Voices from the Finance and Investment Network: RENEW

RENEW is an impact investment firm supporting small- and medium-size enterprises (SMEs) across East Africa. Under INVEST, RENEW is developing and testing a SME Gender Growth Acceleration (SG2X) Playbook (or “the Playbook”) for fund managers in sub-Saharan Africa to boost portfolio performances of SMEs and ensure that they become gender smart. By improving the performance of SMEs, fund managers can deliver GLI portfolio success stories that can be used to encourage future investments in SMEs and GLI SME-focused funds across Africa. Laura Davis, Managing Partner at RENEW, discusses the opportunity of African SMEs, creating the Playbook, and working under USAID.

By Carolanne Chanik, INVEST Communications Coordinator

SMEs are the largest segment of the African economy and yet, across the continent, they are underperforming as a business and investment class. The challenges facing SMEs are well known — they have little access to finance and lack experienced and affordable middle management. Additionally, SMEs are rarely implementing gender-smart business practices, keeping half of the population from prospering in the workplace.

“What we need are systemic, replicable, and tested methods to build gender-smart SMEs with gender-balanced management teams that deliver financial and impact results,” says Laura Davis, Managing Partner at RENEW, an impact investment firm focused on building vibrant private sectors across East Africa. “Once those types of changes are implemented, we believe that SMEs will start to demand attention from private sector investors.”

Through the USAID Gender Equity and Women’s Empowerment Hub and INVEST, RENEW is working to bolster women’s access to, and success in, the workforce. The firm is developing a SME Gender Growth Acceleration (SG2X) Playbook (or “the Playbook”) for fund managers to boost portfolio performance of SMEs, which will in turn deliver GLI portfolio success stories.

“We created the Playbook to improve SME portfolio performance at scale in Africa, hopefully increasing the chances for competitive financial and impact results that will demand attention from larger private sector investors, thereby catalyzing capital, job creation, and gender equality,” explains Davis. By making evidence and tools available, USAID and RENEW hope to move the concept of gender-smart investing from an impact investment screening practice for gender-focused investors and fund managers to a mainstream strategy to unlock portfolio growth. “Our job is to turn SMEs into gender-smart market leaders.”

The Playbook is being informed by a series of co-creations led by RENEW with three consortia — investors, fund managers, and SMEs. Each group will provide tailored feedback on the content to ensure that the Playbook is a useful and practical resource across the investment spectrum. “We’re currently engaged in this process, holding quarterly one-on-one meetings with key stakeholders,” says Davis. “We’re engaging with development finance experts, asset managers, and SMEs in Uganda and Rwanda to provide their unique perspectives on different components of the Playbook.”

The Playbook will help to strengthen management gaps, gender equality, and the performance of investments in SMEs, as well as advise fund managers on how to better work with, and improve, gender-smart business practices of their portfolio companies.

“Our hope is that investors can utilize this Playbook to move beyond looking for women-owned and led companies,” says Davis. “Investors can use their capital to drive social change by transforming a typical SME into a gender-smart one through human capital development and policy reform as advised by our Playbook.” She continues, “The Playbook doesn’t screen deals or expect that all SMEs will meet the gender-focused criteria of gender lens investors. Rather, it provides strategies to integrate gender-smart principles into an SME’s growth strategy and management disciplines that results in trained, gender-balanced teams across portfolios.”

The Playbook will include HR strategies, various tools, trainings, and best practices to maximize portfolio results. “It’s not just about getting money into the hands of women-led companies; it’s about demonstrating that GLI can deliver significant impact and better returns from any company that implements these practices to mobilize larger sums of commercial capital,” says Davis.

Once the Playbook is complete, RENEW will host a dissemination workshop for the investment and development communities, coordinated by USAID and INVEST. “We’re really grateful for the opportunity to work with USAID,” says Davis. “Through projects like this, the Agency is buying down the risk for fund managers and investors to get involved in gender lens investing by establishing the research and infrastructure to get started. We’re excited to be a part of that effort.”