RENEW Strategies

RENEW's Fellows Program: A View from Inside

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Laura Davis
| October 25, 2013

This is a guest post by Ryan Musser, who participated in RENEW's Fellows Program from May - August 2013. Ryan lives and works in Washington, D.C.

I first learned about RENEW a year ago and was instantly drawn to its mission. As a student and practitioner of international development, I’m always interested in new and better ways to facilitate and encourage development. What attracted me to RENEW is its public-private partnership approach of impact investment that puts the investor and entrepreneur on the same level, rather than the typical donor-recipient relationship in traditional development models. If I were to make a prediction about the future of economic development, I would predict that the way of donor-based economic development projects are on their way out. Impact investment is on its way in.

In the upcoming years, business creation, entrepreneurship, and investment are bound to play an integral role in poverty alleviation around the world. China and India have proven that millions of people can be lifted out of poverty through the market-led economic growth of investment and business creation. Impact investment is an exciting opportunity for philanthropists and development practitioners seeking to alleviate poverty.

But impact investment isn’t just an opportunity for the charity-minded. We now see in Africa in general – and Ethiopia specifically – a situation that is ripe for investment with huge returns. Out of the 10 fastest growing economies in the world in the past decade, six are from Africa. From 2011-2015, seven African countries are set to be among the 10 fastest growing countries in the world, with only China and India being ahead of Ethiopia at 8.1% annual average GDP growth. Already from 2005 - 2009, Ethiopia recorded higher growth than China, averaging 11% growth. From 2003 to 2011, Ethiopians have seen their income double from $527 per capita to over $1,100. In the next five years, East Africa is expected to attract $6.8 billion of annual foreign direct investment. And investing in this growth in the developing world is profitable. According to WhyDev, forty percent of impact investment funds that focus on emerging markets target a return between 16-20% after fees, carry, and currency conversion.

Impact investment is a win-win for everyone: investors, entrepreneurs, and the poor. Investors are making money, entrepreneurs are growing their businesses, and the poor are seeing their incomes rise and their quality of life improve. This past summer I participated in a fellowship with RENEW because I want in on this action. I believe that Africa is the future frontier for investment and impact investment is a key tool in the fight to alleviate poverty. If the US wants to stay competitive globally, we need to be investing in Africa, and if international development practitioners want to stay competitive, we need to get involved in impact investing. During my fellowship with RENEW, I had the opportunity to familiarize myself with the impact investing field, gaining insight into the players, the opportunities, and the obstacles faced in impact investing. During this time and through my research with RENEW, my hunch has been confirmed: impact investing is a disruptive innovation here to stay. Whether you’re seeking a financial return or a social return with your money, you can’t ignore impact investing. It’s a crucial tool for the investment world, as well as the philanthropic and aid world, and it’s only just beginning to show its impact in these circles.