In early August, Ethiopia removed its currency controls, allowing for more flexibility in its financial system. This move can impact foreign investors who may face challenges repatriating their profits from such countries due to strict regulations.
For example, investors could encounter difficulties in withdrawing their returns from a successful investment, making it crucial to consider the ease of transferring funds out of a country before committing. This issue has been observed in various regions, including Nigeria, where companies have resorted to unconventional methods to access their funds.
If profits are inaccessible, they hold little value, emphasizing the importance of a stable and market-driven foreign exchange policy for investors. Renew Capital, an investment firm, faced challenges in Ethiopia but has since shifted its focus to other regions in Africa.
Renew Capital now concentrates on investing in asset-light and technology-driven businesses in West Africa and North Africa, starting with a notable investment in a digital bank in Ghana. The firm operates through two funds, supporting startups with initial funding and subsequent follow-up investments based on performance.
One distinctive aspect of Renew Capital’s approach is its thorough vetting process for founders, prioritizing trustworthiness, focus, and discipline. Continuous learning remains a key lesson for CEO Matt Davis and the firm, driving their investment strategy and decisions.
For more insights on Renew Capital and its investment approach, you can explore the full interview for additional details.