Unlocking Growth of Startup Ecosystem in Ethiopia

A startup business is an entrepreneurial venture in the early stages of operations, typically created for resolving real life problems. It often focuses on developing innovative products, services, and solutions to address market needs and societal challenges. As startups solve society's needs, they attract investors and funders because of the tremendous growth opportunities.

In recent years, Ethiopia has emerged as a beacon of opportunity in the global startup landscape. The country's commitment, both from the government and the private sector side, has set the stage for a remarkable transformation.

During a recent panel discussion, Prime Minister Abiy Ahmed emphasized the need to foster a strong startup ecosystem in Ethiopia. He pointed out the country's unique potential, citing the huge number of youth with a strong technological aptitude — over 60 percent in science, technology, engineering, and mathematics (STEM) education at university level.

These factors, the premier argued, could be instrumental in tackling Ethiopia's challenges, including high unemployment, low Foreign Direct Investment (FDI), and limited tax collection.

According to the premier, startups in Ethiopia range across all sectors. A very good thing is that international financiers are making commitment to finance Ethiopian startups. For example, Master Card Foundation has promised to invest about 700 million USD for startups, and Bill & Melinda Gates Foundation also extends a lot of support in this regard. 

The PM further recalled that Khalifa Foundation has announced the launch of a 100-million-USD fund for startups, small and medium scale businesses in Ethiopia. There are many interests from outside to support Ethiopian startups.

Moreover, the premier reiterated the government's commitment to supporting startups, primarily driven by the private sector. This support will encompass policy frameworks, administrative assistance, and the creation of a favorable ecosystem for innovation.

Noting the several key government initiatives taken to support the startup ecosystem, Abiy  pointed out that the government's Ten-Year Development Plan positions technology as one of the five pillars for achieving prosperity – a critical policy move for startups.

Above and beyond the supports, a National Steering Committee led by Deputy Prime Minister Temesgen Tiruneh has been established to oversee the overall functions of startups.

The recent legalization of Fintech, which the government previously deemed illegal, demonstrates its commitment to embracing new technologies. Additionally, intellectual property rights are now recognized to address investor concerns. Artificial intelligence is also actively explored and adopted.

The prime minister revealed that universities across the country have various incubation centers to nurture startups.

"By implementing all these initiatives, we are laying the groundwork for a flourishing of robust startups ecosystem, offering a roadmap for sustainable growth and success,” Abiy pointed out.

Furthermore, the premier noted the common practice of previous governments were banning new technologies due to lack of understanding and fear of potential risks. However, he emphasized that such a stance has detrimental effects, often leading to illegal activities.

The new approach is to assess both the benefits and risks of emerging technologies. By taking calculated risks and learning from experience, the government aims to decree laws that minimize risks while maximizing the potential benefits. 

Prime Minister Abiy underscored that this commitment to continuous learning represents a significant leap forward in strengthening the startup ecosystem. While much work remains to be done to support the initiative, Ethiopia is poised to reap the rewards, potentially nurturing homegrown tech giants in the years to come.

Encouraging startups in sectors like technology, healthcare, renewable energy, and consumer goods can intensify Ethiopia's resilience to economic shocks and global market fluctuations.

Ethiopia's journey towards becoming a startup hub has been fueled by an unwavering commitment from both the government and private entities. This commitment is not just a paper work but a tangible investment in the future. Government initiatives, coupled with the enthusiasm of private enterprises, have created an ecosystem where startups can thrive.