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February 19, 2013

Ethiopia Focuses on Entrepreneurs to Maintain Economic Growth

The Ethiopian government and the United Nations want to train more than 200,000 entrepreneurs in the East African country. Both believe Ethiopia needs a stronger private sector to maintain its fast economic growth.
 
The Ethiopian government and the United Nations Development Program, UNDP, have launched a three-year program to train the entrepreneurs. The say the businesses established by these new entrepreneurs potentially could create about 1.2 million jobs.
 
Ethiopia’s minister of urban development and construction, Mekuria Haile, said the mindset of Ethiopians needs to be changed.
 
“In spite [instead] of looking for jobs and living as employees, to challenge their attitudes to become social and economic entrepreneurs who will create jobs for others. Viable and competitive enterprises that will become the backbone and foundation of the country's industrial growth and transformation,” said Mekuria.

The focus is both on start-up entrepreneurs and small and medium enterprises. The development program is based on four pillars: institutional development, entrepreneurial development training, business development services and partnerships.
 
UNDP resident representative to Ethiopia, Eugene Owusu, said the four areas deal with the key challenges that entrepreneurs face in Ethiopia.
 
“More needs to be done to create a more conducive environment to allow business to thrive. The labyrinth of bureaucratic controls, lack of access to credit, a convoluted logistic system, amongst others, all require priority attention,” said Owusu.
 
Ethiopia is one of the world's fastest growing economies, but still ranks only 174 out of 187 countries on the UNDP Human Development Index. Although human development has improved by 32 percent in the last two decades, almost a third of the country still lives below the poverty line.
 
Ethiopia has known double-digit economic growth for the last few years and has implemented the ambitious Growth and Transformation Plan to become a middle-income country by 2025. Much of the projected growth is based on the public sector, an approach that is difficult to maintain according to the International Monetary Fund [IMF].

The goal now, according to Ethiopia's leaders, is to encourage a bigger role for the private sector in the East African country.
 
Ethiopia’s Prime Minister Hailemariam Desalegn pointed out that the new three-year program will not establish new businesses just for the sake of having more entrepreneurs in the country.
 
“The government will not be in the business of propping up enterprises that are not competitive in the name of creating employment opportunity. That, we believe, is counterproductive,” said Hailemariam.

Ethiopia is Africa's second most populous nation after Nigeria. Hailemariam said creating jobs for young workers is imperative, as a majority of the nation is under 25 years old.
 
“As much as our huge population can be a source of strength and growth, it could also be a source of vulnerability and social tension unless we are in a position to offer job opportunities that can absorb this huge chunk of our population,” said Hailemariam.

The first round of trainees, like marketing entrepreneur Azeb Assefa, ended their training on the day the entrepreneur program was officially launched. She said the training helped her improve her business skills as she learned to work on her improvement areas.
 
“I have weakness in networking, and I have a weakness in risk-taking and persistence. So the techniques that have been given for us to improve such things helped me,” she said.

Entrepreneurs graduating from the program, such as Azeb, are expected to train others.
 
The program will cost $26 million. So far, UNDP has allocated only $6 million. The Ethiopian government and UNDP say they will come up with the rest of the needed money.