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AfDB’s $42.86mln Grant to Support Ethiopian Agri Businesses

ADDIS ABABA – The Board of Directors of the African Development Fund approved a grant of $42.86 million to Ethiopia to fund the implementation of the Agri-MSMEs development for jobs Program.

The fund – the African Development Bank (AfDB) Group’s concessional financing window – sanctioned the grant on May 22, 2024.

The program aims to enhance the growth and productivity of over 8,000 micro, small and medium-sized businesses (MSMEs) led by young people and women with focuse on improving access to finance and entrepreneurship enabling environment.

AfDB’s financing is bolstered by a $10 million contribution from the Development Bank of Ethiopia and $6.24 million from the Government.

These, the AfDB says, will significantly boost the initiative seeking to eliminate the barriers to finance access for youth and women entrepreneurs’ access in Ethiopia.

“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,” said Dr Abdul Kamara, AfDB Deputy Director General for East Africa.

The project comprises two pillars.

One seeks to expand access to finance and non-financial services for youth and women led agri-MSMEs, with institutional capacity strengthening for the main institutional providers of non-financial services.

The second pillar centers on designing, establishing and deploying the Youth Entrepreneurship Investment Bank (YEIB) framework.

The bank’s goal is to offer long-term financial and non-financial support to mitigate risks for youth entrepreneurs and nurture their talents and entrepreneurial spirit.

The support includes a management company to oversee an equity investment fund providing long-term patient capital to youth businesses in the form of equity and quasi equity.

Among others, the company will also work closely with the national Public Credit Guarantee Scheme under design to provide guarantees to financial institutions to incentivise them to lend to youth businesses, which are most often asset-light, without collateral.

“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,” Ahmed Attout, the Bank’s Acting Director of Financial Sector Development, explained.