AfDB Grants $42.86 Million to Empower Ethiopian Youth and Women in Agriculture

The African Development Bank (AfDB) is providing a significant boost to young people and women in Ethiopia's agricultural sector. The Board of Directors of the African Development Fund, the concessional financing arm of the AfDB, approved a grant of USD 42.86 million on May 22, 2024, to fund the Agri-MSMEs development for jobs Program.

This program tackles a critical hurdle for young and female entrepreneurs: access to finance. By providing both financial and non-financial services, the initiative aims to propel the growth and productivity of over 8,000 micro, small, and medium-sized businesses (MSMEs) led by these groups.

The project implements a two-pronged approach to achieve its goals. First, it will focus on expanding access to finance and services for youth and women-led agri-MSMEs. This includes strengthening the capacity of institutions offering these services and fostering collaboration between public and private sector providers. This will not only increase the availability of financial resources but also enhance the quality of business development services offered, ensuring participating businesses receive the support they need to thrive.

The second pillar of the program centers on the establishment of the Youth Entrepreneurship Investment Bank (YEIB) framework. This framework aims to provide long-term support for young entrepreneurs through a combination of resources:

  • An equity investment fund will offer patient capital, allowing young businesses the time needed to establish themselves and grow.
  • A dedicated management company will oversee the fund and collaborate with a national Public Credit Guarantee Scheme. This collaboration aims to incentivize lending to young businesses, which often lack the traditional collateral required by financial institutions.
  • The YEIB framework will also work closely with the Entrepreneurship Development Institute under the Ministry of Labour and Skills to build the capacity of participating MSMEs, equipping them with the skills and knowledge necessary for success.

To further bolster the program’s impact, the project will collaborate with the Africa Adaptation Acceleration Program. This collaboration will integrate climate adaptation strategies into the program, focusing on capacity building and empowering businesses to become more resilient to the effects of climate change.

This initiative has garnered strong support from AfDB leadership. Dr. Abdul Kamara, AfDB Deputy Director General for East Africa, highlighted the project’s timeliness, stating it will “support major sector reforms that will help strengthen…financial inclusion, and youth- and women-led entrepreneurship development in Ethiopia.” Ms. Martha Phiri, AfDB Director for Human Development, emphasized the program’s contribution to the Bank’s goals, stating “the project focus on youth and women entrepreneurs will immensely contribute to advancing the inclusive growth agenda and gender commitments of the Bank.” Finally, Mr. Ahmed Attout, the Bank’s Acting Director of Financial Sector Development, explained the YEIB’s role: “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.”

The AfDB’s grant is not the sole source of funding for this initiative. The Development Bank of Ethiopia is contributing USD 10 million, and the Ethiopian Government is adding USD 6.24 million, bringing the total project value to nearly USD 59.1 million. This combined investment signifies a strong commitment to empowering young people and women in Ethiopia’s agricultural sector and fostering a more inclusive and resilient future.

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