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Etiopia-Sostegno alla trasformazione e alla crescita economica in etiopia attraverso il miglioramento del clima degli investimenti

Ethiopia

Initiative timeframe: 2013/2015

Total initiative costs

€ 1,522,000.0
Reparted as
  • Loans -
  • Grants € 1,522,000.0

Status

50 Complete
50%

Ethiopia


Location

entire Country

The project Supporting Growth and Transformation in Ethiopia through Investment Climate Improvements is the first Pillar of the Ethiopia MDI-PSD (Multi Donor Initiative for Private Sector Development) which was launched in 2014 by Canada, Italy, Sweden, the United Kingdom, the Government of Ethiopia and IFC. The aims of the MDI-PSD are to harmonise donor activities, leverage resources and build a more dynamic and competitive private sector. The focus is on improving the business enabling environment in Ethiopia, and promoting and investing in scalable private sector interventions that aim to increase access to finance, particularly for small and medium enterprises (SME). This strategy is coherent with the Ethiopian development plan (The Growth and Transformation Plan 2011-2015), which stress the importance of improving the business climate and promote SMEs for fostering inclusive growth and create employment. The project is also coherent with the 2013-2015 Ethio-Italian country program. read more close

Main outcome

The overall goal of the MDI-PSD is to support private sector capacity building and raise the level, competitiveness and importance of the private sector in Ethiopia. The goal of the present project is to improve the business climate for private sector development.

Initiative data

Initiative number 010023
Purpose Industrial development
Sector III.2.a. Industry, Total

Subjects

Agency MAE - Direzione Generale per la Cooperazione allo Sviluppo
Counterpart authority Ministry of Industry of Ethiopia
Representative ginevra.letizia@esteri.it
Other financiers UK, Canada, Swedish

Beneficiaries

Private entreprises, mainly SME Governement authorities dealing with private entreprises

Late involvement of government authorities at the highest level. All the initiatives relative to investment climate improvement are implemented by IFC since mid 2013 in conjunction with government authorities. This collaboration at agency level has proven very effective. Nevertheless the Ministry of Industry has signed the Governance Framework of the MDI-PSD only on May 15th 2014. Moreover during the first steering committee, held on September the 2th 2014, government authorities were not present and during the second, held the on December the 2th 2014, only low rank officials from ministries of Industry and Trade participated. The reluctance of the government authorities to get involved at the highest level was probably due to the fear that financial sector reforms would have been proposed as part of Pillar 2 of the programme.

The Pillar I of the programme is obtaining good results thank to the collaboration of several governmental agencies with the IFC at grassroots level. But, because of the difficulties in involving higher-level governmental authorities the programme has accumulated a certain delay. The IFC estimates that the 4 on-going initiatives composing Pillar 1, which where due to finish at the end of 2015, will be concluded only by the end of June 2017.

Actions taken

The co-chair of the programme, DFID, has managed to involve low ranking officials from Ministries of Trade and Industry at the last steering committee in December 2014. The initiatives proposed by IFC for the II Pillar do not include any significant reform of the financial sector (such as revision of unfavourable regulation that applies only to private banks, opening of the banking sector to foreign banks), or any credit line in favour of private banks. On the contrary they concentrate on reforms at meso level such as: developing a national bond market, strengthening the national credit bureau and the national collateral registry, train banks and SMEs in corporate governance, promote innovation in financial products for SME, and support the implementation of the new leasing proclamation. All those initiatives will help improving the effectiveness of the banking sector in supplying credit to SME. Since the topics proposed for the II Pillar gather consensus among government authorities and development partners it is to be expected a much higher-level degree of participation by government authorities to the steering committee of the initiative, which will favour a much more fast and smooth implementation of both Pillars. Moreover the IFC has presented a II phase for the Pillar I (on business climate) in order to consolidate the results obtained during the present phase. That will gradually transform the MDI-PSD from a programme into a real platform were coordination among donors and government on topics that gather consensus.

IFC

Participation to the multi donor trust fund managed by IFC (World Bank Group)

Status On Going
Type Technical Assistance/Consultancy and related expenses
Procedure Competitive Bidding
Procurement notice Tender preparation

DGCS

Technical assistance to the Programme monitoring and follow up

Status Completed
Type Technical Assistance/Consultancy and related expenses
Procedure Direct Contracting/Direct Assignment
Procurement notice Tender preparation