JCC and Mastercard Foundation to Support MSEs and Startups in Ethiopia That are Impacted by COVID

The Jobs Creation Commission of Ethiopia, the Mastercard Foundation, and First Consult announced the creation of the Mastercard Foundation MSE’s Resilience Facility. This is an emergency program that will support micro and small-sized enterprises (MSEs) and start-ups in Ethiopia during the economic downturn caused by the COVID-19 pandemic.

The program, with an initial commitment of approximately USD 24.8 million from the Mastercard Foundation COVID-19 Recovery and Resilience Program, will ensure MSEs remain solvent, retain their employees, and are able to create increasingly innovative work opportunities in the wake of COVID-19.

The implementation and monitoring of the Mastercard Foundation MSE’s Resilience Facility will be undertaken collaboratively by the three organizations. The provision of financial assistance, in the form of grants and soft loans, will take place via participating institutions – Banks, Microfinance, and Business Development Services – to eligible, qualified micro- and small-sized enterprises, both formal and informal.

The amount and type of financial support provided will vary depending on the size of enterprise and their needs and will focus on supporting MSEs and start-ups within the following two categories:

• High Vulnerability: Registered micro-enterprises and informal firms that are self-employed.
• Moderate Vulnerability: Small enterprises facing extreme slowdown within service-related businesses and that are at risk of major interruption or cancellation of orders.

The program, to be implemented in Addis Abeba, is anticipated to:

• Prevent 24,000 MSEs from going bankrupt and closing permanently.
• Prevent more than 50,000 employees from losing their jobs.
• Equip three financial institutions to effectively partner with MSEs through collateral-free loans and increase their adoption rate of digitally based microcredit.

The creation of the Mastercard Foundation MSE’s Resilience Facility is aligned to the Foundation’s Young Africa Works strategy. Young Africa Works, developed in consultation with young people, policymakers, educators, and entrepreneurs, is Mastercard Foundation’s strategy that aims to enable 30 million young people in Africa, with 10 million in Ethiopia, to access dignified and fulfilling work over the next 10 years.

“Young Africa Works is about connecting young people to opportunity, enabling them to build and sustain their livelihoods. To move forward with that agenda, we first have to safeguard the opportunities that already exist but are threatened by COVID-19. We can then build on that foundation,” said Alemayehu Konde Koira, Country Head, Ethiopia, at the Mastercard Foundation.

Despite the risk mitigation efforts being implemented by the government and the financial sector following the current spread of COVID-19 in Ethiopia, several containment measures are being undertaken which have economic implications and a forecasted loss of about 2% economic growth in this fiscal year. The economic crisis will lead to jobs being at risk, an increase in underemployment, and working poverty.

“This intervention, by filling the critical gap needed to serve MSEs, will significantly enhance the government’s proactive measures to avert the impact of the pandemic and keep enterprises solvent and in business. The Jobs Creation Commission estimates that close to 1.4 million wage jobs are under threat and approximately 1.9 million people in vulnerable employment will lose their income due to the economic impact of COVID-19. Enterprises and informal businesses, that are least able to withstand this economic slowdown, will bear the burden of these losses. The least served and vulnerable young people in our country will be impacted, ” said Jobs Creation Commission Commissioner, Dr. Ephrem Tekle.

Once participating institutions have been onboarded, the Jobs Creation Commission and First Consult, a leading consulting firm specializing in the design and delivery of interventions that support private sector advancement and the overall economic development of Ethiopia, will put out a call to MSEs and start-ups to apply for funding, which will be announced soon.