ADDIS ABABA – Ethiopia is gearing for a revolution in the smart technologies segment of its economy thanks to a partnership agreement between and international financial services firm and local organizations.
Visa, a global financial services firm and STEMPower, a non-governmental organization, working to increase the number of Ethiopian students engaging in science, technology and engineering innovations, signed an agreement on Tuesday.
The agreement brings together the Ethiopian financial sector players, including the national development banks, the commercial banks and backed by the Ethiopian ministry of education, with the sole aim of getting some 3,600 innovators and technology entrepreneurs trained.
“This partnership will leverage financial education skills and assets. It will also help the technology entrepreneurs to be financially included in the national economy,” said Mamadou Biteye, the Head of Social Impact and Vice President for Central Europe, Middle East and Africa at Visa, a global payments solutions services provider.
Under the agreement, Visa extended a grant to STEMPower, which has been engaged in the training of young innovators in Ethiopian universities, with the aim of helping them to break new ground in their field of innovation.
The agreement will enable a collaboration leveraging STEMpower’s existing capabilities within the country to educate innovators and aspiring entrepreneurs by equipping them with business and management skills.
The agreement is styled to deliver the financial education to better prepare the Ethiopian technology-based Small and Medium sized Enterprises in establishing and running TechSMEs, Visa and STEMPower said in a statement.
Visa’s Practical Business Skills and Money Skills will be integral part of the training module to be developed by January.
The program runs for three years from September 30, 2020 to August 31, 2023 and will bring tailored skills to two distinct groups of micro business owners looking to establish and grow their businesses.
Ethiopian entrepreneurs complain about the lack of adequate access to finances required to expand their businesses.
The technology entrepreneurs in Ethiopia also complain about the lack of adequate access to the internet as well and peer to peer contact with other engineering innovators.
While access to the internet is barrier to innovation, access to the exports markets for the local technology entrepreneurs, retailers and the SMEs is an even greater challenge which adds up to the difficulty accessing finances.
The National Bank of Ethiopia put in place their Financial Inclusion Strategy with a vision of “achieving universal access to and use of range of affordable and high-quality financial products and services in Ethiopia by 2025”.
Limited access to loan and huge bureaucratic hurdles for starting and closing a business and lack of entrepreneurship and business process knowledge and skills at individual levels have been cited as some of the key business and entrepreneurship challenges in the country.
However, commercial banks in Ethiopia have also stepped in to examine their stake in the technology environment and are considering rapidly expanding their loan books to the technological innovators.
Speaking during the unveiling of the partnership between Visa and STEMPower at an Addis Ababa hotel, Birhan Bank President Abraham Alaro said his bank had set aside a whopping 500 million Birr in capital to be invested in the SMEs.
“The Bank has had opportunity to reflect on the parts of the economy we would like to significantly cover and our approach is to focus on the SMEs,” Abraham said.
He said the Birhan Bank has learnt its lessons well in managing the financing process and the recovery of the loans advanced to the SMEs and the technological field.
“We are keen to ensure we are able to power technology. We hope to achieve these significant results by rendering electronic payment services and other digital services,” the Birhan Bank President said.
Financing of technology and creating jobs is part of a major initiative by Ethiopian financial sector players.
The Ethiopian Job Creation Commission is working to bridge the 14 million jobs gap by 2025 and 20 Million jobs gap by 2030.
To this effect, the plan of action for job creation 2020-2025 has been drafted by outlining six strategic objectives.
One of the six objectives is building a vibrant private sector by revamping the current support to Medium, Small, Micro Enterprises (MSMEs), effectively supporting high-potential and high-growth MSMEs and improving the quality of business development services.
One of high-potential and high-growth area in this regard is the creation and development of Tech SMEs.
Officials of Visa say they believe in the importance of bringing under-served individuals globally into the formal financial system, and access to formal financial services can help improve the daily lives of these individuals and create opportunities to alleviate poverty.
Through our work of creating and expanding access, Visa collaborates with leading development organizations such as STEMPower to understand the financial needs of diverse populations and deliver tailored local market solutions that meet those needs,” said Corine Mbiaketcha, Vice President and General Manager, Visa, East Africa.
The Ethiopian banks appear to all agree that in order to achieve results in helping to bring on more technology enterpreneurs to the market, more than just financial literacy is required if not all that a business requires to survive.
Ethiopian bankers said after witnessing the signing of the partnership agreement between the education based NGO and the digital payments solution firm, Visa, that e-services platforms are equally required to support the enterprises.
It has become clear that the Ethiopian bankers now consider the need to build an electronic services ecosystem in Ethiopia as crucial as blood to the human body.
STEMpower and Visa announced their partnership to drive financial inclusion and job creation in Ethiopia for innovators and aspiring entrepreneurs in a meeting held on Nov 3. [Photo ENA]