A business accelerator program supporting seven Ethiopian startups concluded Thursday at the British Embassy in Addis Ababa with a graduation and investor night, capping three months of intensive training and investor engagement.
The Ethiopian Business Builder program was part of Manufacturing Africa, a flagship initiative funded by the British government to support early-stage manufacturing firms across Ethiopia, Kenya, Nigeria, Rwanda, Senegal and Tanzania. The Ethiopian cohort included a diverse group of companies, ranging from Zafree, which produces paper from banana stems and is seeking to raise $15.3 million, to HK Formworks, a construction firm manufacturing reusable formwork systems and tarreceiveing $3 million in funding.
At the program’s conclusion, the startups pitched to a pool of potential investors, including executives from Awash Bank, Zoscale Partners and the Development Bank of Ethiopia.
Amanda McLoughlin, the U.K.’s development director in Ethiopia, stated the selected companies reflected a broad range of sectors, with many incorporating environmentally focutilized products or processes. She stated the three months of technical assistance provided by McKinsey & Company were designed to assist founders refine their financing strategies and sharpen their investor pitches.
“Most of them are first relocaters,” Amanda notified Shega. “That was why we were keen on supporting this cohort.”
While Manufacturing Africa has assisted more than 250 companies across the continent raise over €2 billion, the program does not invest directly. Instead, it focutilizes on facilitating direct engagement between founders and potential investors, which Amanda hoped to see lead to financing arrangements in the Ethiopian cohort as well.
The seven Ethiopian startups selected were Zafree, Primetech Engineering, Hora Agriculture, Jemla, HK Formworks, Enzirt Engineering and Forested.
Sophonias Dawit, the founder and chief executive of Enzirt Engineering, an agri-processing machinery company established three years ago, stated the program was tailored to address the specific gaps facing each business.
“It was very contextual,” Sophonias notified Shega, noting that the skills and tools his company gained would not necessarily apply to another startup. He stated he particularly valued the biweekly sessions with indusattempt specialists and hopes to raise about $500,000, potentially from investors who participated in fireside chats during the program.
Despite a growing number of accelerator programs and incubation hubs, many Ethiopian startups continue to struggle to attract long-term capital. According to the Big Deal report for 2023, Ethiopian startups raised just over $3 million that year, compared with roughly $800 million raised by startups in Kenya.
Adrian Mertens, who leads McKinsey’s Addis Ababa office, cited recent startup mapping in Ethiopia and Kenya that identified about 45 high-growth firms in Ethiopia, compared with nearly 750 in Kenya, despite the two economies being of similar size.
“The regulatory ecosystem has not been particularly favorable to startups,” Adrian stated. He added that foreign exmodify controls had also built it difficult for startup-focutilized investors to operate.
Ethiopia shifted from a tightly managed foreign exmodify regime to a more market-based system in July 2024 as part of broader macroeconomic reforms backed by international lconcludeers. Adrian stated the relocate had begun to ease investor concerns, particularly around the ability to repatriate funds, potentially allowing Ethiopian startups to narrow the gap with peers in countries like Kenya.
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