The Board of Directors of the African Development Fund, the concessional financing arm of the African Development Bank Group (www.AfDB.org), approved a grant of $42.86 million to Ethiopia on May 22, 2024, to support the Agri-MSMEs Development for Jobs Program.
This initiative aims to enhance the growth and productivity of youth and women-led micro, small, and medium-sized enterprises (MSMEs) in Ethiopia. The program’s focus is on improving access to finance, offering business development services, and strengthening the entrepreneurial environment.
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The AfDB’s funding is supplemented by a $10 million contribution from the Development Bank of Ethiopia and $6.24 million from the Ethiopian Government. These additional funds will help remove financial barriers for youth and women entrepreneurs in Ethiopia.
The project is expected to benefit over 8,000 MSMEs led by young people and women. Highlighting the project’s significance, AfDB Deputy Director General for East Africa, Dr. Abdul Kamara, stated, “The project interventions are timely and will support major sector reforms that will help strengthen the strategic and institutional framework for financial inclusion and youth- and women-led entrepreneurship development in Ethiopia.”
The project consists of two main pillars. The first pillar focuses on expanding access to finance and non-financial services for youth and women-led agri-MSMEs and strengthening the capacity of institutions providing these services. This includes supporting financial institutions to increase lending to these enterprises and improving the quality and variety of services offered by key public and private sector providers.
These improvements aim to enhance business development services and foster stronger connections among service providers. Ms. Martha Phiri, AfDB Director for Human Development, stated, “The project’s focus on youth and women entrepreneurs will significantly contribute to advancing the Bank’s inclusive growth agenda and gender commitments.”
The second pillar involves the creation of the Youth Entrepreneurship Investment Bank (YEIB) framework. This framework is designed to provide long-term financial and non-financial support to reduce risks for youth entrepreneurs and develop their talents and entrepreneurial spirit. The YEIB will include a management company overseeing an equity investment fund, offering long-term patient capital in the form of equity and quasi-equity to youth businesses. Additionally, it will collaborate with the national Public Credit Guarantee Scheme to provide guarantees to financial institutions, encouraging them to lend to typically asset-light youth businesses without collateral. The management company will also work with the Entrepreneurship Development Institute under the Ministry of Labour and Skills to enhance MSME capacity.
Mr. Ahmed Attout, the Bank’s Acting Director of Financial Sector Development, explained, “The YEIB aims to transform hurdles for young entrepreneurs by acting as an ecosystem anchor, convening stakeholders, achieving financial synergies, and establishing youth entrepreneurs as an attractive investment asset class.”
The project’s implementation emphasizes collaboration with the Africa Adaptation Acceleration Program, aiming to strengthen businesses while focusing on climate adaptation through capacity building and empowerment initiatives.
Source: CNBC Africa
