<h1 style="text-align:center;">Reflections on Goats and Cinnamon Dolce Lattes</h1>I am writing this blog from the comfort of a hotel in New York City. I am sitting in an air-conditioned room, eating breakfast off the room service menu – a rare vacation treat, to be sure. This morning, I woke up in a big soft bed and bathed in a shower with amazing water pressure. I didn’t think twice about the safety of the tap water as I filled the Nespresso machine in my room. I memorized the directions needed to get to today’s tourist attractions – easy to do when the everything is mapped on a grid system – and marveled at the controlled chaos of the city.If you are reading this and live pretty much anywhere in the “developed” world, this morning is probably similar to the morning you had. The names, faces, and places change, but the general story of each day is the same. Wake up, work, leisure, rinse, repeat.This was not my daily story in Ethiopia, where I spent 10 days onboarding with RENEW at the beginning of May 2022.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Whats_App_Image_2022_06_09_at_5_53_35_PM_7a657e35af.jpeg"></figure>My mornings there started on a firm bed, awakened either by the caterwauling of the neighborhood cats or the call to prayer broadcast on the local mosque’s loudspeaker. My daily shower could best be described as an aggressive sprinkle. I brushed my teeth with bottled water, to avoid ingesting tap water that might make me sick.The directions to the RENEW office were mercifully straightforward, but involved walking on an unpaved rocky road, competing for walking space with goats instead of the ogling tourists I compete with here in New York. (Though a strong case for comparison can be made between the two.)&nbsp;Meals in Ethiopia were limited to the safety of our office building’s in-house coffeeshop and restaurant, as well as Laura Davis’s excellent home cooking – vegetables in Ethiopia need to be bleached in advance, you see, or you risk eating something your untrained American stomach can’t handle. Fruit with a peel is safe, and meat cooked thoroughly is fine, but anything else and you’re playing Russian roulette with your digestive system.Life in Addis Ababa, where RENEW has its East African headquarters, is apparent chaos. One day, I walked to the office alongside a herd of goats, and was horrified when a goat got lightly hit by a car not three feet away from me, its offended bleat startling me awake against the jetlag. (The goat was completely fine; it did not demand to see the driver’s insurance.)&nbsp;Since there isn’t a single Starbucks to be found in Ethiopia, my caffeine routine instead consisted of strong, dark Ethiopian coffee, the ritualistic serving of which is deeply embedded in Ethiopian culture. In a world of insanity where I was searching for normalcy, I am especially grateful to the RENEW team for showing me the best hospitality I’ve ever had when taking my morning coffee. Truth be told, I’ve been going to the same coffeeshop in my neighborhood for almost two years, and the barista still thinks my name is Cali, Kelly, or Aly depending on the day, so the team’s love and care surrounding my daily coffee cannot be appreciated enough.&nbsp;Our wifi and electricity – at home and at the office – were subject to outages, depending on the city’s mood that day. Do you know how hard it is to do work in a digital environment without internet? It is literally impossible.I say all of this not to make some sweeping patriotic statement about how grand American life is compared to life in a developing country; in fact, I find myself missing the daily challenges of my Ethiopian experience. Those challenges kept things interesting! I also don’t say this to garner sympathy for the good people that call Ethiopia home. They may not be tech bros in Patagonia vests, or investment bankers in full suits yelling into their phones on the subway, but they work as hard at pursuing their hopes, dreams, and goals as we do our own.If you take away anything from time spent in Ethiopia, I hope it’s this: “developing” is a verb, one that captures the spirit of East Africa and the work that RENEW is doing. It is not an adjective that remains forever static, a distant goal on the horizon, a lofty but unattainable ideal. Across East Africa, RENEW is developing capable business leaders, smart investment models, and opportunities for economic growth through job creation. This is not your high school mission trip – this is real, lasting progress, and it’s happening on the other side of the world with or without you.This drive to thrive is at the core of RENEW’s philosophy, and that is something that was evident to me on day one. Against all odds, there is a team of committed and passionate individuals doing the hard work of participating in developing a nation. Despite the lack of many creature comforts, there is upward and forward momentum. There may not be street signs, but there are locals who know the city by heart and can push businesses ahead with that knowledge.<figure class="image"><img src="/uploads/Whats_App_Image_2022_06_09_at_5_54_01_PM_7fa7ae6b0a.jpeg"></figure>There is no grande cinnamon dolce latte with oat milk to start your day. There is no grid system to make navigation and transportation easier. There is no reliable utility of any kind to keep you connected 24/7. There is no junk food you can effortlessly find and thoughtlessly chomp on while you work. There is a lack of life infrastructure that I’ve completely taken for granted.But there are motivated people, visionary leaders, and savvy investors who are all rowing in the same direction to make sustainable development happen across East Africa. There are trailblazers. There are subject matter experts. There is a generosity of spirit. There is a willingness to teach and to be taught.There are people like me, small cogs in this big machine. There are people like Matt and Laura, big thinkers in a historically conventional space. And there are people like you: inquisitive, innovative, interesting, looking for something new, looking for something bigger, looking for a place to belong, looking for opportunities to align and deploy the cash in your wallet, the ideas in your head, and the compassion in your heart.&nbsp;You are my road to RENEW. You are the reason we’re all here, able to do what we do best, able to do what we love and value. You are why “developing” is a verb.That’s what will get me out of this big soft bed today. That’s what will get me back to Africa.

Ellie Maguire Contrasts Addis Ababa and NYC, and How Her Personal Path Led to RENEW

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Reflections on Goats and Cinnamon Dolce Lattes

<h1 style="text-align:center;">RENEW’s Legal Corner: June 2022</h1>Our take on developments in the investment ecosystems of East Africa.<figure class="image"><img src="/uploads/Screen_Shot_2022_05_12_at_11_13_40_AM_1d149622f5.png"></figure><hr>ETHIOPIA​​The Ethiopian Securities Exchange (ESX) is Under FormationStarting from the entry into force of the Capital Market Proclamation in July 2021, the government of Ethiopia has been taking the necessary steps to make the capital market operational. One of the cardinal steps to operationalize this is the establishment of a securities exchange. Therefore, on May 19, 2022, the government took this crucial move by signing a cooperation agreement for the establishment of the Ethiopian Security Exchange (ESX). The Ministry of Finance (MoF), Ethiopian Investment Holding (EIH) and Financial Sector Deepening Africa (FSD Africa) have signed an agreement for establishing the ESX. According to the CEO of FSD Africa, the ESX will be operational within the next two years. When the ESX comes into effect, financial institutions and key economic players will be listed, which is expected to widen the investment opportunities for potential investors in Ethiopia. In addition, this is expected to have a positive impact on the country’s development by facilitating access to finance for businesses, whose source of finance has been limited to the banking sector for a long time.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade Registration and Licensing Activity Goes Fully Digital&nbsp;According to the <a href="https://www.pmo.gov.et/media/other/b2329861-f9d7-4c4b-9f05-d5bc2c8b33b6.pdf">digital Ethiopia 2025 strategy</a>, which was endorsed by the Council of Ministries on June 15, 2020, the government mentioned lack of E-governance as a reason for the country’s low rank on the Ease of Doing Business index. In order to avert this and other problems which are facing Ethiopia’s businesses, the government has listed initiatives that are undertaken in the digital Ethiopia 2025 strategy. These include digitizing government operations, government services and developing better service delivery channels.&nbsp;As part of digitizing government operations and services, the Ministry of Trade and Regional Integration (MoTRI) has introduced an Online Trade Registration and Licensing System (OTRLS) this month. Clients of MoTRI and Addis Ababa Trade Bureaus are now not required to go to government offices to get the services previously provided by appearing in person at the above mentioned respective trade bureaus. Effective May 2022, MoTRI has stopped all in-person licensing activities and has shifted everything online. However, the online system has its flaws. From our experience, we have noticed that the system is not user friendly. In addition, we have realized that the personnel at MoTRI who handle the system itself are not accustomed to how it operates, which still causes some delays and frustration in the business community.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign Mobile Money Operators Allowed to Operate in Ethiopia ahead of Revisions to the Banking Proclamation&nbsp;Following the government’s decision to open up the financial sector to foreign players, the National Bank of Ethiopia (NBE) indicated that it is working on building the legal framework that liberalizes the sector. Similarly, NBE announced the government’s decision to allow foreign mobile money operators or other digital financial services to operate in Ethiopia ahead of revisions to the banking proclamation. This decision is part of the series of measures being taken by the government to liberalize the market. This is also related to another recent government decision – opening the telecom sector for foreign investors. Allowing mobile money will be a great advantage for Safaricom (who will be opening operations in Ethiopia this year) in its competition with Ethio Telecom, which recently announced Ethio-birr and gained millions of subscribers within a short period of time.<hr> UgandaLitigation Continues in Bitature Case - A Deterrent for Foreign Investors?Vantage Mezzanine Fund II (Vantage), a South African investment fund, and Mr. Patrick Bitature (Bitature), a Ugandan local, continue a litigation battle in Uganda’s courts. Vantage was recently blocked by Ugandan courts from foreclosing on its investment in Bitature’s hotel/real estate business, Simba Group.&nbsp;Vantage provided a $10M secured loan to Simba Group in 2014. Simba Group defaulted on the loan in 2017; Vantage agreed to restructure the loan, with payments coming due in 2019. By 2019, the company had still failed to repay anything on the loan, and Bitature filed suit, claiming that the loan was invalid, and alternatively that it was signed under duress, and thus his company did not have to repay the loan. This lawsuit was eventually dismissed as baseless, but the legal battle continued. Vantage tried to enforce its security over the shares in Simba Group in an effort to recoup its loan. Under Ugandan law, the share transfer has to be registered with the Uganda Registration Services Bureau (URSB). When Vantage attempted to register it, URSB refused (there is speculation that Bitature may have interfered with the registration). Vantage filed suit to compel URSB to act, and the court dismissed the claim on the basis that Vantage Mezzanine Fund II was not registered as a partnership in Uganda and thus lacked standing to sue in Uganda.&nbsp;This ruling is significant for the international investment community – it calls into question the enforceability of foreign investments in the country and may harm Uganda’s reputation in the international investment world. Foreign investors want certainty and predictability from the laws and legal systems of the countries in which they invest. This case puts a question mark on whether government agencies and courts in Uganda will uphold and enforce foreign investments.&nbsp;In the latest development, Vantage received the green light from a commercial court in Uganda to sue Bitature and his wife directly, as they were guarantors on the loan. Bitature moved to dismiss this suit and asked the court to order a temporary injunction preventing Vantage from bringing private legal action against the Bitatures. The court dismissed Bitature’s requests and, remarkably, the judge directed the Bitatures’ lawyer to personally pay the court costs for&nbsp; representing his clients unprofessionally and filing a baseless lawsuit. This is the latest in the ongoing struggle by Vantage to recoup its investment; time will tell whether Vantage can win its money back through private prosecution.<hr>RwandaRwandan Central Bank Creates Regulatory Sandbox for Testing Fintech ProductsThe Rwandan Central Bank has introduced a platform for testing innovative fintech products and services in a live environment. This platform will serve a vital role in assessing and managing risks that financial products and services providers may face, such as interoperability and cybersecurity. Previously, financial products did not need to come to such an environment before applying for licensing. However, starting from this month, the central bank will now use this platform to assess the marketability of certain innovative financial products before issuing licenses. This will help the central bank to issue new laws and regulations, or amend existing regulations, by witnessing how these products function in a real market rather than based on assumptions. The sandbox regulation is part of the government policy to support innovation and development in Rwanda and is designed specifically for financial products that are deemed innovative.&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;

Our take on developments in the investment ecosystems of East Africa: June 

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RENEW’s Legal Corner: June 2022

<h1 style="text-align:center;">My Unconventional Path from University to the Investment World &nbsp;</h1>“What do you want to be when you grow up?” We've all been asked this question when we were kids, and coming up with the most fascinating profession was a competition hoping someone else didn’t say what we were thinking. Fast forward to college, in the process of discovering oneself; every decision turns out for the best or worst. But it is human nature to fail; we must rise from the ashes and keep on going. Although college life has its stressful thoughts, none is like the thought of landing your first job. All the questions come flooding in; “Where should I apply? When should I apply? Sector? Location?”. But the most important question is “Will I get the job?”. Jobs in Ethiopia are very competitive, with thousands of students graduating each year and most employers wanting to employ someone with experience only. Granted, entry-level employees, most of the time, want to build their CVs and leave for a better job. Internships are usually not available, and on top of that, most students don’t get the initiative to apply unless the college obliges them.<figure class="image"><img src="/uploads/Screen_Shot_2022_06_08_at_8_30_37_PM_b937762329.png"></figure>My story with RENEW began when I was in a situation most students in Ethiopia find themselves in; wondering what my first job would be after graduation. I didn’t want to blow with the wind as I saw my friends doing. Most saw the banking sector to be the most stable and promising job they could get, but not me. I wanted something different. Although I couldn't put my finger on it, I knew there must be something different out there than the trendiest job for an accounting and finance graduate. I didn’t want to work in a bank starting as a front desk clerk. I said to myself “there's got to be more”. Luckily, I was introduced to RENEW by one of my fellow interns. Just one week before my graduation, I was interviewed and landed an internship opportunity in October 2021. Most internships I had heard of, even with world-renowned organizations, were learning platforms only, without stipends let alone medical insurance as I receive from RENEW.Some say that you should start your career with a horrible job. Because as you move up the ladder, you will learn to appreciate the good people that come into your life and the improving environment you get to work in; on top of that, challenging jobs make you tough. That is why I think I am going to be a spoiled girl having worked at RENEW as my first job. These past months, I have experienced an environment where people genuinely want me to learn and improve, a&nbsp; team who is only superior on paper but who has treated me as a friend and equal colleague. My colleagues want me to excel not only in my career but in my personal life as well. This unprecedented environment was new to me. I have never heard of a COO of a company dedicating time to interns to work on projects and advise them on work and life. Everywhere I turn, I see people who are always there to help and teach. I was made to feel welcomed from the first time I walked through the door. This is one of the best places to kick off a career. I have learned about the investment sector, which I had zero knowledge of prior to my internship at RENEW. I also had the opportunity to learn about the different business environments of Uganda and Rwanda. I would say the highlight of my internship would be seeing companies pass through different levels of assessment and coaching and being able to finally pitch to investors; I got to see them grow and improve with each stage. And with RENEW being an impact investor, hearing all about the impact side of the businesses was inspirational.&nbsp; I also got to work with a dynamic team of people from seven countries that stretched across three continents, and I am pleased with the results in my life from working here. I fully recommend students in East Africa consider applying to RENEW for an internship.&nbsp;&nbsp; RENEW received 84 applications and is selecting 6 for the next cohort that starts June 2022 in Ethiopia. Check back regularly for additional internship opportunities in Ethiopia, Uganda and Rwanda.

2022 Intern Nuhili Girma shares why others should consider an internship at RENEW


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My Unconventional Path from University to the Investment World

<h1 style="text-align:center;">Survey: Benchmark your Company, Win a Prize</h1>RENEW is currently exploring more investment opportunities in SSA. We would appreciate if you'd take 5 minutes to complete a short survey with your perspective and business needs. We'll share the aggregated results with you and keep your information in our confidential pipeline.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Edited_for_Mailchimp_518fed68c0.jpg"></figure><a href="https://docs.google.com/forms/d/e/1FAIpQLSc7-loCFPlGiO99_sQHBvN4PmgSxuylR0FuKigf_Kd9pqfLTg/viewform">Complete Survey Now</a>YOU WILL BE ENTERED TO WIN $500 OR COACHING Please note, your information will be kept confidential. Only aggregated information will be publicly shared. Deadline is Friday, May 20th&nbsp;by 12PM EAT&nbsp;

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Survey: Benchmark your Company, Win a Prize

<h1 style="text-align:center;">RENEW’s Legal Corner: May 2022</h1>Our take on May’s developments in the investment ecosystems of East Africa.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2836_15ec557b17.jpg"></figure><hr>ETHIOPIAThe New Directive by the Ministry of Revenues Eases the Deductibility of LoansThe Ministry of Revenues (MoR) issued a directive related to keeping tax books of accounts. The new directive No. 176/2014, which repealed Directive No 152/2011, aims at bringing clarity to the business community on keeping books of accounts and having supporting documents with an ultimate goal of creating consistency in terms of application. The new directive has made some noteworthy changes. However, perhaps the significant one is related to the registration and documentation of loans.&nbsp;Previously, taxpayers were required to show a loan agreement that was notarized at Documents Authentication and Registration Services (DARS) in order to recognize a certain entry to the company’s books as a debt. Otherwise, there is a high probability that the transfer will be considered an income and subject to tax. This has been a major dispute area between the taxpayers and the tax authority.The rigidity of the process at DARS to get a loan agreement notarized added to the fact that most businesses are family-owned and lack of awareness resulted in shareholders usually putting their personal money into their business at times of distress without DARS registration and facing excessive taxation.&nbsp;The new directive has provided some clarity to that. Even though the burden of proof still rests on the taxpayer, now a loan can be proven in different ways in addition to proof of notarization at DARS. Despite the upgrades to the law, be advised that not getting a loan agreement notarized at DARS will have consequences in terms of stamp duty penalty. The business community is still advised to get the loan agreement notarized at DARS, however, the consequence of not doing so is now less grave.&nbsp;NBE has Released a Complete Guidelines for Telecom OperatorsIn 2020, the National Bank of Ethiopia (NBE), came up with a <a href="https://nbebank.com/wp-content/uploads/pdf/directives/Payement%20system/ONPS-02-2020.pdf">Licensing and Authorization of Payment System Operators Directive - ONPS/02/2020</a>, which allowed telecom operators to engage in payment and related services in Ethiopia. As a follow-up to this, NBE has introduced a <a href="https://www.nbe.gov.et/wp-content/uploads/pdf/directives/Payement%20system/A-complete-Guide-on-licensing-process.pdf">Complete Guide on Payment System Operator License Process</a> that stipulates the details of the licensing process for the financial firms that want to engage in related businesses.&nbsp;The guideline has five phases detailing the application procedure to secure the license. These include to whom the application should be addressed, documents that should be submitted with the application, company formation and the authorization process.&nbsp;&nbsp;&nbsp;&nbsp;Basic Food Items Can Now Enter Ethiopia on Franco Valuta Basis&nbsp;In an effort to control the food inflation in Ethiopia, triggered by internal and international factors, the government is taking new measures. As part of this move, the Ministry of Finance has issued a circular allowing the Ethiopian diaspora and Ethiopians’ who live abroad to import basic food items into Ethiopia without a foreign currency permit.&nbsp;In a circular which is written to the Ethiopian Customs Commission, the Ministry of Finance has given permission to the diaspora and Ethiopians who live abroad to import oil, wheat, sugar, rice and instant milk under the franco valuta scheme. The new circular waives the restrictions that were imposed on the volume that is allowed. Under the new circular there is no minimum requirement and persons who are considered eligible can import any amount of the basic food items which are listed under the Directive.&nbsp;NBE Has Come up with a New Directive for the Implementation of Technology in Core Banking OperationsNBE has introduced a Directive that obligates commercial banks to automate their system, at least their core business processes. As per this law, commercial banks are required to automate their customer due diligence, loan processing, loan portfolio management, and interest banking services among others.&nbsp;NBE has set a time frame for banks to modernize their banking processes, which is within the next two years starting from the effective date of the Directive. Not complying with the Directive within the set time framework will result in an ETB 10,000 fine each month. If a bank fails to automate its core banking business within additional two years, it will face partial or full suspension of related core business in due consideration of the nature of the function.<hr>UGANDAThe End of Umeme’s Monopoly over the Supply and Distribution of ElectricityThe Ugandan Parliament has passed an Electricity Amendment Bill 2022 which, if ratified by President Museveni, will end Umeme Limited's (“Umeme'') monopoly as the sole bulk power supplier of the country. Umeme has been operating under a 20 years electricity distribution concession effective March 2005 from the Government. Umeme is Uganda’s main electricity distribution company, listed on the Uganda Securities Exchange and cross-listed on the Nairobi Securities Exchange of Uganda and is currently distributing about 97% of all electricity used in the country.&nbsp;The new bill permits suppliers to receive generation and transmission licensees to supply electric power in bulk directly to categories of customers specified by the Minister. The assent of President Museveni is the only remaining hurdle for the bill to be implemented.The implementation of the presidential directive will take away Umeme’s service territories where it is not licensed. It will also give a selling power to industries at a tariff that eliminates the current expensive distribution costs of Umeme.&nbsp;Uganda Import Rule Over Age-Old CarsIn a new directive by the Uganda Revenue Authority (URA), imports of vehicles older than nine will be cleared under the East African Community’s Single Customs Territory (SCT) which allows members of the bloc to jointly collect customs taxes. Complementary to this directive, any vehicle nine years old or more from the date of manufacture shall no longer be cleared under the current warehousing regime. As a result, based on CRSP The price of used cars will be inflated as it attracts an import duty of 25%, excise duty (ranging from 25% to 35%) and value-added tax of 16% payable cumulatively and in that order.The likely impact of this directive will be first, a decrease in vehicles sold on the automobile black market in Kenya and secondly, it will create a tough environment for Ugandan importers as they will be required to lodge import declaration forms in their respective home countries and pay relevant taxes upfront to facilitate the export process. Thus, the price of automobiles will likely imminently increase. However, for some, this is viewed as positive news from an environmental point of view because consumers will inevitably opt to purchase newer cars that have lower carbon emissions. Kampala, Uganda’s capital, is currently reported to have the second-worst air quality in Africa.<hr>RWANDARwanda to Benefit from $25m Initiative for Climate Resilient Crop VarietiesBurundi, Rwanda and the Democratic Republic of Congo (DRC) are part of the countries listed for consideration in the new initiative that strives to ensure environmental conservation and increase food security. According to an article in the New Times, the&nbsp; $25 million regional initiative dubbed “Transforming Agri-Food Systems in West and Central Africa” (TAFS-WCA) initiative has been launched by CGIAR, a global research partnership to improve nutrition and food security within the context of climate change in West and Central Africa through nutritious, climate-adapted and market-driven food systems. Rwanda depends greatly on agriculture for both domestic consumption and export. Earlier this year, a prolonged drought eroded more than 40% of Rwanda’s farmer’s produce, mainly beans and maize. This situation was exacerbated when the heavy rains that came, later on, damaged the crops that had survived the dry spells. This initiative will offer farmers some relief from the adverse and sometimes unavoidable effects of climate change subsequently ensuring food security and steady yields for consumption and export.Ukrainian Refugees Could be Sent&nbsp; to RwandaIn an interesting twist, senior officials in the UK have stated that Ukrainian refugees entering the country with illegal documentation may be relocated to Rwanda. The process will begin in the next few weeks following a $158M deal struck by the British government and Rwanda last month. Thousands of illegal migrants who haven’t yet been processed in the UK will be granted asylum or refugee status. According to an article in The Guardian UKTom Pursglove, the minister for justice tasked with tackling illegal migration stated in defense of the new immigration scheme that, “This is a new and untested policy at this point in time. I do think that in the fullness of time we will see this policy, as part of a wider package that we are introducing, really shift the dynamic.” The Migration and Economic Development Partnership will likely be beneficial in achieving Rwanda’s economic and social transformation by integrating the asylum seekers into the workforce.&nbsp;1. <a href="http://umeme.co.ug/">http://umeme.co.ug/</a>2. <a href="https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812">https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812</a>3. <a href="https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394">https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394</a>4. Current Retail Selling Price

Our take on May’s developments in the investment ecosystems of East Africa


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RENEW’s Legal Corner: May 2022

<h1 style="text-align:center;">10 Years of Blended Finance</h1>This month, we continue our celebration of operating in Ethiopia for 10 years with a special focus on lessons learned from our blended finance model. In case you missed previous posts in the series, you can find them here:<ul><li><a href="https://www.renewcapital.com/resources/blogs/Photo%20Journey%20%20Ethiopia%20Then%20%20%20Now%20%20A%20Tribute%20to%20a%20Cooking%20Pot">Photo Journey: Ethiopia Then &amp; Now. A Tribute to a Cooking Pot </a>(March 2022)</li><li><a href="https://www.renewcapital.com/resources/blogs/10%20Years%20of%20Changes%20in%20Ethiopia%20%20What%20Do%20the%20Numbers%20Tell%20Us%20">10 Years of Changes in Ethiopia. What Do the Numbers Tell Us? </a>(April 2022)</li></ul><figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_05_12_at_10_19_18_AM_de03a9629b.png"></figure>RENEW operates what’s called a blended finance (BF) model, which involves the private sector partnering with donors to address a development challenge that has commercial potential. In RENEW’s case, we aim to accelerate the formation of capital for growth-oriented small and medium enterprises (GO-SMEs) and strengthen the investment ecosystem in Africa. Our partners include groups like Global Affairs Canada (GAC) and USAID among others. In each project we take on, we aim to achieve leverage, which means attracting more private capital than donor funding that was used to support the project. We also aim to strengthen the investment ecosystems by developing pipeline for investors, organizing local capital, and improving the investment environment. We also work on women's economic empowerment and climate-change by helping companies become climate and gender-smart. After 10 years of working on our model in Ethiopia, we’re happy to say we’re rapidly expanding into the region. Looking back, we wanted to share the eight biggest lessons we learned from implementing our blended finance model in Ethiopia.&nbsp;<ol><li>FIND A BALANCE WITH MONITORING AND EVALUATION AND REPORTING: With BF projects, implementers will serve two masters that require robust and specific reporting. Obtaining timely and accurate financial statements from portfolio companies and other non-investee SMEs was a challenge. &nbsp;Lesson Learned: During the project planning stage, be careful what you sign up for in terms of reporting. Try to create as much alignment and overlap between the reporting requirements for your different clients to lessen the burden.</li><li>PERSIST ON THE OUTCOMES, BE FLEXIBLE ON THE ACTIVITIES AND OUTPUTS: Investing in Africa is relatively new for Western governments and investors. We’re learning that some approaches that worked for one country could be unsuccessful in another. &nbsp;Lesson Learned: Make sure your donor partner and your investors are flexible and allow you to pivot as you begin implementation and apply lessons learned throughout the project, even if that means adjusting how you get there. Further, be diligent in documenting your failures and reviewing them to extract lessons learned. For many investors right now in Africa – the early ones like those supported by blended finance – this can be extremely valuable for the larger community and can catalyze more capital.</li><li>DON’T BE AFRAID TO TRY SOMETHING RADICALLY NEW: Building on the idea of flexibility, be willing to try something totally radical. One component of the project from the planning phase to expand our reach in Ethiopia was “investment hubs” in larger cities outside of Addis Ababa to educate SMEs on investing, sourcing deals, and creating valuable business networks. Due to unrest, logistics and a lack of local partners in these cities, there was little traction. Instead of continuing down a failed path, someone came to a more radical idea to reach the masses; an edutainment show – Chigign Tobiya, which is like Shark Tank or Dragon’s Den meets American Idol, customized for Ethiopian culture. We soon went from minimal touchpoints in four cities outside of Addis with only a few stakeholders, to a reported 40 million viewers that raised excitement for entrepreneurship and the formation of local angel networks. Lesson Learned: Be open to trying something radical if the status quo is not working and you may just end up unlocking impact at a larger scale than you thought possible.</li><li>MONEY TALKS WITH POLICY REFORM: Due to the sheer volume of SME transactions we closed in Ethiopia, we became a de facto expert on investing in a country where this is very hard to do. This gained us credibility and a seat at the table when the Ethiopian government was updating their investment code. Our track record of bringing FDI into the country allowed us to help influence several changes that will have a significant impact on the investment and entrepreneurial ecosystem.</li><li>STAY THE COURSE, DON’T GET PULLED AWAY FROM YOUR SWEET SPOT: It’s tempting to chase grant dollars and get pulled into work beyond your sweet spot, or your general good investment sense. For example, it’s easy to become infatuated with social enterprises that have a compelling story, but no real investment case. Lesson Learned: Be disciplined with your investment model and don’t sacrifice longer-term sustainability of the business for near-term soft funding and praise.</li><li>EXTEND THE TIMELINE: SMEs take a long time to realize impact and growth from investments. You might invest in a company in year four of a five-year project and, as a donor, never see the benefits of that initiative. The market and the country are also very dynamic, and the entire private sector might be in an economic slump right at the end of your project, which hurts your numbers. &nbsp;Lesson Learned: Work with your donor to find ways to either extend the project or the reporting period to get a truer sense of the long-term positive impact of a blended finance model.</li><li>80/20 RULE: FOCUS ON A FEW GROWTH COMPANIES, VERSUS TRY TO HELP EVERYONE: Not everyone is meant to be an entrepreneur, and blended finance interventions need to realize this. You’ll figure out quickly which entrepreneurs have the capacity to take on financing. &nbsp;Lesson Learned: 80% of the impact and the results will come from 20% of the SMEs you support under the model. Focus on the 20% and those who are equipped to grow and create impact at scale.</li><li>BE PREPARED TO EDUCATE ALL STAKEHOLDERS, MULTIPLE TIMES – YOU’RE LIVING IN THE “MIDDLE”: Some of the reporting, forms and requests we received made no sense in the greater context in which the project operated. Some, in the donor community, have said we are only making rich people richer. Some SMEs thought we were grantmakers and approached us as such. Many investors are ignorant to Ethiopia’s private sector potential. The bottom line: you must constantly educate because development is so conditioned to fall in line with specific expectations. Lesson Learned: Be prepared to be a project manager and an educator to all program beneficiaries involved – all the time.</li></ol>To read more lessons learned from other key stakeholders in our blended finance model, including investors, donors and entrepreneurs, download our <a href="https://latest-api.renewcapital.com/uploads/ABG_Program_Overview_and_Lessons_Learned_3ebb258c22.pdf">Accelerating Business Growth Project Report.</a> &nbsp;

8 Lessons learned from implementing a blended finance model in Ethiopia

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10 Years of Blended Finance

<h1 style="text-align:center;">White Paper: Current State of Ethiopia’s Angel Investing Landscape&nbsp;</h1>As a legal professional supporting RENEW’s investment practice in Ethiopia for five years now, I keep a close pulse on commercial, tax and economic related regulations that impact private equity investors including angel investors. I recently prepared a white paper to help you understand the opportunities that are on the horizon for local and foreign angel investors and the crucial work that must be undertaken by my government to increase the attractiveness of early-stage investing and the startup ecosystem in Ethiopia in the years to come.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_05_12_at_11_13_40_AM_1d149622f5.png"></figure>I am hopeful that the Homegrown Economic Reform, the Digital Transformation Strategy, the Capital Markets Proclamation, and the draft Startup Proclamation will help set the stage for increased economic prosperity for Ethiopians and support for the private sector, but much work must still be done to ensure the legal frameworks are effectively implemented in support of an optimal environment for startups, angel investors and the private sector in general.&nbsp;&nbsp;As the famous quote by Walter Wriston says, “Capital goes where it is welcome and stays where it is well treated.” As I see it, the Ethiopian government has an important opportunity to ensure that more angel capital flows to Ethiopian startups through the following efforts:<ol><li>Coordinating the enactment of subordinate legislations&nbsp;</li><li>Broadening the label “startup”&nbsp;&nbsp;</li><li>Building a strong institutional backing&nbsp;</li><li>Providing a waiver for the sector restriction for angels&nbsp;</li><li>Easing the work permit and residence ID acquisition process</li><li>Reducing regulatory burdens&nbsp;</li></ol>To read more about my recommendations, download the white paper: <a href="https://latest-api.renewcapital.com/uploads/2022_05_2022_FINAL_Angel_Investing_Landscape_52783c12e3.pdf">LINK</a> &nbsp;

Ethiopia’s opportunities to increase early-stage investing

The Current State of Ethiopia’s Angel Investing Landscape, A White Paper

<h1 style="text-align:center;">RENEW’s Legal Corner: April 2022</h1>Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2846_254237521f.jpg"></figure><hr>ETHIOPIAA Startup Proclamation that Incentivizes Startups and Investors is in the MakingEthiopia is in the process of enacting a Startup Proclamation that aims to create an innovative ecosystem that is able to promote innovation and job creation. The proclamation that is currently in the draft stage is expected to bring solutions to some of the challenges that startups and innovative businesses face in Ethiopia including barriers to entry and exit, administrative challenges, and access to finance.&nbsp;One of the major measures taken by the Startup Proclamation is incentivizing angel investors to invest in startups and innovative businesses in Ethiopia. The incentives to such investors include tax breaks on capital gains tax and allowing debt investment, among others. [We will be publishing a white paper next week on angel investing in Ethiopia, and will include details on how the Startup Proclamation will likely impact angels.]Road Transport Proclamation in the PipelineThe Ethiopian Ministry of Transport and Logistics released a draft Road Transport Proclamation (Draft Proclamation), which, once enacted, will repeal the nearly decade and a half old Transport Proclamation No. 468/2005 (Transport Proclamation). The revision is needed in order to restructure the road transport sector in a manner that makes it competitive, safe and efficient and cognizant of the economic and social developments of the country. Below, we have summarized some of the major changes that are proposed by the draft proclamation as compared to the current one.Railway Transport Sector RemovedThe current proclamation regulates almost all forms of land transport including railway transport and their operators. However, in reality, this hasn’t been the case since 2017. With the enactment of the Railway Transport Administration Proclamation 1048/2017, the sector has been removed from the Transport Proclamation. Reinforcing that decision, the draft proclamation removed the regulation of railway transport from the scope of application.&nbsp;Maritime Transport Sector RemovedSimilar to the railway transport sector, the maritime sector administration has been part of the Transport Proclamation. However, this has been removed from the transport sector and a separate regulation has been set up per the Maritime Sector Administration Proclamation No. 549/2007. Similarly, the draft proclamation reinforced that decision and left the maritime sector out of the scope of the transport sector regulation.&nbsp;&nbsp;&nbsp;Establishment of the National Road Transport CommissionUnder the current Transport Proclamation, powers in relation to regulating the transport sector are given to the Transport Authority, which is empowered to promote an efficient, adequate, economical and equitable transport system. The new draft proclamation changes the name of the regulator to the National Road Transport Commission, which will have similar mandates to the Transport Authority. However, since there is a need to tie the works of the regulatory body with cross-border activities and neighboring countries, the decision is being taken to elevate the body to a commission.The Use of Technology&nbsp;The draft proclamation emphasizes the need for integrating technology into the transport sector, which is also one of the major reasons for the need to revise the current Transport Proclamation. The use of technology is mainly introduced in relation to data collection and dissemination. The draft proclamation provides for the establishment of a data center for such purposes.&nbsp;<hr>UGANDAChanges in the Coffee Sector Continue to Raise Concern&nbsp;A recent deal between the Ugandan government and Uganda Vinci Coffee Company Limited (UVCC) to set up a coffee processing plant in Uganda has raised concerns based on the exclusive rights given to the company to purchase all the Ugandan coffee to the exclusion of other players in the coffee sector. UVCC has been given free land in the Namanve Investment Park on a 49-year lease agreement and has been granted priority rights over the purchase of coffee to ensure its supply. There is also concern around the tax exemption extended to the investor. According to an article in the <a href="https://www.monitor.co.ug/uganda/news/national/inside-multibillion-coffee-deal-govt-signed-with-uvcc-3769446">Monitor</a>, the agreement, which lasts for a 10 year period, states that ‘the exemptions shall extend to taxes and impositions applicable to all the activities of the company and its foreign staff in respect to the export of green coffee beans.’It further states that ‘where no exemption from tax is allowed under the law of Uganda or exemption provided is inadequate to provide the company with comprehensive relief from taxes or other impositions, then the government undertakes that it will bear the cost of all taxes.’ In effect, this ensures the company will not have to pay any taxes and puts taxpayer money at risk for a deal they had not previously been made aware of or approved.&nbsp;This agreement comes after the recent decision of the Ugandan government to withdraw its membership from the International Organization of Coffee Exporters where it previously has been a pivotal member. The timing also aligns with the new National Coffee Bill passed in August 2020, which requires the registration of coffee farmers and, according to the Monitor, has not been well received.&nbsp;<hr>RWANDAImproved land rights for foreign investors may increase Rwanda’s attractiveness&nbsp;&nbsp;In an effort to position Rwanda as an entrepreneurial hub of Africa, significant changes continue to be made to the country’s laws in order to attract investments from all parts of the world. The new amendments to the land law n° 27/2021 of 10/06/2021 will likely play an instrumental role in achieving this. New land rights regarding state land leases and land concessions were revised alongside the existing rights that apply to nationals and foreigners in Rwanda.Under the new amendments, an <a href="https://www.collinsdictionary.com/dictionary/english/emphyteusis">emphyteutic</a> lease that initially stipulated a lease term of 49 years for investments and 20 years for a residential house extended the term to 99 years for both types of lease. This will likely encourage investors.&nbsp;Regarding freehold titles, historically a foreigner was only allowed full and exclusive rights to land by virtue of international bilateral agreements between Rwanda and other states, if they co-owned the land with a Rwandan citizen who had at least a 51% ownership stake, or were apportioned land in a special economic zone. The new revisions to the land law grants freehold rights to foreigners if approved by a presidential order in exceptional circumstances of strategic national interest. Though this is undefined in the new land law, and no such presidential order has been issued yet, the hope is that the order would cover all strategic investment undertakings under the new investment laws.&nbsp;The additional inclusions to the land law consist of land concession that entails use of private state land for a period not exceeding 49 years for strategic investment like forestry, agriculture and livestock, among others. An article in <a href="https://www.newtimes.co.rw/opinions/foreigners-rights-land-rwanda-new-land-law-and-its-impact-investment">The New Times Rwanda </a>stated that “All projects of national importance are deemed as strategic investments, such projects focus on special impact to the development of the country and its people.” The article further details the state lands lease which is “a State private domain land lease agreement between the State and an investor for strategic investment in construction of infrastructure for commercial purposes such as trade centers, hotels, real estate, restaurants, public parks, tourism sites, schools, hospitals passengers or goods transportation stations and industries.” The lease term is 99 years and can be renewed pending fulfillment of the investor’s tax obligations and diligent land conservation.&nbsp;

Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda

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RENEW’s Legal Corner: April 2022

<h1 style="text-align:center;">10 Years of Changes in Ethiopia. What Do the Numbers Tell Us?</h1>&nbsp;RENEW is celebrating our 10th year of operating in Ethiopia. Read our March blog here: <a href="https://www.renewcapital.com/resources/blogs/Photo%20Journey%20%20Ethiopia%20Then%20%20%20Now%20%20A%20Tribute%20to%20a%20Cooking%20Pot">Photo Journey: Ethiopia Then &amp; Now. A Tribute to a Cooking Pot</a><figure class="image image_resized" style="width:100%;"><img src="/uploads/IMG_6706_7aa2e8c866.jpg"></figure>In the spirit of continuing our celebration of RENEW’s 10th year in Ethiopia, we have compiled the economic developments of the country when we opened in 2012 (or the year just prior) and the current year (or the most recent reported). The following information is based on data provided by the National Bank of Ethiopia. Figures may vary slightly from other publically reported sources.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_23_44_PM_ca851c6db6.png"></figure>Ethiopia is currently home to the second largest population in Africa (next to Nigeria) and the 12th largest population in the world. The natural rate of population increase is 2.1%, which makes the country one of the fastest-growing populations in the world. Ethiopia is also one of the youngest countries in the world with a median age of 18 years old. As a result, the government has positioned Ethiopia to be a destination for labor-intensive manufacturing sectors like textile. However, the textile sector’s future is uncertain due to the recent suspension of Ethiopia’s status as an AGOA country and other factors. Because of the suspension, Ethiopia currently does not have duty-free access to the U.S. market for certain goods and services manufactured in Ethiopia, such as textiles. The government is putting all its efforts into finding alternative markets, one of which is the African Continental Free Trade Area.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_26_34_PM_b16d114be6.png"></figure>During the past decade, Ethiopia has recorded one of the fastest rates of economic growth in the world. Although the country’s development has slowed down during the past couple of years due to the outbreak of COVID-19 and internal conflicts, the country still managed to grow at the rate of 6.3% in 2021 according to reports from the country’s central bank.The main drivers of GDP growth for the past 10 years have been public capital investments and population growth. In 2020/21 alone, the construction industry registered 6.6% expansion with a 72.2% share in industrial output of which construction of roads, railways, dams and residential houses played a significant role.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_27_06_PM_ece572d4a6.png"></figure>The overall economic growth in Ethiopia is highly associated with the performance of the agriculture and service sectors. However, the Ethiopian economy, which previously was highly dominated by the agricultural and service sectors, is showing progress towards industrialization. The share of agriculture in the GDP is specifically declining, whereas, the share of the industrial sector almost tripled within the past 10 years.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_27_47_PM_76038c0337.png"></figure>The GDP per capita, which is a proxy to measure wealth, has tripled in the last 10 years. However, due to recent sanctions and the war in Ukraine, food inflation has recently spiked, a factor which is putting significant economic strain on the poor.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_28_20_PM_eb59b436e7.png"></figure>Ethiopia’s balance of trade shows consistent deficits mainly attributed to the imbalance in merchandise trade. Small production and quality of exportable goods and logistic difficulties are major contributors to this issue.&nbsp;Focusing on merchandise trade, the main export items from Ethiopia are coffee, gold, flower and oilseeds, although the share of oilseed exports is expected to decline significantly as a result of the war in the northern part of the country which is the agricultural center for oilseeds. The major destination for Ethiopian products is Europe with 41.3% of Ethiopia's total export of goods, with Switzerland being the major destination with 45.4% of the total export to Europe. Asia is the second largest destination with 31% of the total export of goods, of which Saudi Arabia holds the major share with 18.7% of the total exports to Asia, followed by U.A.E, India and Japan. Exports of goods to Africa currently represent only 17.4% of the total export. This, however, is expected to increase following the operationalization of the African Continental Free Trade Area. Ethiopia’s exports to the Americas constitute 9.4% of total exports of which 7.6% is destined for the U.S., which is expected to be significantly impacted as a result of Ethiopia’s suspension from AGOA.&nbsp;&nbsp;The main import items to Ethiopia on the other hand are consumer goods, accounting for 38.5% of the total imports, capital goods accounting for 27.2%, and fuel, which accounted for 13.6%. The imports mainly originate from Asia with 61.3% of the total imports originating from the continent. China and India are the major contributors with 22.86% and 12.32%, respectively. European-originated items represent 22% of the total imports, of which 2.8% is from Ukraine, which is expected to be affected by the recent Russia-Ukraine war.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_29_19_PM_d633a10583.png"></figure>Inflation in Ethiopia has soared during the second half of 2021. This is mainly attributed to the war in the northern part of the country and the widening difference in the foreign exchange market between the official exchange rate and the parallel market. <a href="https://www.renewcapital.com/resources/blogs/What%E2%80%99s%20Behind%20the%20Soaring%20Inflation%20in%20Ethiopia%3F">Read RENEW’s blog </a>about the different measures taken by the government during the past nine months in order to control inflation.<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_30_12_PM_049b6bdde8.png"></figure>In 2017, the central bank raised the minimum interest rate on savings and time deposits from 5% to 7%, leaving the lending interest rate on loans and advances to be determined by commercial banks freely. However, the skyrocketing inflation has kept the real rate of interest at -16.6% on savings and -10.35% on lending.&nbsp;&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_04_07_at_2_30_58_PM_06c3a3ca91.png"></figure>The ETB has largely been controlled by the Ethiopian central bank. While the exchange rate has generally devalued, the parallel/black market rate, which often represents a more accurate real rate, is much higher today, near a 25% difference from the formal market. This is largely due to a weak manufacturing base and export market for the country. The government has also drained foreign reserves to pay for the Grand Ethiopian Renaissance Dam. As a result, the country has only 2.2 months of foreign currency reserve.&nbsp;

As we celebrate our 10th year operating in Ethiopia, we plan to take time each month to bring your attention to interesting data, stories, partnerships or other analysis of the changes and journey of RENEW. 