Socio-Economic Response and Recovery in Ethiopia in the Aftermath of COVID-19

The Project addressed the socio-economic impact of COVID-19 including livelihoods improvement with a major focus on enterprises development (MSMEs) and jobs creation.

Despite its best efforts, Ethiopia cannot insulate itself from the global crisis and must move quickly to design and implement socioeconomic response and recovery measures that mitigate the worst effects, sustain large and small businesses, protect jobs, and maintain human capabilities. This refers to a study conducted by Ethiopia's Planning and Development Commission (PDC) that found COVID-19 would have a significant negative impact on the economy, household welfare, and human dignity. Economic growth was expected to deviate from the base by 2.81% and 3.80%, respectively, in the moderate and worst-case scenarios. Moreover, long-run economic growth would deviate from 2.6% to 3.1% in the moderate and the worst-case scenarios, respectively. Estimates from other sources such as the IMF and the UN indicated that the situation could be worse. Impacts would also be uneven across sectors with effects on economic, social, cultural, civil and political rights. 

What we have accomplished so far:

The project has assisted 2070 MSMEs in the formal sector and 11,779 micro informal businesses. There were 785 businesses that received wage subsidy, and 1285 businesses received soft loans. Micro enterprises account for 75.29 % of the total MSMEs that benefited from the wage subsidy scheme, while small businesses account for 24.71 percent. In terms of the year of business establishment, those businesses that have been in operation for five years or more received 61.73 percent of the total MSMES selected for wage subsidy, while 25.26 percent came primarily from those with three to four years of operation experience, and the remaining 13.1 percent came from those with two years of operation experience.

The amount of micro enterprise supported by access to finance through a soft loan scheme accounts for 76 percent of the total, with the remaining 24 percent going to small businesses. Informal businesses are solely micro-enterprises that engage in petty trade, restaurant, cafe business, service provision, and other similar activities. Business owned by women account for 8657 (74 percent) of the total of 11,779 informal business owners supported by the project, while business owned by men account for 3122. (24 percent).