformation Plan II - increasing yields from 700 kg/ha to more than 1,100 kg/ha.(12)Ethiopia truly has the potential to increase coffee production and productivity as it has all the necessary “ingredients” including suitable elevation, temperature, soil fertility and sufficient rainfall in coffee growing regions of the country. With the right financial support and guidance, the country could become the number one coffee producer in the world. And METAD, with its clear vision and passionate entrepreneur, is uniquely positioned to become a market leader in Ethiopia’s specialty coffee industry.&nbsp;

Developing Ethiopia’s specialty
coffee sector.

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An analysis and overview of one of Ethiopia’s oldest and most lucrative value chains.

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 Back to the Source: Coffee

<h1 style="text-align:center;">Africa: The Final Frontier</h1>Before arriving in Ethiopia, my only interaction with Africa was largely related to researching some macro numbers or hearing stories from other people who had traveled to the continent as a tourist or as a volunteer. Moreover, the media portrays stereotypical images of Africa, either showing a lone acacia tree (as pointed out by <a href="https://twitter.com/SimonMStevens/status/464049317926686720">Simon Stevens</a> on Twitter) or poverty without showing a balanced view of economic growth. These stereotypes reinforce that Africa is a country and not a continent with as varied fundamentals as in Europe. When <a href="http://qz.com/207527/the-reason-every-book-about-africa-has-the-same-cover-and-its-not-pretty/">Michael Silverberg</a> (a writer at Quartz) asked Peter Mendelsund (an associate art director of Knopf and a gifted cover designer) about the prevalence of Acacia tree on each book cover about Africa, he pointed out laziness, which is both individual and institutionalized. He further mentioned that most American book designers tend not to know all that much about the rest of the world and that is why they resort to visual clichés. Risk-averse marketing departments further reinforce these clichés.<figure class="image"><img src="/uploads/book_covers_4317018a62.png"></figure>Unfortunately, these stereotypes prevail in investing too as media puts the entirety of Africa in one basket without recognizing the differences among countries. In the new world order, where Central Banks all over the globe are printing money, it has become more imperative to search for yields in all places, which essentially means turning over more stones while controlling for popular biases. I believe the best philosophy of investing in Africa comes from a fictional character of Captain James T. Kirk of Starship Enterprises instead from a popular investor. Just replace “Space” with “Africa” and you can understand the differences and nuances of investing in African countries.“Space: the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.”I believe that RENEW’s modus operandi resembles Captain Kirk’s statement. Instead of being based in Washington DC and occasionally visiting Ethiopia, RENEW has boots on the ground; employees who turn over many stones to find ideas while increasing the probability that the investment opportunity RENEW decides upon is actually promising and will turn out to be good. Based on my prior work in emerging and developed economies at multiple private and public equity funds, I learned the lesson to invest the same amount of time you spend looking at the Google’s and Apple’s of the world as you do with promising ideas in other countries — and no matter what you’re looking at, keep just a few in your nest to gain diversification and thus Ethiopia.Ethiopia’s situation is as different from many other countries in sub-Saharan Africa as a comparison between an apple and a sheep. Africa’s big four are grappling with cheap oil, political uncertainty, depreciating currency and weak banks but that is as unrelated with Ethiopia as my previous comparison. Ethiopia shares the same continent with other problem countries and probably some problems too, but the country has different fundamentals than South Africa, Nigeria, Angola or Kenya. South Africa is set to grow by just 0.6% this year (source: IMF) with a currency that plummeted 30% last year as well as an ongoing political turmoil.* Nigeria is buckling under the low oil price as it relies on oil for 70% of government revenue and accounts for 90% of export revenue.* Angola is another victim of oil prices as it relies on oil for 95% of its government revenue.* Ethiopia’s neighbor, Kenya is relatively more resilient and diversified but has been facing troubles in its banking sector; the country has 43 banks, most of which have overstated profits and are facing the weight of non-performing loans combined with a big fall in deposits.* Although Ethiopia has its own set of troubles, none of them require relying on a commodity that fuels a significant part of its state budget. Real economic growth is projected at 7% between 2016 and 2025, which, according to the IMF, is due to Ethiopia’s heavy public investment into priority sectors such as infrastructure, agriculture, and manufacturing.** Moreover, strict capital controls support Ethiopia Birr’s value. I believe these are some of the factors that made me buy that one-way ticket to Addis Ababa.<figure class="image"><img src="/uploads/prasoons_blog_e20f3a6d40.jpg"></figure>As a stereotypical investment professional, when I saw the job posting by RENEW, I researched Ethiopia’s macro indicators first before pressing the “send” button. I could sense a similar pattern as I noticed in a few emerging markets' growth stories. I saw a fast-growing frontier economy with an emerging middle-class and a young population that demands products and services similar to their counterparts in other emerging markets. Moreover, I could identify with RENEW’s work ethics and decided to join the global team in July 2016. Ethiopia is a regulated economy that is still figuring out its place in the global trade. As the regulatory environment is focusing on cautious growth, Ethiopia’s on the ground situation feels similar to the China or India of two decades ago. The good part is that the country is eager to learn from the growth of other emerging countries and leapfrogging growth without reinventing the wheel. Despite fundamentals and precedents of other countries, the country and a majority of Ethiopian midsize businesses take their own time in figuring things out and move cautiously. I believe that is where RENEW plays a pivotal role in helping management teams and companies grow by considering an outside perspective, which could merge with local conditions to spearhead a potentially high growth sustainable company.I have been enjoying my journey at RENEW and turning many stones with a talented local team to find opportunities that create social and financial returns. Moreover, I can leverage on my prior experience in operations, research, and investing to help businesses in Ethiopia grow. I believe the larger part of work satisfaction come from seeing companies employing more people and building livelihoods. There are many other trends and fundamentals that are worth learning about Ethiopia. I am taking my time to assimilate macro and cultural learning about Ethiopia to help our companies and investors navigate growth in Ethiopia, which I will share in the my next blog.In the meantime, live long and prosper.*CNN Money:<a href="http://money.cnn.com/2016/04/15/news/economy/africa-economy-south-africa-nigeria-kenya-angola/"> Africa's Top 4 Economies Are In Trouble</a> **Deloitte:<a href="https://www2.deloitte.com/content/dam/Deloitte/et/Documents/tax/Economic Outlook 2016 ET.pdf"> Ethiopia Economic Outlook 2016, The Story Behind the Numbers</a>

RENEW's Senior Investment Manager breaks down stereotypes, clichés and outdated perspectives about the continent of Africa.

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Africa: The Final Frontier

<h1 style="text-align:center;">A Weekend of Connections, Discussion and Positive Impact</h1>This past weekend, members of the Impact Angel Network (IAN) and distinguished guests met in Washington, D.C. for the second annual National Gathering, which was filled with introductions, connections, and meaningful discussion on how conscious capitalists can change how the West views Africa.The weekend event commenced on Friday evening with a dinner and discussion at the Cosmos Club. Guests mingled and enjoyed cocktails in the East Garden, and then moved into the Club's Warne Ballroom to hear global economist, New York Times bestselling author and TEDTalk speaker - <a href="http://dambisamoyo.com/">Dr. Dambisa Moyo</a> - shared insights on investing, opportunities and major economic shifts that are occurring in developing markets, like Ethiopia.<figure class="image"><img src="/uploads/2nd_annual_national_gathering3_6679e06676.jpg"></figure>In line with the weekend’s theme of sharing real stories of impact, entrepreneurship and innovation, the evening continued as members and guests alike shared their personal stories and experiences with impact investing, development, and Ethiopia (<a href="https://twitter.com/hashtag/whatsyourstory">#WhatsYourStory</a>). Ambassador Girma Birru opened dinner, encouraging attendees to continue seeing the economic growth potential that SMEs have in Ethiopia. Hussein Hirji, Economic Counselor of the Canadian Embassy, spoke to the unique public-private model that Global Affairs Canada is implementing in Ethiopia in partnership with RENEW.The night concluded with Miraf Hailu, deputy-manager of <a href="http://www.mama-fresh.com/">Mama Fresh Injera</a>, sharing about the beginning of RENEW and the IAN’s relationship with the company and just how far they’ve come. Starting in an outdated bakery to becoming a leading injera export manufacturing facility that is positively impacting the local community through job creation and tax revenue. It was a truly inspiring story of growth, opportunity and impact!On Saturday morning, IAN Chapter Chair David Grizzle and his wife Anne hosted network members for a morning of learning and review. RENEW went over the current status of each of the IAN portfolio companies including progress made to date, challenges and opportunities, and the plans going forward. All members participated in a lively discussion to brainstorm ideas on how the IAN can add more value to our portfolio. Guests were given a little taste of Ethiopia by participating in a traditional Ethiopian coffee ceremony.The weekend concluded with the investment pipeline dinner, hosted by IAN Chapter Chair, Dr. Andrew Umhau and his wife Cary. During this relaxed evening of community and fellowship, the RENEW team provided important updates on the network's investment pipeline, while guests were able to sample some Mama Fresh’s delicious Ethiopian cuisine - truly, home cooking at its finest!The RENEW team would like to thank Dr. Dambisa Moyo, Ambassador Girma Birru, and the <a href="https://renewcapital.com/impact-angel-network/advisory-board">IAN advisory board chairs</a>, Dr. Andrew Umhau, David Grizzle, Jeff and Donna Turi, Alan Gardner, Beth and Joel Marquette and Jodi Morris, and the staff of the Cosmos Club for helping deliver an unforgettable event. We also thank the members of the IAN and their families for coming to D.C. for a memorable fall weekend.