The Ethiopian Startup Act was first published in 2020, after a decade of disparate efforts to establish a legal framework for the startup ecosystem. The Act aims to establish a National Startup Council and an Innovation Fund that will both be chaired by the Ministry of Innovation and Technology.
The role of such a council will include creating and facilitating an innovation ecosystem, breaking down entrepreneurship barriers, and increasing access to foreign direct investment.
Furthermore, the council will also reserve the discretion to determine which businesses qualify as ‘Startups’ and which businesses qualify as ‘Innovatives’. For a business to qualify as a ‘Startup’ it would have to be a micro, small, or medium enterprise that has been legally operating for a time period not exceeding 5 years.
The Innovation Fund, on the other hand, will be financed by the Ministry of Innovation and Technology through government fund allocation, grants, and foreign donations. The fund will be used to issue startup scholarships, cover intellectual property fees, incentivise key players in the ecosystem such as incubators and accelerators, and even replace workers that are on leave.
Before the Startup Act passes into law it would have to be ratified by the Ministry of Innovation and Technology, the Ministry of Revenues, the Jobs Creation Commission, the Ethiopian Ministry of Trade and Industry, and the Ministry of Finance.
Addis Ababa’s startup ecosystem is ranked 692nd on the top 1000 list of the StartupBlink Global Ecosystem Ranking Report, an abysmal placement given the city’s vast potential.
The establishment of a National Startup Council and an Innovation Fund, coupled with initiatives like ‘Digital Ethiopia 2025’ will provide much needed economic opportunities for the country’s budding startups.