Wednesday, June 12, 2024
Money TalksWhat is holding the startup bill back?

What is holding the startup bill back?

It was unusual for a top government official to publicly criticize his office for failing to accelerate an activity, but Nigussu Tilahun state minister at the Ministry of Labour and Skills did so as his government was being grilled by number of panelists.

Two years ago, when Nigussu succeeded Ephrem Lamango (PhD) as commissioner of the then Jobs Creation Commission, later incorporated to the Ministry, he had a major task of working with the Ministry of Innovation and Technology (MInT) to advocate for the approval of the eagerly anticipated start-up proclamation.

“The experts as well as my predecessor were counting on me to mainly work on two big tasks, one of which was to co-work with MInT on this proclamation,” Nigussu said explaining the responsibility he received when he came to the Commission two years ago.

He boldly accepted there has been a delay in pushing reforms to succeed. The startup business proclamation can be a best example to show things are not progressing as hoped.

It has been three years since the government started making plans to introduce the “Startup Business Organizations and National Innovation Fund Proclamation,” in support of startup businesses.

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The idea of the proclamation coming to effect gave great hope to new businesses and entrepreneurs. However, three years after the concept was first proposed, the draft proclamation never even made it to the table at the Council of Ministers.

The Ethiopian Youth Entrepreneurs Association (EYEA), a lobbying organization for young entrepreneurs and startups, started putting together a series of workshops to discuss this and other startup ecosystems. 

The first-ever session, dubbed Stakeholders Engagement Workshop on Startups Ecosystem, was conducted on August 30, 2022. The main topic was the government’s prolonged delay in ratifying the highly awaited startup proclamation.

Nigussu, Bayissa Bedada (PhD), State Minister for MInT, experts, startups, investors and several other government representatives were in attendance.

Samiya Abdulkadir, president of the EYEA, intends to create awareness to as many young entrepreneurs as possible about the significance of the startup proclamation and other ecosystems. Her advocacy group plans to host 12 sessions in general. 

“There are many more rules in place but still need to be amended to enable the youth. Awareness among the youth is crucial to the policy advocacy and lobbying activity,” she said.

Samiya has a point. Young entrepreneurs can benefit from a number of advantages if they actively advocate for the approval of the startup proclamation alone.

Director of MInT’s legal services, Ayalneh Lemma has been participating in the proclamation’s preparations and consultations. He disclosed that the Office of the Prime Minister is currently in contact with experts from his Ministry and a number of stakeholders to finally submit it before the Council of Ministers.

Among the few great possibilities this proclamation will bring, according to Ayalneh, are solutions like easier access to financing, the offering of tax exemptions with grace periods, and a streamlined business registration process.

“Entrepreneurs come up just with ideas but not capital. How we regulate that and more are some of the issues we have to work on,” Ayalneh said.

The draft proclamation proposes the establishment of a national innovation fund to be the primary source of funding and assistance for a startup establishment, but later subject to approval by the Council of Ministers.

The proclamation assigns MInT the responsibility of overseeing the fund through a designated bank account. This fund will be used to offer free financial assistance with low interest rates, offer incentives, and for capital investment under the supervision of MInT and a council that will be established.

Government funding, loans, grants, and a number of other sources that are only intended for this purpose will be the fund’s primary financial sources. Angel investors, venture capitalists, and equity investors are a few of the potential sources of funding.

The draft proclamation also suggests creating an Innovation Fund Council, whose major responsibility will be to manage the fund and encourage more ecosystems. The minister for MInT will serve as the Council’s chair, and there will be six or eight other members and recommends Council members for the Prime Minister to appoint.

The Council’s major goal will be to hasten economic growth by fostering an atmosphere that makes it easier to create jobs based on new ideas and technological advancements. Its responsibilities will include making sure that the startup programs and funds are in line with the country’s economic objectives. Additionally, it identifies obstacles to the innovation ecosystem in various industries and works with the Minister to find a solution.

The Council will also supervise audit procedures related to the assistance and incentives received. Another duty is to consult the minister on matters of policy.

Ayalneh told The Reporter that it is related to the situation the nation is under explaining why the government is taking long to bring it to fruition. He claimed that it was delayed due to the difficult economic situation the nation is in, the fact that some government institutions are still under formation, and a number of other factors.

“It is a new thing, and officials also need to adapt their attitudes. Banks, numerous government agencies, and multiple stakeholders must comprehend and support it,” Ayalneh said.

Although he acknowledges that the government is more appreciative than ever of technology-supported startups, a number of factors, including the issue’s newness in the nation, are preventing it from moving quickly.  

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