African Development Fund Grants $42.86M to Boost Youth and Women-Led Agri-MSMEs in Ethiopia

The project will also collaborate with the Africa Adaptation Acceleration Program to leverage opportunities for strengthening businesses while focusing on climate adaptation through capacity building and empowerment initiatives.

The African Development Fund (ADF), the concessional financing arm of the African Development Bank Group, approved a grant of $42.86 million to Ethiopia on May 22, 2024, for the Agri-MSMEs Development for Jobs Program. This initiative aims to enhance the growth and productivity of micro, small, and medium-sized enterprises (MSMEs) led by youth and women in Ethiopia by improving access to finance, providing business development services, and strengthening the entrepreneurship enabling environment.

The ADF’s grant is further supported by contributions from the Development Bank of Ethiopia ($10 million) and the Ethiopian Government ($6.24 million), significantly bolstering efforts to eliminate barriers to finance for young and women entrepreneurs in Ethiopia.

Dr. Abdul Kamara, Deputy Director General for East Africa at AfDB, highlighted the transformative potential of the project, stating, "The project interventions are timely and will support major sector reforms that will help strengthen the strategic and institutional framework for financial inclusion, and youth- and women-led entrepreneurship development in Ethiopia."

Project Structure and Goals:

The project consists of two main pillars:

Expanding Access to Finance and Services:

This pillar focuses on increasing financial and non-financial services for youth and women-led agri-MSMEs.

It aims to strengthen the capacity of financial institutions to lend to these businesses and improve the quality and variety of services offered by public and private sector entrepreneurship service providers.

Ms. Martha Phiri, AfDB Director for Human Development, noted, “The project focus on youth and women entrepreneurs will immensely contribute to advancing the inclusive growth agenda and gender commitments of the Bank.”

Youth Entrepreneurship Investment Bank (YEIB) Framework:

This pillar involves designing, establishing, and deploying the YEIB framework to offer long-term financial and non-financial support to mitigate risks for youth entrepreneurs.

The YEIB will provide equity and quasi-equity investments to youth businesses through a management company overseeing an equity investment fund.

The management company will collaborate with the national Public Credit Guarantee Scheme to incentivize financial institutions to lend to youth businesses, which often lack collateral.

It will also work with the Entrepreneurship Development Institute under the Ministry of Labour and Skills to build MSME capacity.

Mr. Ahmed Attout, Acting Director of Financial Sector Development at the Bank, explained, “The YEIB aims to transform hurdles for young entrepreneurs by acting as ecosystem anchor, convening stakeholders, achieving financial synergies, and establishing youth entrepreneurs as an attractive investment asset class."

Climate Adaptation Focus:

The project will also collaborate with the Africa Adaptation Acceleration Program to leverage opportunities for strengthening businesses while focusing on climate adaptation through capacity building and empowerment initiatives.

This comprehensive approach aims to support over 8,000 MSMEs, enhancing their growth and productivity while fostering an environment conducive to youth and women entrepreneurship in Ethiopia.