Highlighting innovative financing solutions for SMEs and the role of diaspora capital in private sector development
The African Development Bank and the Government of Japan have concluded a joint field visit to Ethiopia to assess a project expanding access to finance for the country's small and medium-sized enterprises.
The Ignite - Financing the Missing Middle Project, is supported by the Fund for African Private Sector Assistance (FAPA), a Japan financed facility managed by the African Development Bank that supports capacity building and technical assistance for African governments, business associations, and private enterprises among other entities.
Through an innovative equity crowdfunding platform, Ignite-- a $1.8-million project that includes a grant of nearly $1 million from FAPA-- connects entrepreneurs in Ethiopia with diaspora and angel investors to mobilise financing and foster entrepreneurial success.
The joint delegation was co-led by the Bank's OIC Country Manager for Ethiopia, Nathaniel Agola and by Japan's Deputy Director-General Minister of Finance Shuichi Hosoda. During the visit, it met with the project implementer Ignite Capital, a woman-owned SME, and visited beneficiary businesses: Kabana Leather and Inter Ethiopia, which are active in leather products and e-waste management, respectively.
The platform is tailored to the Ethiopian market and seeks to provide SMEs with access to smaller ticket equity investments that are often unavailable through conventional financing channels. The initiative is also expected to contribute to the development of Ethiopia's capital markets and support improvements in the regulatory environment for alternative financing mechanisms.
"The Ignite Diaspora Equity Crowdfunding Platform will contribute to strengthening Ethiopia's capital markets and refine its regulatory framework," Agola said during the visit. "Furthermore, the support to transform local business into investment-ready SMEs provides a bankable pipeline of SME projects for upcoming secondary markets. This illustrates the transformational impact of FAPA funded projects across Africa."
Hosoda reaffirmed Japan's commitment to supporting private sector development across Africa through its long-standing partnership with the African Development Bank. "This project presents a formidable opportunity for increased engagement with the Japanese private sector. I am confident our long-term partnership with the Bank will have spillover effects on private capital mobilization throughout the continent," he said.
The delegation also discussed opportunities to expand the project's outreach and explore lessons from Japan's experience in SME development, entrepreneurship, and private sector financing.
About FAPA
FAPA is a thematic-trust fund administered by the African Development Bank and supported primarily by the Government of Japan. FAPA provides technical assistance and capacity-building support to strengthen Africa's private sector, improve business enabling environment, enhance financial systems, promote trade, and support the growth of micro, small, and medium-sized enterprises. To date FAPA has provided over $86 million to 111 projects in 51 countries across the African continent.
