Ethiopians hope startups turn into business success

Young Ethiopians are eager to benefit from the economic growth of the last few years. And since the market has so many opportunities, everyone seems to be working on a startup idea in the hopes of “making it”.

Around the capital city of Addis Ababa, young people sit with their laptops in any hotel lobby that offers free WiFi. Many of them will tell you they are working on their latest startup idea.

With a large population of young adults and one of the fastest growing economies on the African continent, many Ethiopians are trying to figure out how they can start their own business and benefit financially.

Iceaddis is an innovation hub that supports tech startups. Co-founder Marcos Lemma said that youth entrepreneurship is big in East Africa, but relatively new to Ethiopia.

“Our basic requirements for startups is, the first one is that we check if it’s an innovative idea for Ethiopia,” said Lemma. “And the second one is if that idea is sellable so that the startups will get enough market to sell it in the country or outside. Most of the startups we are supporting, they are fourth year students or recently graduating.”

But since the idea is relatively new to Ethiopia, startups face a lot of problems, among them a lack of financing, the absence of tax breaks, and a poor telecom sector. Lemma said that is not all.

“There is also some licensing problem; if you start something really innovative, it’s a very long process.”

Stefanos Kiflu is an architect graduate and co-founder of a construction website, Kinehintsa. Iceaddis supported the startup by maturing the business concept and promoting its idea.

Kiflu said the website will be up in a few weeks, but the process has taken more than two years because of a lack of financing.

“So far we really tried to look for funds for our startup,” said Kiflu. “It was not really feasible so now we are working on other income resources through our other skills and trying to start this company on our own.”

A group of three young Ethiopians is currently registering their own startup that tries to tackle this financing problem. This startup is a micro-investment firm that will provide small loans to people trying to start a business. Co-founder Amanuel Grunder said small loans are rare.

“Basically, the majority of investments are large, it’s millions of dollars,” said Grunder. “Someone in Debre Zeit (just outside the capital city) who might want to start a chicken incubator, he might not need millions of dollars, he might just need US$5,000-$7,000 to start up.”

Millions of Ethiopians still live in poverty, but the government is set on turning the nation into a middle-income country by 2025. The International Monetary Fund projects the economy will grow by 7.5% in the next fiscal year. – VOA