Innovative Finance Lab Selects 20 Ethiopian Enterprises to Receive $100K Grant from GIZ

Twenty local companies are set to split a grant of $100,000 from GIZ after being selected by Innovative Finance Lab (IFL) following a three-month technical assistance training program. 

The grant was awarded following a pitch competition for 31 small and medium-sized enterprises (SMEs) and startups who were part of the second cohort of the Technical Assistance Facility (TAF) program run by IFL.

Kamrach, a B2B e-commerce marketplace that connects retailers, manufacturers, SMEs, and farmers across Ethiopia, is among the 20- businesses selected through the program. Its founder, Meron Ephrem, says she was equipped with tools and skills that will help her and the business enhance their receptivity to investments. The training entailed pitch deck creation, business development, and actual pitching to investors, which was capped by a $5,000 grant.

“We will use the grant to expand operations and strengthen our team,” Meron told Shega.

Karmach currently hosts around 2,500 registered users and 17 active vendors, as it looks to grow its user base to the tens of thousands.

A host of other businesses ranging from publishing like Ankobot Books & Publishing to gemstone and jewelry businesses like Lolite, organic fertilizer enterprises like Lemlem, and children's fashion brand Wolfaby were part of the 20 enterprises selected for the grant.

Launched in 2022 by UNDP and the National Bank of Ethiopia (NBE), the IFL aims to establish a hub for piloting and scaling up flexible and innovative financial instruments that cater to the capital needs of Ethiopia’s startups and SMEs.

As part of its intervention program, IFL initiated TAF in early 2023, implemented by R&D Group and MDF Global. The TAF serves as a pre- and post-investment program, preparing SMEs and startups for investment.

At the beginning of this year, IFL, similarly funded by GIZ, awarded $150,000 in grants to 30 local companies that were part of the first cohort.

The financing gap for SMEs in Ethiopia is estimated at approximately $3.9 billion, which is 2.4 times the current level of lending, according to a 2021 World Bank report. Many SMEs are deterred from applying for loans due to high collateral requirements, complex application processes, and unfavorable interest rates. A significant number, about 39.4%, do not seek loans at all because of these barriers.