On 15 May, the EU, Germany and the Netherlands launched an ambitious four-year programme to support the recovery of micro-, small and medium-sized enterprises (MSMEs) in Ethiopia’s conflict-affected North. Focusing on regions like Afar, Amhara, and Tigray, the 36 million Euro (2.2 billion Birr) programme aims to improve access to finance for MSMEs, particularly in manufacturing and agro-processing sectors. It addresses the urgent need to restore jobs and economic opportunities, especially for women and young people, emphasising the importance of financial support for post-conflict economic recovery.
The programme, a testament to the collaborative spirit, is jointly funded by the EU, the German Government, and the Minister for Foreign Trade and Development Cooperation of the Netherlands. It is implemented by the KfW Development Bank, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the United Nations Capital Development Fund (UNCDF).
“This support adds to many other initiatives launched by the European Union and EU Member States to help the people of Ethiopia to recover from the conflicts. We believe that helping the MSMEs will generate more social cohesion, economic recovery and eventually peace in the country,” said Roland Kobia, Ambassador of the European Union to Ethiopia.
“This programme shows that the European Union, The Netherlands and Germany always support us in the crucial sectors. We recognise the special importance of this action, which focuses on job creation for youth and women, as 65% of our population consists of young people,” added Haasan Moalin, State Minister from the Ministry of Industry.
KfW and the Development Bank of Ethiopia (DBE) will improve finance access by providing credit lines to MSMEs through local banks and microfinance institutions. GIZ will support MSMEs with technical assistance to strengthen their business recovery, resilience, and creditworthiness, facilitating connections with financial institutions.
“This programme is in line with the overarching objective of the Netherlands activities in Ethiopia: contribution to sustainable stability in the country. This particular Team Europe Initiative puts the private sector in the centre, which is crucial for strengthening the economy of the country,” said Henk Jan Bakker, Ambassador of the Netherlands to Ethiopia.
“We strongly believe that the way forward to support Ethiopia in post-conflict recovery is the Team Europe approach,” added Benjamin Hecker, Head of Development Cooperation from the German Embassy.
Finally, UNCDF will provide capacity-building support to financial institutions and service providers to better serve MSMEs, including via digital financial services. The programme will also support financial institutions and service providers in developing new demand-oriented financial products and credit scoring systems, expanding agent networks, and facilitating partnerships among financial institutions and technology companies to enhance innovation.
“We believe this partnership will benefit all of us, and with our constructive efforts, we can help restore the sense of normalcy through economic recovery in the post-conflict areas of Ethiopia,” underlined Samuel Doe, UNDP Resident Representative
The programme will be executed through a concerted effort involving EU Member States’ development agencies and UNCDF, in tight partnership with Ethiopian institutions. The program is funded by the European Union (EUR 30 million / 1.8 billion Birr), with additional contributions from the German Federal Ministry for Economic Cooperation and Development (EUR 3 million / 185 million Birr) and the Ministry for Foreign Trade and Development Cooperation of the Netherlands (EUR 3 million / 185 million Birr).
