Ethiopia

ENTREPRENEURIAL
ECOSYSTEM
SNAPSHOT

EAST AFRICA
WITH SUPPORT
FROM
Ethiopia ENTREPRENEURIAL
ECOSYSTEM SNAPSHOT

Ethiopia, Africa’s second most populated country, is

forecasted to be the fastest growing economy in Sub-
Saharan Africa this year according to data from the IMF. At
the same time, the market is riddled with challenges. State-
owned enterprises dominate the economic landscape,
which have constricted the private sector’s ability to
flourish. However, recent government-led market reforms
are beginning to paint a positive outlook for Ethiopia’s
private sector. For example, opening up the national airline
to foreign investment is an encouraging signal for what
may lie ahead for businesses throughout the country.

The journey to mapping Ethiopia’s entrepreneurial

ecosystem started in February 2017, with support from the
Department for International Development (DFID), at an
Aspen Network of Development Entrepreneurs (ANDE)
event that brought together a select group of investors,
capacity development providers, and funders who
support small and growing businesses (SGBs) in Ethiopia.
ANDE and the meeting participants conducted an initial
assessment of business support providers within the
ecosystem at the meeting.

METHODOLOGY

Review of Surveys and Stakeholder

Existing Literature Interviews Meetings

To see more data and findings, see the digital

version of ANDE’s Ecosystem Snapshots at:
ecosystems.andeglobal.org

EAST AFRICA
 SUMMARY

86 62 2

NON-FINANCIAL FINANCIAL SUPPORT OTHER ECOSYSTEM

SUPPORT PROVIDERS PROVIDERS SUPPORT PROVIDERS

TOP SECTOR OF FOCUS TOP VERTICALS

48+52+J
50%
OF SURVEY RESPONDENTS
FOCUS ON AGRICULTURE
& FOOD

TOP FINANCIAL INSTRUMENT

61+39+J
62%
OF SURVEY RESPONDENTS
FOCUS ON AGTECH

NON-FINANCIAL SUPPORT

86+14+J
86%
OF SURVEY RESPONDENTS
PROVIDE EQUITY

63+37+J
64%
OF SURVEY RESPONDENTS
FOCUS ON SECTOR
DEVELOPMENT

65+35+J
TOP IMPACT OBJECTIVE TOP STAKEHOLDERS FOCUS

75+25+J75 %
OF SURVEY RESPONDENTS
FOCUS ON CAPACITY
BUILDING
67%
OF SURVEY RESPONDENTS
FOCUS ON ACCESSIBILITY

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 2

 6+10091719445159
+100
DATA
Intervention Type

60%
Provide Nonfinancial Services to
Entrepreneurs Directly (65)

50%
Promote and Educate about
Entrepreneurship (55)

45%
Provide Financial Support to
Intermediaries (49)

Conduct Research on the Sector (22)

20%
Invest Directly (18)
17%
Invest into Funds (10)
9%
Other (6)
6%

n=109

Investment Instrument

86%
Equity (12)

Debt (8)
57%
21%
Quasi-Equity (3)

Grant (2)
14%
7%
Guarantees (1)
7%
Other (1)

n=14

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 3

 DATA
Nonfinancial Support

63+37+H 40+60+H 32+68+H 32+68+H 25+75+H

64%

Sector Development
(42)
41%

Business Strategy
and Planning
32%

Value/Supply Chain
Development
32%

Access to Networks
and Partners
24%

Financial
Management

22+78+H 20+80+H 18+82+H 18+82+H 17+83+H

(27) (21) (21) (16)

21% 20% 18% 18% 17%

Technology Development Building M&E Performance Marketing Support or Needs Assessment

or Adoption Capacity management Market Research (11)

15+85+H 14+86+H 14+86+H 12+88+H 11+89+H

(14) (13) (12) (12)

15% 15% 14% 12% 11%

Leadership Building HR Governance Media Exposure Investor Showcases

Development Capacity Structure (8) (7)

9+91+H 9+91+H 8+92+H 8+92+H 8+92+H

(10) (10) (9)

9% 9% 8% 8% 8%

Ideation Legal, Accounting, Product Investor Due Diligence

(6) Other Office Services Certification Matchmaking (5)

6+94+H
(6) (5) (5)

6%

Exit Strategies
(4) n=66

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 4

 DATA
Nonfinancial Support Delivery Mechanism
Classroom/Seminar Training (62) 59%

Mentoring (57) 54%

Cohort or Group Support (49) 47%

Co-working Space (33) 31%

Direct Consulting Services (32) 30%

Seat on the Board (24) 23%

Peer to Peer/Network-based
Support (20) 19%

Competitions/Prizes (15) 14%

Fellowships (8) 8%

Talent Placement (7) 7%

Other (8) 8%

n=105

Stakeholder or Business Model Focus

Accessibility (70) 67%

Citizen Empowerment (57) 54%

Social Enterprise (57) 54%

Rural Communities (51) 49%

Women Entrepreneurs (47) 45%

Youth Entrepreneurs (47) 45%

Gender Inclusion (35) 33%

Urban Communities (32) 30%

Base of the Pyramid (18) 17%

Science, Engineering or Invention
Based Businesses (13) 12%

Resiliency/Climate Change (12) 11%

Ethical Sourcing (6) 6%

Advocacy (5) 5%
Franchising (3) 3%
Minority or Previously Excluded
Population (3) 3%

Refugees and Migration (2) 2%

n=105

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 5

 DATA
Stakeholder Type
Business Development Service
Provider (38) 52%
Accelerator/Incubator (28) 38%
Consultant (16) 22%
Fund of Funds (15) 21%
Private Equity Fund (15) 21%
Funder of accelerators (12) 16%
Angel Investor (8) 11%
Impact Investor (6) 8%
Venture Capital Fund (6) 8%
DFI/Multilateral (3) 4%
Enterprise Development Services (3) 4%
Crowdfunding (1) 1%

n=73

Sectors of Focus
Agriculture & Food (54) 50%
Sector Agnostic (39) 36%
Financial Services (35) 32%
Manufacturing (32) 29%
Supply Chain Services (18) 17%
Education (17) 16%
Environment (14) 13%
Infrastructure/Facilities
Development (13) 12%
Wholesale and Retail Trade (12) 11%
Health (10) 9%
Energy (10) 9%
Information and communication 7%
technology (8)
Water & Sanitation (6) 6%
Transportation (4) 4%
Land Conservation (4) 4%
Forestry (4) 4%
Hospitality/Travel/Tourism (4) 4%
Housing and Community
Development (3) 3%
Artisanal (2) 2%
Logistics & Distribution (2) 2%
Media & Entertainment (2) 2%

n=109

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 6

 DATA
Impact Objective
Income/Productivity Growth (75) 75%
Capacity Building (70) 70%
Employment Generation (69) 69%
Community Development (59) 59%
Access to Financial Services (58) 58%
Agricultural Productivity (54) 54%
Food Security and Nutrition (49) 49%
Access to Information (29) 29%
Equality and Empowerment (25) 25%
Health Improvement (19) 19%
Access to Education (15) 15%
Access to Energy (10) 10%
Energy and Fuel Efficiency (8) 8%
Disease-specific Prevention and
Mitigation (6) 6%
Pollution Prevention and Waste
Management (5) 5%
Access to Clean Water and
Sanitation (5) 5%
Sustainable Energy (4) 4%
Water Resources Management (3) 3%
Natural Resources Conservation (3) 3%
Sustainable Land Use (2) 2%
Generating Funds for Charitable
Giving (1) 1%
Conflict Resolution (1) 1%
Affordable Housing (1) 1%
Human Rights Protection or
1%
Expansion (1)
n=100

Verticals
AgTech (51) 62%
FinTech (40) 49%
E-commerce (23) 28%
EdTech (14) 17%
Biotech (14) 17%
CleanTech (6) 7%
Data Analytics (4) 5%
Hardware (3) 4%
Software as a service (SaaS) (3) 4%
n=82

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 7

 STAGES OF SUPPORT
KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Academic Institution

IDEA START UP EARLY GROWTH MATURE

Center for Entrepreneurship & Innovation (St. Mary’s University)

Bank or Financial Institution

IDEA START UP EARLY GROWTH MATURE

Business Advisory Service (Zemen Bank)

Consultancy Services for MSEs about Credit Management (Cooperative Bank of Oromia)

Cooperative Financing Project (Cooperative Bank of Oromia)

Corporate Credit Service (Nib International Bank)

Credit Provision Towards Economic Empowerment (Lion International Bank S.C)

Credit Service for Micro, Small, and Medium Enterprises (Bank of Abyssinia)

Credit to Entrepreneurs (Debub Global Bank)

Finance for Micro Finance Institutions (Commercial Bank of Ethiopia)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 8

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Bank or Financial Institution

IDEA START UP EARLY GROWTH MATURE

MEDA Project (Bunna Bank)

Rural Financial Intermediation Programme (RUFIP) (Development Bank of Ethiopia)

Small and Micro Finance Institution Loan (Wegagen Bank)

Small Business Financing (Dashen Bank S.C)

Small Business Support (United Bank S.C.)

Small-scale Loan Provision (Amhara Credit and Savings Institute)

SME Financing and Loan Advisory Service (Oromia International Bank S.C. (OIB))

SME Financing Project (Awash Bank)

SME Loan (Berhan Bank)

Women Financing Service Program (Enat Bank SC)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 9

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Capacity Development Provider

IDEA START UP EARLY GROWTH MATURE

Agri-business Incubator Program (blueMoon)

CBOS’ Capacity Development (Jerusalem Children and Community Development Organization)

Credit and Economic Facilities for Self Sufficiency (Christian Aid)

Developing Social Entrepreneurship in Ethiopia (Reach for Change Africa)

Economic Development Program (World Vision)

Entrepreneurship and Business Growth (Digital Opportunity Trust)

Entrepreneurship Development Programme (United Nations Development Programme)

Ethical Coach Initiative (Center for Creative Leadership)

Global Business Network (Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH)

GrowthAfrica Acceleration Programme (GrowthAfrica)

GrowthAfrica Advisory (GrowthAfrica)

Impact Angel Network (RENEW Investment Advisors, PLC)

Private Equity Funding for Small and Medium Businesses in Ethiopia (RENEW Investment Advisors, PLC)

Scaling Up Rural Savings and Credit Cooperatives (Self Help Africa)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 10

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Capacity Development Provider

IDEA START UP EARLY GROWTH MATURE

SME Finance Program (Enterprise Partners)

Supporting Small Business Owners through Financial Access (Mercy Corps)

Sustainable Livelihoods and Social Justice (ACORD Ethiopia)

Sustainable Transformation of Agricultural Resources (STAR) (Self Help Africa)

The Exchange (RENEW Investment Advisors, PLC)

Women Empowerment Program (Center for Accelerated Women’s Economic Empowerment)

Youth and Women Entrepreneurship Project (United Nations Industrial Development Organization (UNIDO))

Youths & Entrepreneurship (Development Expertise Center)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 11

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Corporation or Corporate Foundation

IDEA START UP EARLY GROWTH MATURE

Energy and Manufacturing Project (Elpizo)

Ethiochicken (Ethiochicken)

Private Enterprise Program Ethiopia (PEPE) (DAI)

Social Entrepreneur’s Incubation Program (xHub Addis)

Development Finance Institution or Donor Agency

IDEA START UP EARLY GROWTH MATURE

Business Support Service Department (Addis Ababa Chamber of Commerce and Sectoral Associations)

DCA Project (U.S. Agency for International Development)

Micro-banking Project (Vision Fund International)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 12

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Government Agency

IDEA START UP EARLY GROWTH MATURE

Capcity Building Training (Ethiopian Youth Federation)

Empretec (United Nations Conference on Trade and Development (UNCTAD))

Ethiopian Investment Commssion (Ethiopian Investment Commssion)

SME Finance Project (Federal Small and Medium Manufacturing Industry Development Agency)

Sustainable Financial System in Ethiopia (National Bank of Ethiopia)

Investor

IDEA START UP EARLY GROWTH MATURE

Beekeepers Economic Empowerment through Long-term Investment in Entrepreneruship (Oxfam)

Incubation Support for Biomedical Device Startups in Simbona Africa (Villgro Innovations Foundation)

Novastar Ventures (Novastar Ventures)

Novastar Ventures Ethiopia CRO (Novastar Ventures)

Statera Capital (Statera Capital)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 13

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Microfinance Institution

IDEA START UP EARLY GROWTH MATURE

Credit and Saving Provision (Specialized Financial and Promotional Institution)

Harbu Microfinance Institution (Harbu Microfinance Institution)

Micro & Small Business Loans (Addis Credit and Savings Institution)

Micro Finance Credit Service (Gasha Micro Finance)

Poverty Reduction and Community Empowerment Micro Finance Institution (Poverty Reduction and
Community Empowerment Micro Finance Institution)

Provision of Financial Services to Small and Micro enterprises (Africa Village Financial Service S.C)

Saving and Credit Service (Agar Micro finance S.C)

Saving and Credit Service Provision (Metemamen Microfinance S.Co.)

Saving and Small Enterprise Loan (ESHET micro finance institutions S.Co)

Small and Medium Enterprises (SME) Loans (Nisir Micro Finance Institution (NMI))

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 14

 KINDS OF SUPPORT EQUITY QUASI-EQUITY DEBT GRANT GUARANTEES

Research or Advisory Service Provider

IDEA START UP EARLY GROWTH MATURE

Enterprise Development Program (EDP) and Business Development Center (BDC) (Enterprise Development Center (EDC))

Entrepreneurship Research (Ethiopian Development Research Institute)

Strategic Planning Development (Dalberg Global Development Advisors)

Veritas Consulting (Veritas Consulting)

Sector Association

IDEA START UP EARLY GROWTH MATURE

Private Sector Development Hub (Ethiopian Chamber of Commerce & Sectoral Associations)

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 15

 MAP

55 PROGRAMS 49 PROGRAMS
provide services in provide services in
Amhara. Tigray.

31 PROGRAMS
provide services in 32 PROGRAMS
Benishangul-Gumuz. Programs provide
services in Afar.

33 PROGRAMS
provide services in
Gambela Peoples. 31 PROGRAMS
provide services in
Somali.

53 PROGRAMS 60 PROGRAMS
provide services in provide services in
Southern Nations, Oromia.
Nationalities and Peoples.

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 16

 CHALLENGES AND
OPPORTUNITIES
CHALLENGES
in the Ethiopian Entreprenurial
Ecosystem
High demand for foreign currency by the
Government of Ethiopia’s infrastructure projects is
creating foreign exchange shortages. Businesses
can expect delays of weeks or months to exchange
currency because they must apply and be approved
by the government.
Accelerators and incubators have most of their
operations in Addis Ababa, so innovative businesses
outside of Addis Ababa do not get as much support
as their city counterparts.
Lack of access to finance is a major constraint for
local businesses, especially for SGBs
While the number of mobile subscribers and
internet users has been increasing, only half of the
population are mobile subscribers and less than 15
percent of the population have access to Internet,
according to the CIA World Factbook.
There is a lack of clear information on how foreign
investors can invest in local businesses.
Many organizations working to promote
entrepreneurship in Ethiopia are duplicating efforts,
creating inefficiencies in the entrepreneurship-
support system.
Entrepreneurship education and entrepreneurial
activities are in their infancy at Ethiopian universities.
The courses are more theoretical than practical and
do not build entrepreneurs’ abilities to innovate.
ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018
OPPORTUNITIES
in the Ethiopian Entreprenurial
Ecosystem
Ethiopia is the second most populous country in
Africa and has one of the fastest-growing economies
in the world, which, with the right kind of policies and
ways to ensure that growth is not just concentrated
at the top, could result in an expanding middle class
with more purchasing power.
A relatively young population is an advantage that is
yet to be fully utilized. Entrepreneurship programs
could focus more on developing the entrepreneurship
abilities of young people.
Equity funds and venture capitalists are showing
interest in the country. Many Ethiopians in the
diaspora are also investing in the country.
The Sustainable Development Agenda, adopted by
the Ethiopian government, is a good road map for
the government to work on various initiatives in the
entrepreneurship sector, which would then lead to a
conducive entrepreneurial environment.
The Government of Ethiopia is committed to
promoting entrepreneurship – a case in point is the
roll-out of the 10 Billion Birr revolving fund that is
administered by Commercial Bank of Ethiopia (CBE).
The Government of Ethiopia is spearheading access
to finance through lease financing.
The government is also promoting entrepreneurial
culture by introducing entrepreneurship courses in
TVET institutions.
17
 RECOMMENDATIONS

INVESTMENT REQUIREMENTS
The government should consider relaxing some
foreign investment requirements. For example,
reducing the cap on foreign investment, or creating
space to negotiate sensible, mutually beneficial
investment policies could encourage foreign
investment in the country.

CREDIT GUARANTEE
More affordable capital should be made
available to entrepreneurs by developing
a national credit guarantee specifically for
entrepreneurs.

ENTREPRENEURSHIP CURRICULUM
There should be an entrepreneurship
curriculum that is entrenched in the education
system, ideally starting from elementary
education.

MARKET GAPS
The Government of Ethiopia could setup an
independent entrepreneurship development
agency or institution to address market gaps.

PRACTICAL TRAINING
Educational institutions should also shift
from purely theoretical training to practical
entrepreneurship training that promotes a
culture of entrepreneurship.

ETHIOPIA | Entrepreneurial Ecosystem Snapshot | 2018 18

For more information please contact the
staff of ANDE’s East Africa Chapter:

MARYANNE OCHOLA
ANDE East Africa Chapter Manager
maryanne.ochola@aspeninstitute.org

KHATUCHI KHASANDI
ANDE East Africa Program Associate
khatuchi.khasandi@aspeninstitute.org

ANTONY MAINA
ANDE East Africa Senior Program Coordinator
antony.maina@aspeninstitute.org

EDNA KARANJA
ANDE East Africa Program Coordinator
edna.karanja@aspeninstitute.org

WITH SUPPORT
FROM