In a groundbreaking move to spur the growth of startups, the government introduced a set of innovative incentives. Speaking at the Adwa Memorial on Thursday, April 4, Prime Minister Abiy highlighted the government’s commitment to fostering an environment conducive to the development of startups.

Recognizing the unique needs of startups for experimentation and flexibility, the Prime Minister announced the government’s decision to create regulatory “sandboxes.” This concept allows startups to test and develop their ideas without the constraints of standard regulatory frameworks. “Companies with novel and creative ideas typically require more space for experimentation than is available under standard regulation and control systems,” said Abiy, emphasizing the government’s open stance towards new business ideas and its readiness to provide the necessary room for their growth until a comprehensive understanding and regulation system is in place.

The initiative includes the formation of a national steering committee, chaired by the Deputy Prime Minister, dedicated to nurturing innovative ideas and supporting the sector through policy enhancements. This move signals the government’s recognition of the changing business landscape in Ethiopia, where fintech businesses and business process outsourcing (BPO) industries, such as call centers and coding, are experiencing rapid growth due to the rising costs in more established nations.

Highlighting the evolution of the startup ecosystem in Ethiopia, the Prime Minister noted a significant increase in the number of startups—from around 50 five years ago to over 900 today, spanning across various sectors. This remarkable growth underscores the vast potential within the Ethiopian startup landscape and the government’s role in unlocking it.

In addition to regulatory flexibilities, Muferihat Kamil, the Minister of Labor and Skills, unveiled new programs aimed at easing the path for entrepreneurs. These include simplifications in business registration, office leases, and liquidation audits, alongside a single window solution for licensing. These measures are designed to streamline the operational hurdles that startups often face, making it easier to do business in Ethiopia.

The government’s bold steps towards creating a nurturing environment for startups mark a pivotal chapter in Ethiopia’s economic development. By recognizing the importance of innovation and providing a supportive framework for startups, Ethiopia is setting a precedent for how governments can actively contribute to the flourishing of the digital economy and innovation-driven entrepreneurship.

The Ethiopian Securities Exchange (ESX) announced a remarkable achievement, raising 1.51 billion Birr in capital, surpassing all expectations. This accomplishment highlights the high level of confidence exhibited by investors in both the exchange and Ethiopia’s capital markets, emphasizing their long-term prospects.

Tilahun Esmael, the Chief Executive Officer of ESX, expressed his excitement earlier today, revealing that the capital raised exceeded the initial target by an impressive 240 percent. The oversubscribed offering attracted participation from 48 investors across a range of sectors, comprising both domestic and foreign entities.

The Ethiopian Securities Exchange initiated its capital-raising endeavors in November 2023. Meticulously orchestrated road-shows were conducted in Addis Ababa, Nairobi, and London to garner interest and support. The CEO emphasized that the enthusiastic response received underscores the confidence and anticipation surrounding ESX’s pivotal role in advancing Ethiopia’s financial sector development and overall economic transformation.

The investor base is diverse and includes prominent foreign strategic investors such as FSD Africa, the Trade and Development Bank Group (TDB), and the Nigerian Exchange Group (NGX). Additionally, 16 domestic commercial banks, 12 insurance companies, and 17 other domestic investors have joined the venture. Tilahun disclosed that the public sector holds a 25 percent share, with participation from Ethiopian Investment Holdings and its subsidiaries, Ethio telecom, and the Commercial Bank of Ethiopia.

Expressing delight at the overwhelming response, the CEO stated, “We are thrilled to have exceeded all our expectations in terms of capital and excited by the overwhelming confidence shown by investors in the long-term prospects of both ESX and Ethiopia’s capital markets more broadly.”

In addition to the successful capital raise, Tilahun announced other significant milestones achieved by ESX. This includes the release of its draft Exchange Rulebook for public consultation and the completion of the technical evaluation to select its technology provider. These developments mark significant progress towards fully operationalizing ESX’s trading activities.

ESX has planned issuer and investor education programs in the coming months leading up to its official launch. As the first securities exchange in Ethiopia, ESX aims to drive economic growth, promote financial inclusion, and generate wealth for all Ethiopians. It will provide a platform for companies to raise capital, facilitate investment opportunities, and uphold transparency and corporate governance standards. The achievements of ESX signal a promising future for Ethiopia’s capital markets and its overall economic landscape.

Ethiopia is taking significant strides in transforming its payment landscape by integrating a comprehensive digital payment system. This strategic shift aims at fostering a more inclusive and efficient economic growth, marking a pivotal moment in the country’s journey towards a digital economy.

Solomon Damtew, the Director of the Payment and Settlement Systems Directorate at the National Bank of Ethiopia (NBE), emphasized the critical nature of this transition. “The adoption of digital payment systems is not a luxury but a fundamental necessity,” Solomon stated, underscoring the efforts to create a conducive environment for digital transactions across Ethiopia.

In a bid to standardize financial transactions, Ethiopia has introduced a QR Code Standard. This initiative addresses the previously fragmented QR Code payments, ensuring uniformity and interoperability among different financial service providers. The standardized QR Code is designed to streamline and secure digital transactions, making it easier for businesses and consumers alike to embrace the digital payment landscape.

The National Bank of Ethiopia, in partnership with ETHSWITCH, the Better Than Cash Alliance, and Impact Capital for Development (UNCDF), is spearheading this transformation. A notable milestone in this journey is the two-day conference on Ethiopia’s digital payment, held from April 5-6, 2024. The event marks the inauguration of the QR Code standard, a significant leap towards digitizing the payment sector.

This conference is a critical platform for stakeholders to converge and deliberate on the future of digital payments in Ethiopia. It reflects the collective commitment of the government, financial institutions, and development partners to achieve Ethiopia’s digital transformation strategy by 2025.

Ethiopia’s digital payment strategy, spanning from 2021 to 2024, is ambitious. It aims to be inclusive and comprehensive, gradually reducing the reliance on cash transactions in favor of digital alternatives. This shift is crucial for enhancing financial inclusion, reducing transaction costs, and improving the overall efficiency of the economy.

Statistics reveal the potential for this digital revolution, with Ethiopia boasting 90 million mobile money users, 32 million mobile banking customers, and 42 million debit card holders. This widespread adoption of digital financial services lays a robust foundation for the country’s digital payment ecosystem.

As Ethiopia moves towards fully implementing its digital transformation strategy, the nation stands at the cusp of a new era in financial services. This transition not only promises to redefine the economic landscape but also to empower millions by making financial services more accessible and efficient.