Jon Lubwama
Ethiopia, a country located in the Horn of Africa, is a sleeping giant in the startup ecosystem. With a population of over 114 million people, it is the second most populous country in Africa. Its economy, the fastest growing in the region, is the seventh largest in Africa. These factors, coupled with a burgeoning middle class and a young, tech-savvy population, make Ethiopia a fertile ground for startups. This article provides an in-depth overview of the Ethiopian startup ecosystem, highlighting successful startups, innovation hubs, co-working spaces, accelerator programs, and the challenges of building a startup in Ethiopia.
Ethiopia's startup ecosystem is still in its nascent stages but has shown significant growth over the past few years. According to the Global Startup Ecosystem Report 2020, Ethiopia is one of the emerging startup ecosystems in Africa. The report notes that the country has a high potential for growth due to its large population, growing economy, and increasing internet penetration.
Successful Startups in Ethiopia
Despite the challenges, several startups in Ethiopia have managed to achieve success. These startups span various sectors, including agriculture, fintech, e-commerce, and logistics.
1. RIDE: RIDE is a ride-hailing service that operates in Addis Ababa, Ethiopia's capital. Launched in 2014, the startup has grown to become one of the leading ride-hailing services in the country. RIDE has over 1,000 drivers and has completed more than a million rides.
2. Deliver Addis: Deliver Addis is Ethiopia's first online food delivery service. Since its launch in 2015, the startup has expanded its services to include grocery delivery and courier services. Deliver Addis has partnered with over 100 restaurants and stores in Addis Ababa.
3. HelloCash: HelloCash is a mobile money service that allows users to deposit, withdraw, transfer money, and pay for goods and services using their mobile phones. Launched in 2015, HelloCash has over 1 million users and has processed transactions worth over $1 billion.
4. Gebeya: Gebeya is a tech talent outsourcing company that connects African tech professionals with businesses worldwide. Since its launch in 2016, Gebeya has trained over 600 tech professionals and has worked with over 100 companies.
Innovation Hubs and Co-working Spaces
Innovation hubs and co-working spaces play a crucial role in the startup ecosystem. They provide startups with the necessary resources and support to grow and succeed. In Ethiopia, several innovation hubs and co-working spaces have emerged, providing a conducive environment for startups.
1. blueMoon: blueMoon is Ethiopia's first youth agribusiness incubator. It provides startups with mentorship, training, and seed funding. Since its launch in 2016, blueMoon has incubated over 20 startups.
2. xHub: xHub is a tech innovation hub that provides startups with mentorship, training, and networking opportunities. xHub has incubated over 30 startups since its launch in 2014.
3. Iceaddis: Iceaddis is a co-working space that provides startups with a conducive environment to work and collaborate. It offers startups access to mentorship, training, and networking opportunities.
4. Selam Children’s Village: This is a co-working space that provides startups with affordable office space, internet access, and other necessary resources.
Accelerator Programs
Accelerator programs play a crucial role in the startup ecosystem. They provide startups with mentorship, training, and funding to help them grow and succeed. In Ethiopia, several accelerator programs have emerged, supporting startups in various sectors.
1. Sheba Valley: Sheba Valley is an accelerator program that supports tech startups. It provides startups with mentorship, training, and seed funding.
2. GrowthAfrica: GrowthAfrica is a pan-African accelerator program that supports startups in various sectors. In Ethiopia, GrowthAfrica has supported several startups, including RIDE and Gebeya.
Challenges of Building a Startup in Ethiopia
Despite the potential, building a startup in Ethiopia comes with several challenges. These include:
1. Regulatory Challenges: Ethiopia has a complex regulatory environment that can be challenging for startups. For instance, foreign ownership of businesses is restricted in certain sectors, making it difficult for startups to attract foreign investment.
2. Access to Finance: Access to finance is a major challenge for startups in Ethiopia. The country has a low level of financial inclusion, and banks are often reluctant to lend to startups due to the perceived high risk.
3. Infrastructure Challenges: While internet penetration in Ethiopia has increased in recent years, it is still low compared to other African countries. This poses a challenge for tech startups that rely on the internet to operate.
4. Skills Gap: While Ethiopia has a large, young population, there is a skills gap in certain areas, particularly in technology. This makes it difficult for startups to find the talent they need to grow.
Despite the challenges, Ethiopia's startup ecosystem shows great promise. With a large population, a growing economy, and a young, tech-savvy population, the country has the potential to become a key player in the startup ecosystem. However, for this potential to be realized, there is a need for supportive policies and initiatives that address the challenges facing startups. This includes improving the regulatory environment, increasing access to finance, improving infrastructure, and addressing the skills gap. With the right support, Ethiopia's startup ecosystem can thrive, contributing to the country's economic growth and development.