Development Bank of Ethiopia to Disburse $43M for Youth, SME Support

Capping more than a year of collaboration Ethiopia’s policy bank, the Development Bank of Ethiopia (DBE) has partnered with the Ministry of Labor & Skills (MoLS) to disburse 43 million dollars in youth entrepreneurship and Small and Medium Enterprise (SME) support. Utilizing funding from the African Development Bank (AfDB), the partnership primarily seeks to kick-start operations for agriculture-based businesses.

Yohannes Ayalew (PhD), president of DBE, indicated that most of the preliminary work has been finalized to enable the commissioning of projects by next year. He foreshadowed further collaborations between the two institutions to enable additional support for innovative entrepreneurs.

“This is a new milestone,” Yohanes heralded.

The Bank, MoLS, and AfDB have signed a Memorandum of Understanding (MoU) outlining their shared goals and strategies for empowering innovative SMEs and agriculture-minded youth entrepreneurs.

DBE’s president underscored how the new initiative aligns with prior programs by the policy bank to promote youth entrepreneurship.

One of these initiatives was a four-billion-birr fund two years ago to provide seed money for promising ideas and continued credit provisions to start ups that manage to “graduate” into full-fledged businesses. Another financing arrangement last year entailed a series of five-day trainings to ultimately unlock funding from the policy bank. Despite the initial registration fetching thousands of ambitious youths, the arrangement had mixed success with many failing to meet the complete set of requirements.

DBE’s adoption of relatively stringent conditions for financing is backdropped in its recovery from the brink of shutdown less than a decade ago after years of accrued sick loans. Under the stewardship of Yohannes, former chief economist at the central bank, DBE has recovered and is increasingly prioritizing youth entrepreneurship in its lending practices.

Access to finance has been one of the main challenges hampering the growth and accelerated scaling of most Ethiopian SMEs and startups. Agriculture remains a cornerstone of Ethiopia’s economy, yet the sector has seen insufficient growth in agricultural enterprises despite a positive trend.

According to Labor and Skills Minister Muferiat Kamil, this initiative is the first step in launching youth entrepreneurs’ financing. Idea financing through DBE is part of a broader set of nine policy changes aimed at fostering Ethiopia’s startup ecosystem, announced in April 2024.

Muferiat praised the financial support from AfDB, stating that it will significantly contribute to the expansion of agricultural enterprises and the development of medium and small businesses which boosts employment opportunities.

Two weeks prior the Ministry alongside the Entrepreneurship Development Institute launched a two-week intensive bootcamp for 150 national finalists of the Bruh ICT Competition.

The bootcamp, which drew participants from across Ethiopia, aims to identify the top 50 entrepreneurs who will receive a total of $100,000 in prize money, loan services from the Development Bank of Ethiopia, and ongoing business support, from partners.