In April, Ethiopia's Prime Minister Abiy Ahmed unveiled ambitious reforms to develop the nation's startup sector at the "Startup Ethiopia" event. He outlined changes to taxation, funding access, international payments, and investment rules that could boost the country's entrepreneurs.
The proposals included letting startups retain 100 percent of foreign earnings from exports, rather than 50 percent previously. Tax incentives like holidays and loss provisions would reduce early-stage tax burdens. Requirements around office leases for tax registration would also be removed.
The Investment Commission will provide more flexibility for foreign investors backing local startups. The National Bank of Ethiopia will study adjusting lending policies to increase credit. The Development Bank plans new equity funding windows for innovative firms. On paper, these reforms seem poised to transform Ethiopia's business environment for technology and innovation companies. However, the country faces an implementation challenge.
In the past, well-intentioned announcements did not always translate to consistent on-the-ground changes. Six years ago, office lease rule reforms through the Ministry of Trade had no impact because the Revenue Ministry retained the requirement. Plans to establish a Development Bank startup funding program also failed to materialize.
Piecemeal or partial implementation undermines credibility. To realize potential impacts, sustained follow-through is needed. Comprehensive reviews must update relevant laws like taxation and ensure policy alignment across agencies. Regular progress reports maintain accountability.
Consultation with founders and investors during the process can strengthen outcomes. Development banks globally play a catalytic role; the government working closely with Ethiopia's could accelerate specialized VC funds and accelerators.
Domestic collaboration is also key - local networks, associations, and crowdfunding platforms emerging to connect ventures to resources in step with reforms. International partnerships may aid capability-building.
If Ethiopia wants its startup ecosystem to flourish, this round of proposals must avoid past failures. With commitment to practical and systemic implementation supported through multi-stakeholder collaboration, its innovative potential can be unleashed. But follow-through will determine the true impact of these initial steps.
With sustained commitment to practical implementation supported through multi-stakeholder collaboration, Ethiopia's ambitious new proposals have real potential to pave the path for the transformational growth of its startup community.
But the work has just begun - follow-through will determine whether initial steps advance the country's innovative potential or risk disappointing unfulfilled potential once more. If real changes take root this time, Ethiopian entrepreneurs may finally have an environment that unleashes their creativity and drive to succeed.
