<h1 style="text-align:center;">December Resource Blog</h1>Thinking about starting a company? Looking for some inspiration? Need to learn the basics of cash management? Our December Resource Blog takes a look at our favorite articles on these topics from this past month.<ul><li style="text-align:justify;"><a href="http://grahamduncan.blog/letter-to-a-friend-who-may-start-a-new-investment-platform/">Questions to ask before launching a startup</a>: Almost every wannabe entrepreneur goes through the debate about whether to take the plunge. If you are having similar thoughts, then you might like to ask yourself a series of seven questions as you contemplate the possibility of launching your own startup. (Graham Duncan)</li><li style="text-align:justify;"><a href="https://www.worth.com/how-jonathan-rubinstein-turned-joe-coffee-into-new-yorks-hometown-brand/">How Jonathan Rubinstein Turned Joe Coffee into New York’s Hometown Brand</a>: The article tells the story of Joe Coffee: a burnt-out 33-year-old Manhattan talent agent who leaves his ambitious corporate career, spends seven months subsisting on unemployment checks and then decides to open an artisanal coffee shop. After 17 years in business and a multimillion-dollar investment from Danny Meyer’s Enlightened Hospitality Investments, Joe Coffee is ready for the next level of coffee shops. (Worth)</li><li style="text-align:justify;"><a href="https://avc.com/2019/11/cash-management-in-startups/">Cash management in startups</a>: This article highlights the importance of modelling cash flow on a weekly basis in a startup, as there are all sorts of unpredictable things (revenue, infrastructure costs, hiring pace, receivables, etc.) that might happen. But like all practices, it is about the practice. You have to engage in cash forecasting, you have to engage in it regularly, you have to adapt to changing conditions on the ground, and you have to internalize the puts and takes and their impact on operations. (AVC)</li></ul>Interested in learning more about a specific topic? Contact us and let us know what interests you at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a>.<figure class="image image_resized" style="width:100%;"><img src="/uploads/resourceblogdec_0_604ce57238.jpg"><figcaption>Image Source: Government of Canada: <a href="https://www.canada.ca/en/services/science/educationalresources.html">Science Education Resources</a></figcaption></figure>

Our favorite articles from the past month: December 2019.

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December Resource Blog: 2019

<h1 style="text-align:center;">IMF’s USD 2.9 Billion Financing Package for Ethiopia</h1>It has been approximately two years since Prime Minister Abiy Ahmed took power as the head of the government. Since then, the country has gone through various political and economic reform programs.The release of opposition political leaders and journalists are noteworthy events in the political reforms undertaken by PM Abiy. On the economic front, the government has adopted a new Homegrown Economic Reform Program (“Reform Program”) tailored to the country’s needs.The Reform Program was introduced as a tool to leverage the achievements of the Growth and Transformation Plan (GTP) for private sector development. The Reform Program is based on three pillars, i.e., macroeconomic reforms, sectoral reforms and structural reforms. It aims to correct the emerging macroeconomic imbalances prevalent in the country, ease structural bottlenecks and introduce efficient and transparent institutions, among others.<figure class="image image_resized" style="width:100%;"><img src="/uploads/ethiopia_0_154186cf55.jpg"></figure>With this background, the International Monetary Fund (IMF) staff team visited Addis Ababa for consultation with the Government of Ethiopia from October 29 to November 8, 2019. During the meeting, the Government requested a three-year $2.9 billion financing package that could be supported by the IMF under its Extended Credit Facility (ECF) and Extended Fund Facility (EFF). The IMF has approved the loan in support of the Reform Program, which is designed, as per the IMF report, to eliminate macroeconomic imbalances and lay the foundation for sustainable and inclusive growth. This is supported by the Ethiopian Government’s new trend towards allowing the private sector to take the wheel in leading the economy.The IMF financing package will primarily support the implementation of the macroeconomic pillar of the Reform Program. Specifically, the financing will be used to address the foreign exchange shortage prevalent in the country, reduce debt vulnerabilities, reform the financial sector and boost revenue mobilization. Moreover, the IMF package is expected to facilitate the transformation of the economy from public to private sector-led growth.Ethiopia has been one of the fastest-growing economies in the world, averaging around 9% economic growth per year from 2007/08 to 2017/18 (World Bank). However, the economy has recorded a decline in the rate of growth in the past couple years. This is mainly due to the forex crunch that the country is facing. The facilitation of this financing package by the IMF, and its focus, in part, on addressing the foreign exchange shortage, is expected to boost the country’s economic growth. In addition, the IMF funds can be seen as an example that, together with the Reform Program, the government is loosening its stronghold in the economy and providing a new play ground for the private sector.Read more in a recent article by the Financial Times: <a href="https://www.ft.com/content/81993af2-1c23-11ea-9186-7348c2f183af">IMF Poised to Approve Landmark $3Bn Loan for Ethiopia</a>.

A look at the Economic Reform Program and the recent IMF loan.

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IMF’s USD 2.9 Billion Financing Package for Ethiopia

<h1 style="text-align:center;">April 2020 Resource Blog</h1>For this month’s resource blog, we collected articles focusing on the global response to COVID-19. These articles include: best practices for businesses, information on government bailouts, design specifications for ventilators to encourage rapid manufacturing and an article on grief from the Harvard Business Review.<ul><li style="text-align:justify;"><a href="https://www.notion.so/Best-Practices-for-Founders-in-the-wake-of-COVID-19-54f0c0db17064e6f9e5dd456d9cb26de">Best Practices for Founders in the Wake of COVID-19</a>: A resource guide put together by major investors in India for founders to help them with difficult decisions in these uncertain times. The document contains knowledge and best practices from across the startup ecosystem on how to deal with the crisis at hand both tactically and strategically. (Notion)</li><li style="text-align:justify;"><a href="https://qz.com/1819776/here-are-the-coronavirus-bailouts-being-prepared-around-the-world/">Government Bailouts are Beginning: We’re Keeping Track</a>: The article covers information on various government bailouts for corporations, households and small and medium businesses to extend help during these uncertain times. (Quartz)</li><li style="text-align:justify;"><a href="https://hbr.org/2020/03/that-discomfort-youre-feeling-is-grief">That Discomfort You’re Feeling Is Grief</a>: David Kessler, an expert on grief, shared his thoughts with HBR on why it’s important to acknowledge the grief you may be feeling, how to manage it, and how he believes we will find meaning in it. (Harvard Business Review)</li></ul>Interested in learning more about a specific topic? Contact us and let us know what interests you at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a>.<figure class="image"><img src="/uploads/screen_shot_2020_04_07_at_12_44_49_pm_0_27cadbc6be.png"><figcaption>Image Source: Harvard Business Review: <a href="https://hbr.org/2020/03/that-discomfort-youre-feeling-is-grief">That Discomfort You’re Feeling Is Grief</a></figcaption></figure>&nbsp;

A focus on the global response to COVID-19

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April 2020 Resource Blog

<h1 style="text-align:center;">The Workplace Response Tripartite Protocol that Forgot the Role of the Third Actor</h1>Since the outbreak of the COVID-19 pandemic, the government of Ethiopia, led by PM Abiy Ahmed, has been taking many different measures to contain the effect of the pandemic on human health and the economy. These efforts were strengthened when the first coronavirus case was reported in Ethiopia on March 13, 2020. The efforts have not been limited to Ethiopia. PM Abiy’s government has also been spearheading the response for all of Africa. PM Abiy’s request of $150 billion to the members of the G20 and securing continental support from the Jack Ma Foundation are the major efforts to mention. Read his letter to the Financial Times: LINK. Internally, several efforts have been made to contain the spread of the disease and save more lives. The government has also been taking measures to mitigate the social and economic impact of the pandemic.As part of the latter measure, the Ministry of Labour and Social Affairs (MoLSA) issued the COVID-19 Workplace Response Protocol (Protocol). As could be understood from the preamble, the Protocol is sourced from the International Labour Organization’s (ILO) Guideline on how to respond and manage natural and manmade crises in the workplace.The Protocol underlines the need to take logical, participatory legal and administrative measures with proactive tripartite consultations and direction. Consistent with the general aim, the Protocol has two major objectives. The first objective is to protect workplace actors from contracting COVID-19. In line with this objective, the Protocol outlines the basic workplace preventive measures that should be taken by employers, workers and safety officers. From the employer’s perspective, the Protocol requires employers to take certain measures like ensuring the provision of sanitary materials, eliminating congestion in workers’ transportation service and making sure social distancing is maintained. Similarly, workers are required to comply with these protective measures provided by the employer and take the responsibility of reporting workplace symptoms and cases to the appropriate body, among others.<figure class="image"><img src="/uploads/photo_2020_08_25_15_46_19_1_0_dd8d478476.jpg"></figure>The second objective of the Protocol, and the focus of this blog, aims to mitigate the impact of the pandemic on (1) the national economy, (2) the sustainability of enterprises, and (3) the social and economic situation and livelihood of workers. In order to address these challenges, the Protocol proposes certain administrative and legal measures that need to be taken step by step. In effect, the Protocol restricts employers from laying off employees as a result of this pandemic.As could be understood from the Protocol, with the proposed administrative and legal measures, the Protocol provides what steps an employer should take in order to ensure workers’ social security. Similar to what has been provided in the ILO guideline, the Protocol emphasizes the need to provide social protection for workers, who could be affected during this crisis.However, in its adoption, the Protocol has left out, what seems to be intentionally, certain parts of the ILO guideline. Whereas the guideline by the ILO is framed as a tripartite protocol between the government, employers and workers, the Protocol by the Ministry was issued in a form of an order for workers and employers to comply with. The Protocol provides the administrative and legal measures that employers and workers should avail themselves of. However, it doesn’t state what the role of the government should be. It totally imposes the responsibility of ensuring workers’ social protection on employers. In contrast, the ILO guideline provides for the need to protect employment and income, but it also provides that this can only be done with the combined efforts of workers, employers and the government.As per the ILO guideline, in these combined efforts, the government needs to take the lion’s share. Among others, the government is expected to stimulate the economy and labor demand. This is done by adopting active fiscal policies, particularly social protection measures such as unemployment benefits, along with public investment and tax relief for low-income earners and MSMEs. The government also needs to adopt accommodative monetary policies like interest rate reductions, reserve rate relaxations and targeted liquidity provisions. Because the crisis hits certain sectors particularly hard, like aviation, tourism and hospitality, and MSMEs in general, targeted lending financial support is required for these segments of the economy.These measures should not be left for a single government ministry. They require the commitment of the government in general. The issue is not only about determining what the relationship between employers and workers should be, but it is also about making sure that the country’s economy survives this crisis with minimal effect. We can only do that with carefully calculated policy decisions, which should involve all branches of the government. Protocols such as the one issued by MoLSA will not be able to address all those issues and could do more harm than good.In all these efforts, the government should focus on short-term workers social security and also long-term businesses continuity. It is only the balance of these two that can ensure sustainable social protection. This could be done by availing tax reliefs, providing credit facilities and loosening certain regulatory barriers imposed on employers. Otherwise, with the current bilateral arrangement between employers and workers, the government might ensure short-term social security but that would be at the cost of the national economy in general and businesses continuity in particular.Considering the current status of the country, the government of Ethiopia might not be able to provide all of the recommended support mechanisms by itself; however, this should undoubtedly be one of the areas where it seeks support of its international partners. This will require a huge investment, but it is something that needs to be done for the revival of the economy after the impending economic crisis.Uniform, large-scale, and coordinated policy measures are needed at times like this to save the economy. Making employers shoulder the burden of social protection is not a sustainable approach to workers’ social security. In fact, such uncoordinated measures could result in the death of hundreds of companies, especially MSMEs that cannot shoulder this responsibility for long. This unquestionably will result in a long-term social security crisis and it could take much time for the country’s economy to revive after the COVID-19 crisis is over.

How restricting employee layoffs creates problems for the private sector

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The Workplace Response Tripartite Protocol that Forgot the Role of the Third Actor

<h1 style="text-align:center;">Press Release: RENEW's IAN Make Follow-on Investment in Ethiopia’s #1 Online Food Delivery Company</h1><a href="https://renewcapital.com/sites/default/files/05.21.2020_-_press_release_-_roadrunner_-_final.pdf">Download the Full Press Release</a>&nbsp;<hr>&nbsp;RENEW and the Impact Angel Network Make Follow-on Investment in Ethiopia’s #1 Online Food Delivery Company in Response to Spike in Demand Due to COVID-19&nbsp;Denver, CO and Addis Ababa, Ethiopia, May 21, 2020 --Members of RENEW's <a href="../../impact-angel-network/impact-angel-network.html">Impact Angel Network</a> (IAN) have funded a third investment in Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a> in Addis Ababa, Ethiopia. Deliver Addis (the d/b/a name of Universal Courier Services PLC) is the pioneer e-commerce company in Ethiopia, the world’s 12th largest country. Since 2015, Deliver Addis has focused on online food delivery, but in April 2020, in response to increased demand caused by the COVID-19 outbreak, the company expanded services and now includes an online Marketplace that enables Ethiopian consumers to shop for groceries and other essential goods online. Since the IAN’s initial investment, the company’s daily deliveries have grown 630%.Roadrunner and Deliver Addis’s core competitive advantage is the technology platform they use, designed by founder Feleg Tsegaye. The platform enables Deliver Addis to handle large amounts of orders and coordinate drivers to shorten delivery times. The IAN’s investments financed the enhancement of this platform and an expansion of Deliver Addis’s fleet. Deliver Addis now provides food from over 100 restaurants, groceries, flowers, and other consumer products. The third investment in Roadrunner and Deliver Addis will increase the companies’ capacity, enable them to reduce prices and increase efficiency to expand market share and offer new products and services to the market.“As both a frequent user of Deliver Addis and owner of Roadrunner, I couldn’t be more excited about this investment,” said Matthew Davis, RENEW’s CEO. “Not only is the need for such services of national importance to control the spread of COVID-19, but it is also keeping hundreds of people employed through Deliver Addis and the small businesses they support. Feleg is a visionary and a skilled technician. We’re excited to back him and drive Deliver Addis into new markets.”“While it hasn’t been easy to launch and grow an e-commerce platform in Ethiopia, the country is changing every day,” said Feleg Tsegaye. “We’re seeing consumers adopt technology not only as a luxury, but, in these challenging times, it’s becoming a necessity. We’re pleased to play our role in helping prevent the spread of COVID-19 and to help so many restaurants, local vendors and supermarkets keep their lights on by providing them with an online market. We appreciate all of the support we have received from the community and our stakeholders, and we look forward to continuing to serve them.”The investments made by the Impact Angel Network have been made possible because of RENEW’s partnership with <a href="https://www.international.gc.ca/gac-amc/index.aspx?lang=eng">Global Affairs Canada</a> (GAC). RENEW’s blended finance partnership with GAC aims to support high potential, responsible SMEs in Ethiopia, providing them with the tools, resources and training they need to attract and efficiently use finance to grow, thereby enabling them to play a stronger role in the Ethiopian economy.<figure class="image"><img src="/uploads/rr_press_release_0_1a9d90040c.png"></figure>About the Impact Angel Network and RENEWThe Impact Angel Network is one of the most active private equity investors in Ethiopia. Its members seek to achieve both significant positive social impact and financial returns through investments in small and medium enterprises (SMEs) in Africa, a proven engine of economic growth and job creation which often lacks capital due to their size. RENEW and IAN members believe that targeting employment through SMEs is, dollar-for-dollar, the most effective and sustainable way to reduce poverty.RENEW, with its largest office in Addis Ababa, Ethiopia, manages the IAN’s investment operations and provides investment advisory and consulting services in support of its investments. RENEW’s work in Ethiopia was piloted with USAID and is currently undertaken with financial support from the Government of Canada provided through Global Affairs Canada. The project, Accelerating Business Growth, aims to promote sustainable job creation for low-skilled workers, including women and young adults, through a dynamic and growing small and medium business sector in Ethiopia.&nbsp;###&nbsp;To find out more, please visit <a href="../../index.html">www.renewcapital.com</a>.Photo by Ian Christmann: <a href="http://ianchristmann.com/">www.ianchristmann.com</a>.

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Press Release: RENEW's IAN Make Follow-on Investment in Ethiopia’s #1 Online Food Delivery Company

<h1 style="text-align:center;">A Stock Exchange in Ethiopia</h1>During our June Impact Angel Network Members’ Call, members of the IAN and RENEW explored what happens when a country decides to open up a stock exchange. While Ethiopia is among the five largest economies in Sub-Saharan Africa and is the second-largest by population, it does not have a stock market. As you may have seen in the <a href="https://www.bloomberg.com/news/articles/2020-06-30/ethiopia-to-set-up-regulator-for-first-stock-exchange-this-year">news</a> recently, this is about to change as the Ethiopian Ministry of Finance has plans to open a stock exchange within the next year, though it will likely take more time to fully implement.&nbsp;<a href="https://renewstrategies.formstack.com/forms/astockexchangeinethiopia">CLICK HERE TO LISTEN TO THE MEMBERS CALL RECORDING</a> Given this exciting development, in the recording linked above, RENEW and members of the IAN discussed what this means for investors and what we should be doing now to prepare. We hope to work with our partners, including Global Affairs Canada, to begin educating SMEs on how exchanges work, as well as the benefits and drawbacks of becoming a publicly listed and traded company. Make sure to watch out for more information and webinars on this topic from RENEW in the future.&nbsp;If you’d like to join our monthly Members’ Calls to be a part of these discussions, we invite you to apply to <a href="https://renewstrategies.formstack.com/forms/renew_investor_accreditation_form">join the Impact Angel Network</a>.<figure class="image"><img src="/uploads/stockechange1_0_3ec92755cc.png"></figure>Photo by Ian Christmann: <a href="http://ianchristmann.com/">www.ianchristmann.com</a>

A discussion on Ethiopia’s future stock exchange and what it means for investors

News

December Resource Blog: 2019

IMF’s USD 2.9 Billion Financing Package for Ethiopia

April 2020 Resource Blog

The Workplace Response Tripartite Protocol that Forgot the Role of the Third Actor

Press Release: RENEW's IAN Make Follow-on Investment in Ethiopia’s #1 Online Food Delivery Company

A Stock Exchange in Ethiopia