Startup Marketplace: Reflecting on Ethiopia's digital innovation ecosystem
March 24, 2023
UNDP and the Innovation Ecosystem
Strengthening the innovation and entrepreneurship ecosystem in Ethiopia has been the strategic approach for UNDP to transform and create an inclusive economy. The support to the private sector to become an engine for economic growth and create employment opportunities for the country’s young and growing population is crucial in establishing the transformative change the country needs to meet its development goal.
UNDP started its support to the ecosystem in 2015 with the establishment of the Entrepreneurship Development Center and now has progressed to direct support to startups and SMEs in the digital ecosystem. UNDP’s support for Digital Entrepreneurship corresponds to UNDP’s larger focus on supporting homegrown solutions and enhancing their contribution to the Digital Ethiopia 2025 Strategy.
UNDP Ethiopia has collaborated with government partners to support selected tech startups and young innovators through multiple projects and unique facilitates such as the Innovative Finance Lab which is working on bridging the access to finance gap. While progress is being made across these cross-sectoral initiatives, it is also important to collectively reflect on the work done so far and forge a path for the future. Therefore, the accelerator lab took the initiative to organize an event to bring together the supported startups and ecosystem stakeholders to create visibility for UNDP’s work and create a space for business-business linkages.
Digital Startup Marketplace 2023, #DSM2023
The Digital Startup Marketplace (DSM) was held on the 20th and 21st of February, at the newly inaugurated Science and Art Museum in Addis Ababa. The two-day event had an open exhibition of 54 digital startups and three side events hosted by partners. The event kicked off with a visit from UNDP RBA Director Ms Ahunna Eziakonwa, who discussed with the young entrepreneurs. The official opening of the marketplace took place in the presence of State Minister Nigussu Tilahun, Ministry of Labors and Skills, State Minister Bayissa Badada (Phd), Ministry of Innovation and Technology and Ms Eleni Gabre-Medhin (Phd), RBA’s Chief Innovation Officer.
In their opening remarks, both state ministers emphasized the importance of such platforms to strengthen coordination among actors, create a space for sharing grassroots learnings and accelerate the journey towards the goals of the Digital Ethiopia Strategy.
Following the official opening, a consultation panel was held with ecosystem actors to gather reflection and feedback on the Startup Ethiopia initiative hosted by the Ministry of Innovation and Technology (MInT) and the Ministry of Labor and skills (MoLS).
Ethiopia is preparing to launch its Startup Ethiopia initiative which is themed “StartUpኢትዮጵያ” and will be comprised of networks of governmental and non-governmental organizations whose combined efforts would be geared toward achieving an overarching (ecosystem’s) value proposition including but not limited to creating a conducive environment for the overall development of entrepreneurship, startups and innovation across multiple key sectors.
The initiative shall bring about the very essence of ecosystem characteristic which is “connectedness” among various actors and initiatives and shape the local ecosystem life cycle to get connected to the global startup ecosystem life cycle (Startup Genome). The initiative envisions Ethiopia’s startup ecosystem reaching the fourth startup ecosystem life cycle that enables Ethiopia’s startup ecosystem to finally integrate with the global fabrics of knowledge, producing a global business model and achieving high global market reach in the long run.
On the second day, we shifted gears a bit with a focus on access to finance. The UNDP Innovative Finance Lab hosted a session on the Future of Digital Finance for Business, where prominent and innovative digital finance tools showcased their products and industry leaders shared their experiences and challenges within the ecosystem. In the afternoon, the Ethiopian Young Entrepreneurs Association held its monthly networking series Zelela on the topic of coordination of the public sector for startup support. State Minister Endalew Mekonnen, Ministry of Trade and Regional Integration, highlighted the progress made in improving the ease of doing business for startups, including the exemption of requirements for business registration and license.
The marketplace was hosted on the heels of the African Union Summit 2023 to take advantage of the delegation present in the country following the meeting and contribute to regional integration on innovation and startup. The event was attended by more than 1,000 people, including a delegation from the Ugandan Parliament.
Takeaways from the event
#DSM2023 was an important time for us to reflect as UNDP and as ecosystem actors on the work that we have done so far and see if it is worth similarly investing in the ecosystem. Many fruitful discussions that happened throughout the event are captured below.
- Maturity of the Ecosystem: The innovation and entrepreneurship ecosystem in Ethiopia is growing fast. However, many challenges remain to be addressed by the government and other ecosystem players like academia, development partners and entrepreneurship support organization. The first panel discussion reflected on what is needed to create a vibrant ecosystem in Ethiopia. The need for collaboration among key stakeholders, especially in government, to enact policies and implement regulations that favour startups is essential. A tailored communication strategy that defines and standardizes the narrative in the ecosystem is necessary to create a cohesive vision that all can use to support startups in Ethiopia and attract investment.
Startup Friendly Financial Services: the traditional banking system in Ethiopia has excluded startups and SMEs leaving them with little access to finance to grow their businesses. Therefore, the second panel at DSM2023 looked at how digital finance can be used to bridge this gap in the ecosystem. Panelist from the private sector (Cooperative Bank of Oromia, Chapa Financial Technologies and Pragma Investment) highlighted on the need for the financial sector to align its investment with the needs of the market, how financial literacy but especially digital financial literacy is crucial to position businesses for better investment. In addition, with platforms like Michu, that have taken steps to promote financial inclusion through digital tools, it is imperative that the policy and regulation framework support such products.
Coordination Platforms: the public sector’s role cannot be underestimated to develop a thriving innovation ecosystem. Just as startups need to have the necessary skills and capabilities to be effective as businesses, the public sector needs to be capable at supporting startups. The public sectors mindset and understanding of startups is crucial to design the regulations and services that address their need. There must be horizontal collaboration and public private partnerships at the center of the ecosystem which does not exist now.