ADDIS ABABA— 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 start-up idea in the hopes of “making it."
Around the capital city 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 start-up 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 start-ups. Co-founder Marcos Lemma says that young entrepeneurship is big in East Africa, but relatively new to Ethiopia.
“Our basic requirements for start-ups is, the first one is that we check if it’s an innovative idea for Ethiopia," said Marcos. "And second one is if that idea is sellable so that the start-ups will get enough market to sell it in the country or outside. Most of the start-ups we are supporting they are fourth year students or recently graduating.”
But since the idea is relatively new to Ethiopia, start-ups face a lot of problems, among them a lack of financing, the absence of tax breaks, and a poor telecom sector. Marcos says 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 them by maturing the business concept and promoting their idea.
Stefanos says 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 start-up," said Stefanos. "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 start-up that tries to tackle this financing problem. This start-up is a micro-investment firm that will provide small loans to people trying to start a business. Co-founder Amanuel Grunder says small loans are rare.
“Basically, the majority of investments are large, its millions of dollars," said Amanuel. "Someone in Debre Zeit (just outside of the capital city) who might want to start a chicken incubator -- he might not need millions of dollars, he might just need five to seven thousand dollars to start up.”
Millions of Ethiopians still live in deep poverty, but the government is set on turning the nation into a middle-income country by 2025. The Internatioal Monetary Fund projects the economy will grow by 7.5 per cent in the next fiscal year.