After Years of Delay, Ethiopia’s Startup Proclamation Receives Cabinet Nod

Six years after it was first proposed, Ethiopia’s Council of Ministers has approved the country’s first startup proclamation this morning. The bill will still have to be tabled in the House of People’s Representatives before being signed into law. After years of being in limbo, the Startup Act was resurrected in October with renewed vigor under the auspices of Ethiopian Investment Holdings and the Ministry of Innovation and Skills.

Ethiopia’s startup ecosystem has remained underdeveloped compared to other Sub-Saharan countries like Kenya or Nigeria. Local startups often have a short lifespan as they struggle with scaling their operations or accessing adequate finance. One of the contentious points in the original form of the start-up act had to do with the management and administration of an innovation fund. Historically, the Finance Ministry has been responsible for mobilizing these types of funds and disbursing them.

While it remains unclear whether the startup proclamation will entail a government fund or grant towards supporting the startup ecosystem, its drafters have promised an easier regulatory and financial landscape for the sector. Proper classification, tax obligations and incentives are some of the key issues that the startup is expected to address. The Council also approved a historic near two trillion-birr Federal budget for the next fiscal year. A budget that would be around six hundred billion birr higher than the current fiscal year including the supplementary allocation.