The private sector in Ethiopia faces constraints like limited access to finance, markets, managerial capacity, and infrastructure, with a significant gender gap in employment. Conflict has worsened these issues, making MSMEs less resilient, disrupting livelihoods, affecting the supply chain, diminishing purchasing power, and causing 72% job losses in post-conflict areas, depending on factors like military force duration, agglomeration of enterprises, and their proximity to main roads.

This programme aims to restore local economy through addressing three main specific objectives, namely access to finance and financial inclusion; improvement of business performances including provision of business development services (BDS); and strengthening financial institutions including digital finance services (DFS).

More specifically, the project seeks to:

• Increase financing flow and financial inclusion for MSMEs amidst asset destruction.
• Enhance business performance through Business Development Services (BDS) to improve business planning, financial literacy, and marketing skills.
• Provide gender-sensitive support for MSMEs, especially women and youth, to improve investment readiness and build sustainable value chain linkages.
• Strengthen financial institutions by improving their capacity to avail finance due to conflict and integrating tech-based Digital Financial Services (DFS) for MSMEs.

Project Activities:

• Developing appraisal procedures for selected FSPs to provide finance to MSMEs
• Supporting FSPs in developing and rolling out demand-driven financial service products for MSMEs, through traditional and DFS mechanisms
• Providing tailored Business Development Services (BDS) to MSMEs, focusing on areas such as business continuity management, sustainable planning, marketing, production, organizational management, digital transformation, and gender-sensitive practices.
• Strengthening sustainable value chains and facilitating forward, horizontal and backward linkages
• Providing practical assistance to MSMEs in promoting their products and services through digital methods, B2B networking, and exhibitions, with a gender-sensitive approach.
• Train and equip MSMEs in the use of digital tools for record keeping and financial services.
• Supporting FSPs to develop strategies and expand their agent network in the target regions
• Supporting/fostering the partnerships among FSPs, technology companies and non-bank institutions to enhance DFS and innovation in product offerings for MSMEs
• Conducting periodic market analysis (e.g. through surveys) to understand the financial needs, preferences and behaviors of MSMEs
• Providing training and technical support to FSPs on agent network management and digital product development for mass market

Results:

• Improving access to finance for MSMEs
• Enhancing business skills and technical capacities of MSMEs
• Improving the creditworthiness of MSMEs
• Improving financial service providers (FSPs’) capacity and skills to manage and expand their distribution (agent banking) network
• Improving FSPs’ capacity to provide and manage MSMEs tailored financial products
• Enhancing information availability on access and utilisation of DFS by MSMEs 

Press release link: Ethiopian businesses to benefit from new 2,2 billion ETB (€36 million) economic recovery support from the EU, Germany and the Netherlands

     © EEAS