A three-year startup enhancement project by the Ministry of Innovation Technology (MinT) and the Japan International Cooperation Agency Ethiopia (JICA) is set for a January greenlight. Following preliminary agreements between the two parties last week, a final proposal currently being reviewed will seal the deal.
Tadesse Anbesse, Head of the Startup Desk at Mint, explained that the project would entail an acceleration, incubation, and capacity-building program focused on tech-based Ethiopian companies. He says the primary goal of the project would be focused on more technical rather than financial support.
“Enhancement of the ecosystem is the main goal,” Tadesse told Shega.
The first phase of the project entailed a comprehensive study of the startup ecosystem in Ethiopia and profiled nearly 300 companies and 80 stakeholders. Under the second phase, there are plans to thoroughly review policies and legislation drafted for the whole startup ecosystem.
“Intensive evaluation of the startup act is also part of the plan,” the official says.
The startup draft proclamation which includes alluring legal instruments, including the creation of an innovation fund, a national startup council, and tax incentives has yet to see the light of day. Most startups struggling with adequate finance end up being categorized as part of SME’s often limiting their growth potential.
Tadesse states that the draft Startup Act is nearing ratification by the House of People’s Representatives.
He also pointed out that the new program seeks to identify key bottlenecks in the ecosystem as part of developing a comprehensive national master plan. He says an element of the program entails creating an environment that allows partnerships with international partners to develop.
“International partnerships are crucial for accelerated growth,” the official noted
The first in-depth survey on startups in Ethiopia conducted by a team of researchers at Shega identified several hurdles limiting the acceleration of the ecosystem. A significant portion of the early-stage startups expressed a willingness to accept investment from foreign capital.
However, strict controls on the repatriation of foreign currency have historically been off-putting for many investors. Ethiopian startups managed to access a mere 0.5pc of the total funding availed to companies across East Africa last year.
JICA, through Project NINJA, implements various startup support initiatives in Ethiopia. These efforts include sponsoring local startups to participate in both international and local summits, such as GITEX, a global tech event organized by the Dubai World Trade Center. Additionally, JICA has organized an acceleration program and pitch competition, where six winners each received equity-free funding of 500,000 birr.
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