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    HomeGovernance, Policy & Regulations ForumPolicy & Regulations ForumEthiopia’s ‘Endless’ Startup Act: Can New Council Finally Meet Deadlines?

    Ethiopia’s ‘Endless’ Startup Act: Can New Council Finally Meet Deadlines?

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    In a plot twist that would make Shakespeare proud, Ethiopia’s elusive Startup Act has once again found its way back to the public agenda through a new national draft policy on the country’s startup ecosystem. Initially proposed in 2020 with lofty ambitions to shape Ethiopia into a regional startup hub, the act has since undergone multiple iterations, countless consultations, and missed deadlines. Three years on, Ethiopia’s policymakers appear ready to resume their quest to create an enabling environment for startups — this time, with a new National Digital Transformation Council at the helm. However, for the country’s buzzing entrepreneurial ecosystem, the policy’s history of deferred promises and bureaucratic back-and-forth has created a level of skepticism that any number of councils might struggle to overcome.

    Rebooting the Dream: The National Digital Transformation Council Steps In

    The latest announcement introduces a new protagonist in this policy drama: the National Digital Transformation Council. An amalgamation of officials from across ministries — including Innovation and Technology, Finance, Labor, Trade, and the National Bank of Ethiopia — the council is poised to orchestrate a cross-ministerial push for the startup act. According to government sources, each ministry will handle specific aspects of the policy, from simplifying business licensing and registration to establishing a tax incentives scheme and credit guarantee program for startups.

    On paper, this ensemble approach is a refreshing change from previous initiatives, which were often managed by individual agencies with limited cross-departmental cooperation. In theory, the Ministry of Innovation and Technology, now acting as the council’s secretary, will lead the charge in driving policy implementation while also overseeing the newly promised Startup Grant Program and tax incentives. Meanwhile, the National Bank of Ethiopia is responsible for crafting a startup-friendly credit guarantee scheme that will make financing more accessible.

    But as promising as this collaboration sounds, veterans of Ethiopian bureaucracy may see this as yet another exercise in logistical optimism. Coordinating so many actors under one unified framework, with each ministry retaining its jurisdictional authority, could create a classic scenario of “too many cooks.” From Ethiopia’s Ministry of Finance to its Trade and Regional Integration officials, every ministry involved has its own priorities and processes — a recipe that might prove more chaotic than collaborative.

    Simplification or a Tangle of Directives?

    At the heart of the latest draft of Ethiopia’s National Startup Policy is a goal that entrepreneurs have long hoped for: a more streamlined regulatory landscape for business registration and licensing. Since the policy’s first iteration, one of the most cited obstacles by Ethiopian founders has been navigating the slow, sometimes opaque registration process. The new policy claims to address this pain point by creating expedited pathways for startups, aiming to reduce administrative hurdles and foster a more accessible ecosystem.

    However, the simplification plan comes with a suite of eligibility requirements and application processes. In what some entrepreneurs have called an ironic twist, startups must now apply for “startup” designation before they can access these streamlined services, tax incentives, or grant programs, if the policy document scales through. This designation will reportedly involve a multi-step application process, complete with eligibility assessments and formal reviews from the council. For entrepreneurs accustomed to the labyrinthine registration process, this additional layer could feel like a bureaucratic burden dressed up as a benefit.

    Adding to this complexity is the Ministry of Finance’s array of proposed tax exemptions and duty-free privileges. Although these incentives are designed to lighten financial loads, their accessibility will depend heavily on implementing guidelines that have yet to be drafted. Thus, many founders worry that these promises of relief could become ensnared in the very red tape they are supposed to cut through.

    Metrics and Measurements: A Transparent or Tangled Path to Progress?

    Perhaps sensing the fatigue surrounding the national Startup Act, the council has also announced a Monitoring and Evaluation (M&E) framework, purportedly to ensure transparency and track the policy’s impact. This new layer of oversight will rely on Key Performance Indicators (KPIs) such as the number of startups receiving grants, overall credit disbursement volumes, and the percentage of “early-stage” ventures progressing to “growth-stage” maturity. The logic here is simple: if the numbers go up, the policy is working.

    Yet, while KPIs can quantify activity, they may not capture the full picture of startup progress. Critics point out that metrics such as credit disbursement, for example, track the quantity but say little about the quality of support or timeliness. For Ethiopian startups, funding can often come with extended timelines that don’t always align with immediate cash flow needs. Other crucial success factors — such as market accessibility, infrastructure reliability, and technical skill gaps — are not represented in these numerical benchmarks. In short, these KPIs risk measuring process over outcome, leaving some founders wary of a box-ticking exercise rather than genuine progress.

    Stakeholder Patience: Worn Thin

    Since the Startup Bill’s inception in 2020, Ethiopian startups and investors have been engaged in a prolonged wait-and-see exercise. The sector, rich in potential, has nonetheless struggled to gain traction due to regulatory ambiguity and gaps in financing options. For years, the promise of a startup-friendly environment has remained elusive, as each new draft, consultation, or council announcement has tended to fade quietly into the bureaucratic ether.

    The latest revival effort brings with it a period of public consultation, a procedural step ostensibly aimed at incorporating stakeholder feedback. Yet, the sector’s patience has been tested by years of delays, and many are skeptical as to whether this consultation period will bring real change or simply serve as another box to tick on the policy’s journey. Entrepreneurs are left in the awkward position of hoping for a streamlined, actionable framework while preparing for yet more rounds of administrative hurdles and ambiguous deadlines.

    Balancing Bureaucracy and Collaboration

    While a multi-ministerial council may bring more expertise to the table, it also risks creating a bureaucratic behemoth. Ethiopia’s Investment Commission, responsible for lowering entry barriers for foreign startups, might find itself at odds with the more restrictive policies of the Trade Ministry. In a country where regulations can vary widely between agencies, overlapping jurisdictional turf can quickly spiral into regulatory gridlock, creating headaches for the very startups that the policy aims to support.

    For new entrants, the council’s multi-actor framework could prove both blessing and curse. On one hand, it brings a certain democratic inclusivity, allowing for input from all quarters. On the other, each ministry’s involvement introduces its own protocols, rendering the startup policy less of a cohesive support package and more of a compliance checklist to navigate.

    An Exercise in Patience or Meaningful Progress?

    Ethiopia’s National Startup Act is at a crossroads. Since 2020, the landscape for tech entrepreneurs has transformed dramatically, not just within Ethiopia but across Africa. Neighboring countries have capitalized on this momentum, implementing startup-friendly regulations and making concerted efforts to attract talent and investment. By contrast, Ethiopia’s startup policy, while ambitious in scope, has struggled to move from concept to execution.

    For Ethiopian entrepreneurs, the long wait for regulatory clarity and financial support has become a familiar refrain. As the latest council gears up to finalize the policy, there remains a cautious optimism, tempered by the memory of missed opportunities and deferred promises.

    Ethiopia’s proposed Startup Act represents more than just a regulatory framework; it embodies the potential for a modernized economy that leverages technology, innovation, and entrepreneurship to drive growth. Whether this latest chapter can finally deliver on the vision laid out in 2020 remains to be seen. For now, the country’s startup sector is left to hope that this new council — armed with KPIs, tax incentives, and a mandate to “streamline” processes — will succeed where previous efforts have faltered, and that Ethiopia’s protracted policy journey towards the Startup Act will finally arrive at a destination that works for entrepreneurs, investors, and policymakers alike.

    Get the draft document here: https://t.me/MinTEthiopia/5179

    You can send the Ethiopian Startup Ethiopia Ministerial Committee Technical Team feedback via: Ethstartupcomment@outlook.com

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