Figure 4: Cross-country comparison on firms and loans (WB) Enterprise Survey, 2015

6. Country Comparisons on Barriers to Agricultural Finance

Percent of firms with a bank loan/line of credit Proportion of loans requiring collateral (%)

Percent of firms whose recent loan application was rejected

Percent of firms using banks to finance investments

Ethiopia Kenya Uganda Eritrea Tanzania South Africa

Figure 4: Cross-country comparison on firms and loans (World Bank Enterprise Survey, 2015).

6. Country Comparisons on Barriers to Agricultural Finance (cont.)

Figure 5: Getting Credit in Ethiopia and comparator economies4

Figure 6: Getting Electricity in Ethiopia and comparator economies5

4 Note: The ranking of economies on the ease of getting credit is determined by sorting their score for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Source: World Bank: “Economy Profile of Ethiopia. Doing Business 2020 Indicators”) 5 Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Source: World Bank: “Economy Profile of Ethiopia. Doing Business 2020 Indicators”

6. Country Comparisons on Barriers to Agricultural Finance (cont.)

Lack of business training is a major demand-side barrier to entrepreneurship

 Business training includes record keeping, financial reporting, management and entrepreneurship skills, such as accessing and using information (sources)

100%

80%

60%

40%

20%

0%

Lack of business training Access to finance Requirements by financial service providers

All studies* One-town-studies Female-owned enterprises

* 53 studies, directly and indirectly (from 2 Tanzania-focused review papers) reviewed by the authors, covering Tanzania (34), Kenya (8), Uganda (6), Mozambique (1) as well as multiple African or East African countries (4). Out of these, 14 are one-town-studies and 4 are studies of femaleowned enterprises, 1 is a one-town-study on female-owned enterprises.

Figure 7: Major demand-side barriers to entrepreneurship

6. Country Comparisons on Barriers to Agricultural Finance (cont.)

Lack of business training is a major demand-side barrier to entrepreneurship (cont.)

 The entrepreneurship literature from the region regularly indicates lack of business training and access to finance as major challenges for MSMEs (among many factors, e. g. taxation, marketing, and infrastructure).

 Few studies (mostly one-town-studies6) qualify access to finance with regard to requirements set by financial service providers, such as collateral, provision of guarantors, and loan tenure.

 It is noteworthy that the lack of business training is biased to enterprises with specific characteristics, such as one-town-studies and female-owned enterprises.

 Lack of business training implies gaps in management and entrepreneurship skills.

 These gaps in management and entrepreneurship skills are correlated to access to finance.

 Hence, it is reasonable to deduct that these gaps form a demand-side barrier in access to

finance.

6 Studies that only collected data in one town, municipality or city.

6. Country Comparisons on Barriers to Agricultural Finance (cont.)

Lack of business training is a major demand-side barrier to entrepreneurship (cont.)

 Caveat: Most of these studies are biased towards micro and very small enterprises.

 There are few studies of small and medium enterprises. Two such studies from India and Mexico respectively affirm gaps in management behaviours of medium enterprises (e. g. inventory management, enterprise goal setting).

 There is an extensive literature on the trainability of business management behaviours and practices.

It suggests that:

 Well-designed trainings that control for heterogeneity of trainees (entrepreneurs) have a fair chance to impact management behaviour and contribute to positive enterprise performance.

 Management training is more likely to be impactful than entrepreneurship training.

 Noteworthy, several GIZ-programmes in Africa (e. g. Nigeria, Namibia) have developed ‚pitching formats‘ to combine practical short trainings (‚teachable moment‘) with linking SMEs to financial service providers.

7. Findings II: Recommendations to Overcome Barriers

7. Findings II: Recommendations to Overcome Barriers

7.1 Overview

 The policy recommendation of the empirical studies on M/SMEs are, with the exception of a few, not very strong:

 The explicitly stated policy recommendation for the demand side mentioned most often is the need for HRD/ trainings/ capability-building.

 For supply side recommendations the emphasis lies also on capability-building/ skills training/ HR development as well as on strengthening innovation/ product offer.

7. Findings II: Recommendations to Overcome Barriers (cont.)

7.2 Recommendations from studies focused exclusively on agricultural SMEs

 Below boxes summarise the recommendations from the studies exclusively on agricultural SMEs. They do not vary much from other studies; most recommendations are vague or generic.  Noteworthy, not all of the studies focusing on (agricultural) SMEs do actually survey SMEs– some used secondary data only, some surveyed only (micro)financial practitioners and other stakeholders (associations, government agencies, etc.).

Framework conditions

• Deposit insurance • Expand IT-infrastructure • Credit guarantee scheme (for

SMEs) • Credit Reference Bureau* • Create stock market* • Leasing law reform* • Strengthen informal financial mechanism • Commercial laws – collateral*, bankruptcy system

Incentives

• Tax reduction (or coinvestment as government contribution) for banks active in rural area • Government on-lending or subsidy schemes for agricultural finance • Equity schemes • Challenge fund/ grants for experimenting/ innovating

*Recommendations that have been taken up.

Capacity building of (M)FIs

• Risk management • Build bankability metrics, i.e. credit scoring • Agricultural finance knowledge/ VC-financing • Mobile banking • SME product development

7. Findings II: Recommendations to Overcome Barriers (cont.)

7.3 Recommendations by World Bank (2015) – Study with the largest, most representative SMEsample

Framework conditions:

 SMEs need to be clearly defined in a policy framework by the GoE as well as at operational level by financial institutions with uniform criteria. => Set up a stakeholders’ working group to look into the issue of finding a common definition to be used by all financial institutions to segment the market.

 Establishing collateral registry of both movable and immovable assets.

 Support the use of market credit information through the refinements to the legal and regulatory framework to improve incentives to share information among lenders.

 Leasing can be an effective mechanism for boosting the Ethiopian economy by providing long-term finance to SMEs.

7. Findings II: Recommendations to Overcome Barriers (cont.)

7.3 Recommendations by World Bank (2015) (cont.)

 The GoE should consider adopting an integrated approach to SME development, which would combine a public support scheme to SME finance with parallel interventions in the areas of financial sector infrastructure as well as in the legal and regulatory framework.

Incentives

 Promote commercial banks’ downscaling intervention: Incentives through combination of dedicated liquidity (through lines of credit, e.g. by DBE) with tailored TA packages to successfully reach the missing middle segment.

Capacity building of commercial banks

 Commercial banks should establish dedicated SME units within their organization, define SMEspecific strategies, offer a range of products beyond lending, utilize low-cost delivery channels, develop and use risk modeling tools and build adequate hardware and software architecture.  Use best practices of commercial banks that have applied lending practices developed in the microfinance sector, to overcome high transaction costs and high-risk profiles of potential borrowers.

7. Findings II: Recommendations to Overcome Barriers (cont.)

7.3 Recommendations by World Bank (2015) (cont.)

Capacity building of the demand side

 Educational campaign promoting the value of credit bureaus among SMEs and financial institutions.  Help to address some of the intrinsic weaknesses in SMEs that cannot be addressed through financing tools alone - coordinate and tailor BDS interventions with parallel incentives provided to the supply side (i.e. commercial banks) to engage in SME lending.

Box 8: GIZ Digital Entrepreneurship Center

To improve digital skills, the local digital ecosystem and to encourage innovative entrepreneurship among young people, the GIZ, Orange, the Ministry of Innovation and Technology, the Ethiopian Investment Commission and the Industrial Parks Development Corporation opened the Addis Ababa Orange Digital Center in February 2021.

7

7 Next billion News: “Giz and Orange Launch an Orange Digital Center in Ethiopia”, 26 Feb 2021: https://nextbillion.net/news/giz-and-orange-launch-anorange-digital-center-in-ethiopia-the-3rd-in-the-africa-and-middle-east-region-to-train-young-people-in-digital-technology-and-boost-their-employability/

8. Research Gaps

8. Research Gaps

8.1 Research gaps based on the literature review on barriers and on recommendations

 The studies that focus on agricultural SMEs in Ethiopia – which are a relatively small part of the entire literature reviewed – do hardly discuss measures on the demand side; i.e. overcoming skill and systematic capacity weaknesses of the entrepreneurs and the enterprises.

 There is a strong sense of equivalence between the recommendations of the study by the World

Bank (2015), and the agri-SME-studies. However, the former brings out more pointedly and precisely the merit of an integrated approach – provide liquidity/ funding and TA, parallel to policy reforms and to capacity support to SMEs.

 Still, the demand side is certainly given less pronounced and lower priority than the policy and supply side measures. However, in the World Bank-initiated, multi-donor program for female entrepreneurs, a sophisticated capacity building approach is applied.

8. Research Gaps (cont.)

8.1 Research gaps based on the literature review on barriers and on recommendations (cont.)

 There is a disconnect between the value chain finance studies and the SME literature, in the sense that the literature on VC finance does not specifically consider agri SMEs. Yet, value chain finance is one of the more obvious and more simple approaches to reach agri SMEs as well as other actors in a given value chain.

Relatedly, this approach would be a good way to identify SMEs (with growth potential) in the first place, and tackle the issue of the high collateral requirements, as the agri produce will be serving as collateral instead.

Finance mechanisms could be either through the buyer or from the bank to the farmer directly with the security of a tri-partite agreement between bank, buyer, and farmer.  Agricultural insurance has hardly been explored in the literature reviewed, though a few studies note it as an area of need.

8.2 Additional research gaps identified by authors (independent of literature review)

 Apparently, few of the ‚standard agricultural finance products‘ – inventory and trade finance, tri-partite arrangements – have been explored, let alone piloted in Ethiopia.  Credit scoring is at very early stages, with just one financial institution having piloted such an approach at all.

This perceived gap probably also mirrors that we underestimated the low prevalence of computerisation and digitalisation.

8. Research Gaps (cont.)

8.2 Additional research gaps identified by authors (independent of literature review) (cont.)

 The literature, probably influenced by the long-standing policy-priorities, has focused on

smallholder farmers and cooperatives and has rather neglected the role of more established agricultural entrepreneurs.

8.3 Methodological research gaps

 There is no (nationally) representative survey of agricultural SMEs, only from the World Bank (2015) which assesses SMEs above 10 employees. None of the other studies uses even truly randomised sampling (especially for M/FIs).  Moreover, there is no SME-panel to track developments over time.  We did not find any study (for Ethiopia) with a control group (the evaluation of the training and biometric data evaluations of the WB female entrepreneurship program uses controlled trials).

9. Research Questions

9. Research Questions

Supply Side

What strategies have (M)FIs developed towards SME finance and/ or agricultural finance; what motivated their strategic choices; and if they have not (yet) developed such strategies, why so?

Demand Side

What specific barriers have agricultural SMEs experienced when looking for finance from: (i) formal (M)FIs (ii) other semi-formal sources, e. g. investment funds (iii) informal sources, e. g. friends and family (including own savings).

How can the lessons-learnt (with integrated approaches addressing both supply and demand side) from donor-programs like e. g. WEDP, GIZ's SI (SME-promotion component) and others be transferred to agricultural SMEs?

10. Concluding Remarks

10. Concluding Remarks

 Ethiopia has followed a unique approach to economic policy. While successful in some regards, such as improving agricultural productivity, the approach implies a hard constraint on capital and hence credit in the country.

 The GoE has taken on this challenge and charted a path of economic policy and financial sector reform. Hence, many recommendations for removing policy-barriers to SME-finance are under way.

 Microfinance and financial institutions have so far done little to change their approach to over-collateralised lending. With the focus on smallholder farmers or cooperatives in the agricultural sector, agricultural SMEs lack tailored financial services, e.g. under Ethiopia’s warehouse receipt system, or trade and inventory finance, ideally in a value-chain perspective.

 For (M)FIs to take up the mantel and introduce better appraisal and risk management processes, they need capacity building. As a pre-requisite, they need to create a strategy towards agricultural (and/ or) SME-finance.

 The existing literature focuses overwhelmingly on the supply side, while the perspectives of SMEs are relatively less prominent. Agricultural SMEs have rarely been studied, let alone systematically. The field study proposed by GIZ may make a dent to that research gap in the literature.

11. Annex

11. Annex

11.1 Bibliography

Addis Abeba Chamber of Commerce and Sector Association (AACCSA): “Towards the Creation of a Robust Private Sector”, AACCSA Policy Plan 2025, Vol I and II, Addis Abeba, 2020. Ababulgu: “Analysis of the Economy of Beekeeping and Honey Supply in Horo Guduru Wollega Zone, Oromia, Ethiopia”, 2021. ADA asbl and First Consult PLC: “Small and Growing Businesses in Ethiopia”, 2017. Adem & Worku & Beyene: „Constraints and Growth Potentials of Micro and Small Enterprises: Case from Mekelle City“ International Journal of Scientific and Research Publications, Volume 4, Issue 12, 2014. AEMFI – Amha & Peck: “Agricultural finance potential in Ethiopia”, 2010. Agrilinks – Baver: “How to Close the Agri-SME Financing Gap: Evidence From East Africa”, 2019. Ali et al: "The potential of Islamic financial institutions in promoting small and medium enterprises (SMEs) in Ethiopia" Journal of Economics and Political Economy 7.3 (2020): 188-203. Amentie et al: “Barriers to Growth of Medium and Small Enterprises in Developing Country: Case Study Ethiopia” Journal of Entrepreneurship & Organization Management 5:3, 2016. Amha et al: “The Impact of Financial Access on Firm Growth: evidence from Ethiopian Grain Traders and Millers”. Ethiopian Journal of Economics, Volume 22 Issue 1, p. 139 – 171, 2013.

11. Annex (cont.)

11.1 Bibliography (cont.)

Bekele & Worku: “Factors That Affect The Long-Term Survival Of Micro, Small And Medium Enterprises in Ethiopia” South African Journal of Economics Vol. 76:3, 2008. Central Statistics Agency of Ethiopia & World Bank: “Ethiopia Socioeconomic Survey (ESS)”, 2019. Central Statistics Agency of Ethiopia: “Ethiopia Socioeconomic Survey Financial Inclusion.”, 2020. Chirkos & Yigzaw: “The Role of Microfinance Institutions in the Development of Small and Medium Size Businesses in Ethiopia, A Case Study in Amhara Credit and Saving Institutions” Research Journal of Finance and Accounting, Vol.5, No.13, 2014. Dalberg: “The Economics of Agri SME Lending in East Africa”, 2018. Dawit Hussen: “Access of Financial Service: Supply Side Barriers in the Banking Industry of Ethiopia”. European Journal of Business and Management, Vol.7, No.4, 2015. Debebe: “Value Chain Financing: The Case of Selale area Dairy Value Chain” (Masters Project study). School of Graduate Studies of Unity University, 2010. Dinku: “Financial Inclusion in Ethiopia: Using Core Set of financial Inclusion Indicators”. Journal of Research and Opinion, Vol 6 No 7 (2019). Dokle & Farrell: “Mobilizing Agricultural Finance Toward a Common Language Between Lenders and Agri-SMEs in SubSaharan Africa”, Center for Financial Inclusion (CFI), SCOPEinsight, Alliance for a Green Revolution in Africa (AGRA), 2021.

11. Annex (cont.)

11.1 Bibliography (cont.)

Entrepreneurship Development Centre (EDC)- Ethiopia: “Survey Report Covid19 Impacts on MSMEs in Ethiopia”, 2020. Elias Eriksson: “Demand of External Finance by Manufacturing SMEs in Addis Ababa, Ethiopia” Gothenburg School of Business, Economics and Law, 2015. Esayas Mulatu Morka & Wamatu: “Ethiopian Microfinance Assessment Report: A case for entrepreneurship skills development for youth in sheep fattening” Working Paper, ICARDA, 2020. Farm Mechanization and Conservation Agriculture for Sustainable Intensification (FACASI): “Financial products for farmers and service providers report: Ethiopia”, CIMMYT, 2015. Fanta: “Banking reform and SME financing in Ethiopia: Evidence from the manufacturing sector”. African Journal of Business Management Vol. 6(19), pp. 6057-6069, 2012. Fredu Nega Tegebu & Edris Hussein Seid: “Small and medium enterprises access to finance in Ethiopia: Synthesis of demand and supply”, 2016. Gashayie: “Agricultural Finance Constraints and Innovative Models Experience for Ethiopia: Empirical Evidence from Developing Countries”. Research Journal of Finance and Accounting, Vol.6, No.7, 2015. Gebreeyesus et al: “Main Features of Micro and Small Manufacturing Enterprises in Ethiopia”, Ethiopian Development Research Institute, 2018.

11. Annex (cont.)

11.1 Bibliography (cont.)

Gelaye: “Factors That Affect Financial Performance of Micro and Small Business Enterprises in Dambi Dollo Town, Oromia, Ethiopia” Research Journal of Finance and Accounting, Vol.11, No.1, 2020. GIZ: “Financing Agricultural Value Chains in Africa - Focus on Coffee and Sesame in Ethiopia”, 2011. Gurmessa & Ndinda: “Smallholders’ Access to and Demand for Credit and Influencing Factors: Policy and Research Implications for Ethiopia”. Journal of Business & Economic Policy Vol. 4, No. 3, 2017. Hadis & Ali: “Micro and Small Enterprises in Ethiopia; Linkages and Implications: Evidence from Kombolcha Town”, International Journal of Political Science and Development, Vol. 6(1), pp. 16-26, 2018. Husen & Wodajo & Tasenţe: “The Role of Microfinance in Funding Small & Medium Enterprises: Harekello Town of Goro Dolla District in Focus, Ethiopia”. Technicum Social Sciences Journal, Vol. 17, 355-385, 2021. IFC: “MSME Finance Gap. Assessment of the Shortfalls and Opportunities in Financing Micro, Small and Medium Enterprises in Emerging Markets.”, 2017. IFC: “Innovative Agricultural SME Finance Models”, 2012. Jagiso et al: “Honey Value Chain Analysis and Producers Financing in Damot Gale District”, Southern Ethiopia, Food Science and Quality Management, Vol.78, 2018.

11. Annex (cont.)

11.1 Bibliography (cont.)

Kersten et al: “Small Firms, large Impact? A systematic review of the SME Finance Literature” World Development Vol. 97, pp. 330–348, 2017. Kipnis: “Financing Women-owned SMEs- A case study in Ethiopia” USAID, 2013. Kistana, Aregawi & Abraha: “Assessment of ‘Why Private Commercial Banks in Ethiopia Neglected the Agriculture?’ Evidence from 10 Selected Private Banks”. Journal of Economics and Sustainable Development, Vol.5, No.13, 2014. Kumari, Dibar: “The Role of Financial Institutions in the Growth of Small and Medium Enterprises in Dilla Town, Ethiopia”. Pen Acclaims, Volume 1, April 2018. Manaye, Tigro: “Challenges for Small and Micro Enterprises in Accessing Finance (Case of Wolaita Soddo Town)”. Global Journal of Management and Business Research: C Finance, Volume 17, Issue 7, 2017. Mano & Iddrisu & Yoshino: “How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive” World Development Vol. 40, No. 3, pp. 458–468, 2012. Mashenene and Rumanyika: „Business Constraints and Potential Growth of Small and Medium Enterprises in Tanzania: A Review“ European Journal of Business and Management, Vol.6, No.32, 2014.

11. Annex (cont.)

11.1 Bibliography (cont.)

Mektel & Mohammed: “Determinants of farmers’ adoption decision of improved crop varieties in Ethiopia: Systematic review”. African Journal of Agricultural Research, Vol. 17(7), pp. 953-960, 2021. Mookerjee: “Study on Crop and Seed Insurance in Ethiopia”, GIZ, 2019. Mwonge & Naho: “Determinants of credit demand by smallholder farmers in Morogoro, Tanzania”, African Journal of Agricultural, Vol. 17(8), pp. 1068-1080, 2021. Negasa et al: “Analysis Of Coffee Value Chain Finance In Bodji Dirmeji District Of West Wollega, Ethiopia”. Ethiopian Journal of Environmental Studies & Management 12(1): 32 – 42, 2019. Nkwabi and Mboya: „A Review of Factors Affecting the Growth of Small and Medium Enterprises (SMEs) in Tanzania“ European Journal of Business and Management, Vol.11, No.33, 2019. OECD: “Making Blended Finance Work for Agri-SMEs: Lessons learned from selected case studies”, 2021. Oshora et al: “Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia”. Journal of Risk and Financial Management, 2021. Pinto: „ Part 1: Assessment Of Ethiopian MSME Policies and Institutions“ GIZ, 2019. Salman Alibhai et al: “Disruptive Finance: Using Psychometrics to Overcome Collateral Constraints in Ethiopia”. In: World Bank: “Designing a Credit Facility for Women Entrepreneurs. Lessons from the Ethiopia Women Entrepreneurship Development Project (WEDP)”, 2020.

11. Annex (cont.)

11.1 Bibliography (cont.)

Seife Ayele: “Policy incentives and agribusiness investment in Ethiopia: benefit or deadweight?” APRA Brief, Issue No. 20, 2019. Tarfasa et al: “Determinants of growth of micro and small enterprises (MSEs): Empirical evidence from Ethiopia” Swiss Programme for Research on Global Issues for Development, 2016. Tefera & Gebremichae & Abera: „Growth Determinants of Micro and Small Enterprises Evidence from Northern Ethiopia“ Journal of Economics and Sustainable Development, Vol.4, No.9, 2013. Tekeste Berhanu Lakew & Hossein Azadi, 2020. "Financial Inclusion in Ethiopia: Is It on the Right Track?" International Journal of Financial Studies, MDPI, Open Access Journal, vol. 8(2), p. 1-13, 2020. Till: “A green revolution in sub‐Saharan Africa? The transformation of Ethiopia's agricultural sector” Journal of International Development, 2020. Worku & Abebe: “Review on Production and Marketing of Wheat in Ethiopia”, International Journal of Agricultural Economics, 5(4): 133-14, 2020. World Bank: “Better Loans or Better Borrowers? Impact of Meso-Credit on Female-Owned Enterprises in Ethiopia” World Bank Policy Research Working Paper 8511, 2020. In: World Bank: “Designing a Credit Facility for Women Entrepreneurs. Lessons from the Ethiopia Women Entrepreneurship Development Project (WEDP)”, 2020.

11. Annex (cont.)

11.1 Bibliography (cont.)

World Bank: “Ethiopia Economic Update Ensuring resilient recovery from COVID-19”, 2021. World Bank: “Global Findex”, 2014. World Bank: “SME Finance in Ethiopia: Addressing The Missing Middle Challenge”, 2015.

11. Annex (cont.)

11.2 A snapshot of COVID19-effects in Ethiopia

While external demand remains depressed due to COVID-19, it is showing some signs of recovery.

 Merchandise exports excluding gold declined by 4.1% during July-December 2020 (year-on-year), but most items (except garments) showed signs of recovery in the second quarter of the fiscal year.

 Remittances, which dropped by 10% in FY20, rebounded during the first half of FY21 (19.1%).

 Meanwhile, net foreign direct investment remains sluggish, dropping by 1.7% during the same period.

Direct support to firms in Ethiopia has been mainly instrumented through temporary tax deferrals and measures to support exporters. Overall, adopted measures are likely to have benefited formal firms almost exclusively. Going forward, support shall focus on the provision of credit to small and medium enterprises (SMEs). The measures announced by the Jobs Creation Commission in December 2020 are a good step in that direction.

11. Annex (cont.)

11.2 A snapshot of COVID19-effects in Ethiopia (cont.)

The World Bank advises Ethiopian authorities to:

 Take full advantage of the ambitious telecom sector by implementing the new proclamation on etransactions and to strengthen the regulatory framework to facilitate digital financial services.

 Revisit existing investment incentives, among others emphasizing machinery acquisition and worker training.

Source: 8th Ethiopia Economic Update of the World Bank Group.

11. Annex (cont.)

11.3 Relaxing regulations that constrain (micro) financial institutions

Ethiopia has made substantial progress to provide a modern enabling regulatory framework for (micro)financial institutions (M/FIs) in the country. Remarkably, the National Bank of Ethiopia directive number FIS/01/2012 on regulation of mobile and agent banking services is a very positive step to stimulating the use of technology and innovative financial service delivery channels such as mobile devices and agents that will have significant contribution in deepening financial service accessibility to a wider section of population at an affordable price. At the same time, risk-based regulation principles were introduced and are applied, hence the overall stability of the financial sector looks fairly strong. The ‘27%-rule‘ required financial institutions to hold 27% of new loan disbursements in low-yield NBE bills. It was abolished in 2019, an important step towards improving the liquidity of private banks and lending to the private sector. The increase in loanable funds is estimated at around EUR 500 million or 11% of outstanding loans in FY 2020. The purchase of government bonds at market-based rates also allows financial institutions to diversify their portfolios and access liquidity. The limits for individuals and groups to borrow a maximum of 1 and 4% respectively of the loan portfolio of an MFI was temporarily suspended to manage the fall-out from the COVID19-pandemic. The same NBE-circular (No MFISD 2020) encourages MFIs to renegotiate, restructure, or reschedule loans of customers that have been severely hit by the pandemic.

In cooperation with:

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Registered offices Bonn and Eschborn

Friedrich-Ebert-Allee 32 + 36 53113 Bonn, Germany T +49 228 44 60 - 0 F +49 228 44 60 - 17 66 Dag-Hammarskjöld-Weg 1 - 5 65760 Eschborn, Germany T +49 61 96 79 - 0 F +49 61 96 79 - 11 15

E info@giz.de I www.giz.de

11 Annex 11.4 Collection of Studies‘ Policy Recommendations1

Study

ADA asbl and First Consult PLC: “Small and Growing Businesses in Ethiopia”, 2017.

AEMFI - Wolday Amha, David Peck: Agricultural finance potential in Ethiopia, 2010.

Agrilinks - Baver: “How to Close the Agri-SME Financing Gap: Evidence From East Africa”, 2019.

Study's objective Country MSME Sector Policy recommendations

Main factors that currently affect the growth of businesses which started out as micro and eventually grew into small and medium sized entities. Ethiopia SME non-agri Access to connectivity technologies for transaction and cash management services is a matter of survival for contemporary SMEs. Despite the lack of modern MIS solutions currently in use by MFIs, they are probably better positioned to scale-up their services to small and medium sized clients than banks are to scale-down to clients that they hardly know and pay little attention to. Consider micro enterprises as part of a value chain (i.e. comprised of micro, small and medium enterprises) and establish value chain financing. Extending lines of credit to small or medium enterprises large enough for them to accommodate micro enterprises within their value chains. One-Stop Shops (OSS) (usiness development services (BD) in all primary-level administrative districts (“Kebele” level), business support services became available to virtually everyone without charge. Develop private BDS Testing a public-private partnership (PPP) based on responding to the exact BDS needs of SMEs may pave the way towards a more vibrant, organised, vetted, and quality-driven BDS private sector.

Assessing the importance of agricultural finance as a key enabler for agricultural growth in Ethiopia. Ethiopia n/a agri Improving incentives and regulatory environment to increase financial services in the rural sector, e.g., by putting in place a dedicated framework for the regulation of SACCOs. Strengthening rural financial institutions by using them as a channel for government cash flows, e.g. providing input credit (primarily for fertilizer) through SACCOs or MFIs; skill-building programs. Accelerating the introduction of new product offerings, e.g. increase the offering of insurance products; scaling up the current warehouse-receipt system; buildup of IT infrastructure and mobile banking technologies. Improving the overall "fitness" of the financial sector, e.g. capability-building program for financial institutions and customers, Increasing "system readiness" for possible further liberalization of the financial sector.

How best to close the financing gap for agriSMEs? East Africa SME agri Need for innovation is in risk management, cash incentive payments, first-loss credit guarantee schemes, technical assistance to lenders to improve their agricultural knowledge and risk management practices, TA to borrowers, patient and low-cost capital for FIs to scale-up agri-lending.

1 Only including studies that considered M/SMEs.

Study

Ali et al: "The potential of Islamic financial institutions in promoting small and medium enterprises (SMEs) in Ethiopia." Journal of Economics and Political Economy 7.3 (2020): 188-203. Assess the potential of Islamic financial institutions in promoting SMEs to get access to alternative financial services in Ethiopia. Ethiopia SME n/a The provision of Islamic financial services to SMEs is significantly affected by the regulatory, legal, administrative, human resource, infrastructural factors. The government and other financial sector stakeholders should ease these impediments to smooth the level playing field for SMEs. Market and industry related issues such as the creditworthiness and guarantee and capacity building measures boosting the skills of SMEs’ owners/managers.

Amha et al: “The Impact of Financial Access on Firm Growth: evidence from Ethiopian Grain Traders and Millers”. Ethiopian Journal of Economics, Volume 22 Issue 1, p. 139 – 171, 2013.

Bekele & Worku: “Factors That Affect The Long-Term Survival Of Micro, Small And Medium Enterprises in Ethiopia” South African Journal of Economics Vol. 76:3, 2008.

Chirkos, Asmamaw Yigzaw: “The Role of Microfinance Institutions in the Development of Small and Medium Size Businesses in Ethiopia, A Case Study in Amhara Credit and Saving Institutions” Research Journal of Finance and Accounting, Vol.5, No.13, 2014. Dalberg: “The Economics of Agri SME Lending in East Africa”, 2018.

Study's objective Country MSME Sector Policy recommendations

Assessed access to and the impact of different sources of finance on growth of traders and millers in Ethiopia. Ethiopia SME agri Government support in the form of credit guarantee. Establishing a stock market to increase credit availability for SMEs. Commercial laws protecting property rights and enforcement (collateral, bankruptcy system). Inventory credit important instrument in financing commercial stocks; Leasing. Finance providers should invest in capacity building to improve their services. Value chain financing approach needs to be adopted. Regulated informal finance can compensate for the limitations of the formal sector in serving SMEs.

To investigate factors responsible for failure in small businesses and enterprises in Ethiopia (19 socio-economic variables that affect the long-term survival of businesses). Underlying issues rural small firms are facing in their development, when acquiring financing from ACSI (major microfinance institution in Ethiopia). Ethiopia MSME n/a Integrate iqqub schemes with formal financial institutions in order to increase the capacity of iqqub associations (*rotation savings and credit association) so that a large number of needy members can be assisted efficiently.

Ethiopia SME agri & non-agri ACSI membership fee for new applicants should be reduced, mode of repayment should be revised so that the poorest can borrow without collateral. Group-based lending should be encouraged.

Lending economics for serving agriculture SMEs. East Africa (Kenya, Tanzania , Uganda, Zambia, Rwanda) SME agri Risk-sharing mechanisms that provide a first-loss cover rather than a partial pro rata share. Borrower capacity-building to increase the pipeline of bankable deals, reducing the perception of risk. Low-cost capital, either as concessional debt to reduce the cost of funds (a major issue for local NBFIs) or as innovation grants to help sub-scale lenders with potentially catalytic business models overcome the challenges of high operating costs. Lender capacity-building and senior management engagement to help banks in particular tailor products to the agri-SME market. Capacity-building focusing on exploring local shared service provision to reduce high

Study

Debebe: “Value Chain Financing: The Case of Selale area Dairy Value Chain” (Masters Project study). School of Graduate Studies of Unity University, 2010

Dokle & Farrell: “Mobilizing Agricultural Finance Toward a Common Language Between Lenders and Agri-SMEs in SubSaharan Africa”, Center for Financial Inclusion (CFI), SCOPEinsight, Alliance for a Green Revolution in Africa (AGRA), 2021.

Study's objective Country MSME Sector Policy recommendations

costs associated with origination, due diligence, monitoring loans and assessing collateral, and managing impaired loans.

Address constraints, challenges and good practices of delivering financial services to rural producers and agribusinesses and thus suggest innovative ways of value chain financing. Ethiopia n/a agri Commercial banks should get involved in financing Selale diary union. For flexibility and ease of reaching the farmers, the author suggests that cooperatives, the union, Microfinances and commercial bank should be jointly involved. Abolishing the credit ceiling. Improving the single borrower limit. Coops and the unions should build their fixed asset base to enhance their collateral capability. Coops and the Union have to demonstrate their sustainable institutionalized business management to a level where financiers could depend on working with them and entering into a long term commitment. It is recommended to address other challenges of the value chain, especially the marketing components through coordinated efforts by various stake holders. Demand development, quality improvement, enforcement of standards, a national body specifically concerned for dairy, like the Kenyan and Indian dairy board are recommended course of actions. Recent effort in advertising and introduction of nutritional value of milk need to be strengthened at least to reach the level where Ethiopia’s neighbors are achieved in terms of milk consumption per capita.

Improving the information flow between lenders and agri- SMEs can help address this finance gap. Currently, lenders do not have clear and standard lending requirements and, in turn, agri-SMEs are not always clear on what factors can make them creditworthy. Financial Inclusion (CFI) and SCOPEinsight, in partnership with the Alliance for a Green Revolution in Africa (AGRA), worked to create a standardized set of bankability metrics. SSA (Kenya, Rwanda, Uganda, Ethiopia, Ghana, Ivory Coast, Tanzania ) SME agri Bankability metrics can be used by lenders, donors, TA and BDS providers, and agriSMEs. It will take concerted action by lenders, service providers, and donors to validate, test, and adopt the bankability metrics. Bankability metrics can be an important enabler of access to finance for agri-SMEs.

Study

Elias Eriksson: ”Demand of External Finance by Manufacturing SMEs in Addis Ababa, Ethiopia”. Gothenburg School of Business, Economics and Law, 2015.

Entrepreneurship Development Centre (EDC)- Ethiopia: “Survey Report Covid19 Impacts on MSMEs in Ethiopia”, 2020. Esayas Mulatu Morka, Jane Wamatu: “Ethiopian Microfinance Assessment Report: A case for entrepreneurship skills development for youth in sheep fattening”. Working Paper, ICARDA, 2020.

Fanta: “Banking reform and SME financing in Ethiopia: Evidence from the manufacturing sector”. African Journal of Business Management Vol. 6(19), pp. 60576069, 2012.

Farm Mechanization and Conservation Agriculture for Sustainable Intensification (FACASI): “Financial products for farmers and service providers report: Ethiopia”, CIMMYT, 2015.

Study's objective Country MSME Sector Policy recommendations

Examines how SMEs finance themselves and what drives their demand for external finance. Ethiopia SME non-agri Increase competition in the banking sector (decrease collateral). Improving the public contract enforcement capability (reduces the perceived risk with SME lending). Easing the control and improve flows of foreign currency to meet the working capital demand by importing enterprises. Credit expansion programs for SMEs should not only focus on expanding supply but also to lower the perceived barriers to the formal bank system.

Assesses the impact of Covid-19 on MSMEs in Ethiopia. Ethiopia MSME agri & non-agri Rescheduling and postponing loan repayments, stabilizing the price and supply of inputs and raw materials, providing additional credit facilities and access to capital, wage subsidies, and assistance to enable MSMEs to speedily digitize their sales and marketing operations are among the urgent recommendations.

Assess the status and performance of the MFIs. Ethiopia SME & smallhold er farmers agri & non-agri As providing loans through SACCOs is cheaper and less risky, project should consider facilitating credit through strong SACCOs. Enable MFIs to scale up youth saving/loan products. Business development training to youth borrowers so lenders’ risks are reduced. Inclusion of MFIs will provide the microfinance industry with a valuable resource for smallholder farmers and youth product development, as well as stakeholder engagement. The regional governments in collaboration with development partners should build capacity for smallholder farmers and youths to use credit efficiently and enforce laws for defaulter.

This study investigates the effect of banking reform on SMEs access to bank credit during post-liberalization period 1994 to 2007. Bank concentration, competition, efficiency, and liquidity have been assessed. Ethiopia SME non-agri Enhance competition in the banking sector but without compromising safety and stability of the financial system. Establishment of credit bureaus that maintain borrower information. State needs to launch credit guarantee programs that can run without subsidy targeting SMEs in selected industries because efficiently managed guarantee schemes can robustly enhance credit access with little distortion to the market.

Find innovative models for MFIs to finance farmers and agricultural SMEs with the goal of finding ways to deal with credit risks, given the lack of financial information, track record, or acceptable collateral. Ethiopia MSME agri Improving incentives and regulation for FIs to serve the agricultural sector, e.g. tax reduction for banks active in rural areas, or co-investments such as a government contribution. Guarantee schemes or guarantee on rural deposits to increase savings. Regulatory framework for financial cooperatives. Countrywide deposit-insurance system. Increasing the participation of FIs in rural sectors by starting to use them as a channel for government cash flows (e.g. providing input credit). Accelerating the introduction of new product offerings. Increase offering of insurance products, e.g. index-based weather insurance.

Study

Fredu Nega Tegebu, Edris Hussein Seid: “Small and medium enterprises access to finance in Ethiopia: Synthesis of demand and supply”, 2016.

Gelaye: “Factors That Affect Financial Performance of Micro and Small Business Enterprises in Dambi Dollo Town, Oromia, Ethiopia”. Research Journal of Finance and Accounting, Vol.11, No.1, 2020.

GIZ: “Financing Agricultural Value Chains in Africa - Focus on Coffee and Sesame in Ethiopia”, 2011.

Study's objective Country MSME Sector Policy recommendations

Increase financial literacy and awareness of insurance products. Treat and regulate leasing companies as FIs. Fostering the build-up of IT infrastructure and mobile banking technologies (attract investors to set up the right system and infrastructure) Improving the overall "fitness" of the financial sector. Capability-building program for FIs and customers. Increasing "systemic readiness" for possible further liberalization of the financial sector. Slowly opening up the banking sector to foreign institutions/ investors.

Demand and supply issues relating to SMEs access to finance in Ethiopia. Ethiopia SME agri & non-agri Firms potential growth could be high that they could be too big for MFIs. At the same time, they may not be established enough for banks. It is this segment that seems to be especially affected by shallow financial markets. Entrepreneurs that are of transformational type may not fit well to MFIs financing portfolios. Stronger focus on transformational enterprises is therefore needed.

Determine the factors that affect financial performance of micro and small business enterprises in Dembi dollo town administration. Ethiopia SME & Micro agri & non-agri Solve problems related with supply, accessibility and shortage of infrastructures (electricity, water, quality road and working place) by: repairing the existing broken systems; promoting sustainable systems for new infrastructural development; limiting the governments control of infrastructure system; encouraging unsubsidized private investment, competition and innovation. Offer human resources training and development to staff members; assist small enterprise owners by providing different business training facilities and sharing experiences. Government should give attention related to bureaucracy in company registration, getting a license and uncertainty, inconsistency and instability in tax policy and high tax rate in the town.

The aim is to examine access to finance for agriculture, with a view to identifying strategies and tactics which will improve that access for commercially-oriented agriculture. This study reviews the agricultural finance environment in Ethiopia, with particular reference to the coffee and sesame value chains. Ethiopia SME agri To continue the policy dialogue with the government about the benefits of liberalising the financial sector. To work closely with the NBE to continue its financial sector reform programme, to improve its institutional capacity, and to adopt new approaches to both monetary policy and financial sector regulation and supervision. Focus development finance on equity investments, at least for the time being, and to support foreign and domestic capital with co-financing arrangements. Work with agribusiness to establish or deepen out- grower schemes and contract farming, and facilitate access to supplier finance in due course. Strengthen the business and financial skills of high- potential producers and processors through a pro- gramme of Enterprise Development Services (EDS). Work with the Ethiopian Commodity Exchange (ECX) to build on its operations and support the use of commodities as security for short-term finance. Develop the commercial banking sector, and particularly the Commercial Bank of Ethiopia.

Study

Hadis & Ali: “Micro and Small Enterprises in Ethiopia; Linkages and Implications: Evidence from Kombolcha Town”, International Journal of Political Science and Development, Vol. 6(1), pp. 16-26, 2018.

Husen & Wodajo & Tasenţe: “The Role of Microfinance in Funding Small & Medium Enterprises: Harekello Town of Goro Dolla District in Focus, Ethiopia”. Technicum Social Sciences Journal, Vol. 17, 355-385. 2021.

Jagiso et al: “Honey Value Chain Analysis and Producers Financing in Damot Gale District”, Southern Ethiopia, Food Science and Quality Management, Vol.78, 2018.

Kersten et al: “Small Firms, large Impact? A systematic review of the SME Finance Literature” World Development Vol. 97, pp. 330–348, 2017.

Study's objective Country MSME Sector Policy recommendations

Examine the status of formal institutional linkages (access to the market, financial support, infrastructures and educational institutions) and its implications on MSEs performance in Ethiopia, particularly in Kombolcha town. Ethiopia MSE agri & non-agri National policy and strategies should be revised pertaining the linkages towards financial and educational institutions with MSEs. Technical, Vocational Education, and Training institution curriculums and syllabus has to be compatible to mitigate the existing challenges that MSEs are facing.

Role of the Microfinance on funding of SMEs in Gorodola Harakallo town. exploring the role of microfinance institutions and the extent to which the small business have benefited from the credits scheme of microfinance institution. Ethiopia SME non-agri Banks: expand the payment period of loan asset; follow up programmed to make sure clients have put the loan in the stated purpose. Microfinance institutions: should try to find long term capital from pension and insurance company; ensure that the lending procedure is clear and precise and timely to encourage SMEs to take up the loans. Flexible repayment periods should be facilitated by management of lending institutions. The owners and management of SMEs: monitor their credit usage to avoid misappropriation; in the event of misappropriation they should replace the amount used for other purposes on time.

Identifying different major actors and their respective functions who are engaged in honey value chain. It also identified the sources of finances for bee keepers, and their opportunities and challenges. Ethiopia MSME agri They suggest introduction of strong value chain financing system to higher the benefit of actors and develop a sense of partnership among them. Dissemination of knowledge and technologies should be enhanced through trainings to fill the gap of skill in making locally made transitional hive, chefeka, and using of modern hives and filtering machines could improve both the quality and quantity of the product. There is an opportunity to export the product as there are different requests to supply the product in international markets, but lack of subsequent supply of honey detained it. Therefore, concerning bodies should have to take in to consideration on successive production and supply of the product throughout the year.

Review evaluations of finance programs for SMEs. Worldwid e SME n/a SME finance programs should target SMEs that are credit constrained (e.g., small and new R&D intensive firms for matching grants, and privately owned firms for export credit). The Firm should be sufficiently large and experienced to use the finance effective SME finance programs should also target the right type of financing for the right purpose. The results suggest that the amount of financing should be sufficiently high in order to have positive effects. Long-term loans might be more suitable for most purposes, while export promotion also seems to be possible through short-term loans.

Study

Kipnis: “Financing Women-owned SMEs- A case study in Ethiopia” USAID, 2013.

Kistana, Aregawi & Abraha: “Assessment of ‘Why Private Commercial Banks in Ethiopia Neglected the Agriculture?’ Evidence from 10 Selected Private Banks”. Journal of Economics and Sustainable Development, Vol.5, No.13, 2014.

Study's objective Country MSME Sector Policy recommendations

Motivation, impact, and lessons learned of utilizing a DCA risksharing agreement, coupled with technical assistance, that specifically targets women-owned SMEs. Ethiopia SME n/a Develop an outreach strategy to women-owned SMEs as part of program design. targeted linkages to women’s associations, local governments, local business development services, and other donor-funded programs focused on gender were more fruitful. Provide TA to financial institutions on SME Lending mechanisms and lending to women. Consider a 60–70 percent risk sharing agreement with partner banks within strict regulatory climates like Ethiopia. All stakeholders expressed the concern that many women are still ineligible for credit financing because they can’t produce the residual collateral requirement after the DCA guarantee. A country must have a supportive legal and regulatory environment that enables entrepreneurship in order for programs strengthening women-owned SMEs to be successful. Challenges such as limited or no access to property rights, limited access to education, and lack of awareness of legal rights influence the degree to which a women-owned SME can grow.

The study used ten selected private banks to investigate the reasons why private banks in Ethiopia neglected agriculture. Ethiopia n/a agri For private banks: employing agricultural risk analyst, developing cooperation with national and international agricultural development supportive agencies For the government: Encourage insurance companies to extend their insurance product or service to agriculture. National Bank of Ethiopia to put a minimum percent of loan to agriculture in its directives.

Kumari, Dibar: “The Role of Financial Institutions in the Growth of Small and Medium Enterprises in Dilla Town, Ethiopia”. Pen Acclaims, Volume 1, April 2018. Analyze the role of financial institutions/ banks and micro finance institutions on the growth of SMEs in Ethiopia; examine the performance of financial institutions with regard to the growth of SMEs. Identify the major constraints of growth of SMEs. Ethiopia SME agri & non-agri Further support from financial institutions is critical for SMEs found in Dilla town, so that they can grow and expand.

Study

Manaye, Tigro: “Challenges for Small and Micro Enterprises in Accessing Finance (Case of Wolaita Soddo Town)”. Global Journal of Management and Business Research: C Finance, Volume 17, Issue 7, 2017

Mano & Iddrisu & Yoshino: “How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive” World Development Vol. 40, No. 3, pp. 458–468, 2012.

OECD: “Making Blended Finance Work for Agri-SMEs: Lessons learned from selected case studies”, 2021.

Oshora et al: “Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia”. Journal of Risk and Financial Management, 2021.

Seife Ayele: “Policy incentives and agribusiness investment in Ethiopia: benefit or deadweight?” APRA Brief, Issue No. 20, 2019.

Study's objective Country MSME Sector Policy recommendations

Identify the challenges that small businesses in Wolaita soddo town face in accessing finance. Ethiopia MSME agri & non-agri Products for MSEs where collateral requirements are lenient. Credit giving institutions come up with programs of educating the MSEs on how they can go about obtaining credit facilities. Management of institutions should put in place proper accounting practices and adequate. Internal control systems, which will counter problems of information asymmetry that make MSEs risky for credit giving institutions.

Examines whether the entrepreneurs are willing to learn about management and to what extent the training improves the performance of their businesses. Ghana MSME non-agri Provide advanced training to improve management techniques.

Many agri-food SMEs do not have sufficient access to finance to fulfil their potential. This highlights the role of blended finance and provides insights into how development co-operation actors can utilise blended finance. Ghana, Kenya, Tanzania , Bhutan, Brazil, Paraguay , India, Mexico, Philippin es SME agri Blended finance programmes should be designed with room to experiment, innovate and adjust. Close consultation with target groups enable insights into both supply and demand challenges associated with commercial finance. Blended finance works for agri-SMEs. Donor governments have the financial instruments to mobilise private finance for agri-SMEs at hand, via their aid agencies, or development finance institutions or multilateral development banks (MDBs).

Investigate the determinant factors that affect the financial inclusion of smallmedium enterprises in Ethiopia. Assesses the effectiveness of policies promoting business investment in agriculture. Ethiopia n/a agri Ensure that tax privileges are not abused. Ineffective incentive instruments should be revised and unavoidable taxes should be used to develop infrastructure that enhances investment and development of the agriculture sector. Government to revise guidelines on the size and price of land transferred through lease. Improve information on agribusiness investment opportunities. Government and donors to facilitate more inclusion of smallholders in the emerging

Ethiopia SME n/a Build an efficient, strong, and well-functioning financial market system that provides affordable and sustainable financial service to SME. Stakeholders need to pay attention to support the development of microfinance institutions (the main external source of finance for SMEs) and mobilize the consumer’s use of mobile banking to promote financial inclusion.

Study

Tarfasa et al: “Determinants of growth of micro and small enterprises (MSEs): Empirical evidence from Ethiopia” Swiss Programme for Research on Global Issues for Development, 2016.

Tefera & Gebremichae & Abera: „Growth Determinants of Micro and Small Enterprises Evidence from Northern Ethiopia“ Journal of Economics and Sustainable Development, Vol.4, No.9, 2013. World Bank: “Better Loans or Better Borrowers? Impact of Meso-Credit on Female-Owned Enterprises in Ethiopia”. World Bank Policy Research Working Paper 8511, 2020. In: World Bank: “Designing a Credit Facility for Women Entrepreneurs. Lessons from the Ethiopia Women Entrepreneurship Development Project (WEDP)”, 2020.

World Bank: “SME Finance in Ethiopia: Addressing The Missing Middle Challenge”, 2015.

Study's objective Country MSME Sector Policy recommendations

agribusiness sub-sector. Encourage agribusinesses emerging from within the smallholder sector.

Identify the determinants of growth and of investment in innovation in MSEs using a survey of 300 firm level data from Addis Ababa. Ethiopia MSE agri & non-agri Developing continuous capacity building program to enhance the capability (human capital) of MSES. Improve access to finance, especially small enterprises, requires establishing a special window at commercial banks or improving the capacity of MFIs to enable them avail adequate loan to small enterprises. Improve key infrastructure such as power supply and distribution and access to water. Enhance the integration and linkage of micro and small enterprises with medium and large enterprises through training, experience sharing and access to improved technologies (Networking and sub-contracting develop technology capability).

To investigate the growth determinants of MSEs in Tigray regional state. Ethiopia MSE agri & non-agri Make the formal financial institutions affirmative to support MSEs and an integrated BDS provision that make the MSEs to be engaged in manufacturing. SMEs recognised for reducing unemplyement thus awareness should be created. Governments and NGOs should work hand in hand to formulate policies, design appropriate intervention strategies and practical steps to boost SMEs.

Investigates the impact of credit to female entrepreneurs, by examining larger loans, provided to growthoriented women entrepreneurs, falling in the “missing middle” or “meso-finance” segment of the financial market because their credit needs are too large for microfinance, but not large enough for commercial banks. Ethiopia MSME agri, nonagri Re-thinking loan products to target underserved market segments, with larger and better-fit credit.

Addressing the questions whether MSEs are the main net job creators in Ethiopia and whether they are able to access adequate financial services. Crossregional SME & Micro agri & non-agri Help commercial banks to down-scale, insolvency and creditor/debtor regime, commonly agreed and harmonized definition of what constitutes an SME, innovation in financial products and lending technologies by providing incentives to commercial banks through tailored technical assistance, business development skills for SMEs, improve collateral regime based on an accurate diagnostic of the Insolvency and Creditor/Debtor regimes, development of market credit information for SMEs, develop institutional framework for alternative sources of funding (e.g. leasing, factoring, joint venture capital).

11.5 Collection of Studies‘ Methodologies2

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Ababulgu: “Analysis of the Economy of Beekeeping and Honey Supply in Horo Guduru Wollega Zone, Oromia, Ethiopia” 2021.

ADA asbl and First Consult PLC: “Small and Growing Businesses in Ethiopia”, 2017. Analyzing the determinants of honey supply in Horo Guduru wollega zone of Oromia Region, Ethiopia. It also involved analyzing the economy of beekeeping, honey marketing and income generating activities. Ethiopia Horo Guduru wollega zone n/a agri Mixed Primary n/a Probability sampling Interview (semi structured questionnaires) and group discussions 121 honey producers Inferential statistics

Main factors that currently affect the growth of businesses which started out as micro and eventually grew into small and medium sized entities. Ethiopia n/a SME non-agri Quantivative Primary n/a Non-probability sampling Survey (semistructured) 45 SMEs (urban) (from portfolio of 3 MFIs) (in trade, service, manufacturing, construction) Descriptive statistics

Adem & Worku & Beyene: „Constraints and Growth Potentials of Micro and Small Enterprises: Case from Mekelle City“ International Journal of Scientific and Research Publications, Volume 4, Issue 12, 2014. Idenify the constraints of micro and small scale enterprises and to assess the growth potentials. Ethiopia Mekelle City MSME n/a mixed Primary and secondary n/a Two stage random sampling (sub-cities, MSMEs) Survey 85 MSMEs Inferential statistics

2 Only including empirical studies.

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

AEMFI - Wolday Amha, David Peck: Agricultural finance potential in Ethiopia, 2010. Assessing the importance of agricultural finance as a key enabler for agricultural growth in Ethiopia. Ethiopia n/a n/a agri Qualitative Primary and secondary 2010 Non-probability sampling In-depth key informant interviews, participatory rapid assessment, multi-stakeholder convenings Interviews: 100 stakeholders, including MoARD, BoARD, woreda- and kebelelevel government staff, development partners, research institutes, traders, cooperatives, unions, farmers, processors, investors, and others participated in interviews. Rapid assessment: farmers’ groups, community leaders, and local traders. Multi-stakeholder convenings: government officials, private sector representatives, research organizations. Validation: by three separate expert panels. Qualitative analysis

Agrilinks - Jesse Baver: “How to Close the Agri-SME Financing Gap: Evidence From East Africa”, 2019. How best to close the financing gap for agri-SMEs? East Africa n/a

Ali, Abdu Seid, Ibrahim BUSHERA, And Abdurahman Jemal YESUF. "The potential of Islamic financial institutions in promoting small and medium enterprises (SMEs) in Ethiopia." Journal of Economics and Political Assess the potential of Islamic financial institutions in promoting SMEs to get access to alternative financial services in Ethiopia. Ethiopia n/a SME agri Mixed

SME n/a n/a Primary and secondary n/a

Secondary n/a Non-probability sampling

n/a Datasets, In-depth interviews

Literature review Datasets: from 28 lenders (incl.11 social lenders with global portfolios, 17 domestic lenders from EA), 20 on lender's agri-SME loan portfolio; In-depth interviews: 8 lenders

SMEs all sectors Descriptive statistics, Qualitative analysis

n/a

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Economy 7.3 (2020): 188203.

Amentie et al: “Barriers to Growth of Medium and Small Enterprises in Developing Country: Case Study Ethiopia” Journal of Entrepreneurship & Organization Management 5:3, 2016.

Amha et al: “The Impact of Financial Access on Firm Growth: evidence from Ethiopian Grain Traders and Millers”. Ethiopian Journal of Economics, Volume 22 Issue 1, p. 139-171, 2013. Determine the barriers to growth of small and medium enterprises in Ethiopia. Ethiopia Mojo, Sebata, Gelan, Adama, DireDawa SME n/a Quantivative Primary and secondary n/a Non-probability sampling (combination of nonprobability (convenience) and probability (stratified) sampling) Questionnaire 386 enteprises Descriptive statistics

Assessed access to and the impact of different sources of finance on growth of traders and millers in Ethiopia. Ethiopia Addis Ababa, nearby towns SME agri Mixed Primary and secondary 2011 n/a Questionnaires, rapid assessment, discussions Quantitative: 200 grain traders, 330 processors Qualitative: senior staff of commercial banks, microfinance practitioners, staff of Federal Cooperative Agency, regional cooperative promotion bureau Inferential statistics, Qualitative analysis

Bekele & Worku: “Factors That Affect The Long-Term Survival Of Micro, Small And Medium Enterprises in Ethiopia” South African Journal of Economics Vol. 76:3, 2008.

Chirkos, Asmamaw Yigzaw: “The Role of Microfinance Institutions in the Development of Small and Medium Size Businesses in Ethiopia, A Case Study in Amhara Credit and Saving Institutions” Research Journal of Finance and Accounting, Vol.5, No.13, 2014. To investigate factors responsible for failure in small businesses and enterprises in Ethiopia (19 socioeconomic variables that affect the longterm survival of businesses). Ethiopia Addis Ababa, Awassa, Bahir Dar, Nazareth and Mekele MSME n/a n/a Primary 19962001 Non-probability sampling n/a 500 small businesses and enterprises Inferential statistics

Underlying issues rural small firms are facing in their development, when acquiring financing from ACSI (major microfinance institution in Ethiopia). Ethiopia Bahir Dar, Gondar, Estie SME agri & non-agri Mixed Primary and secondary n/a Non-probability sampling Case studies, questionnaires, interviews 26 Members (clients) of ACSI (SMEs) (farming, trading, artisan, other) 10 credit unions Qualitative analysis, descriptive analysis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Dalberg: “The Economics of Agri SME Lending in East Africa”, 2018. Lending economics for serving agriculture SMEs. East Africa (Kenya, Tanzania, Uganda, Zambia, Rwanda) n/a SME agri Mixed Primary and secondary 20132017 Non-probability sampling Datasets, bilateral conversations, interviews Loan datasets (1,476 in-scope loans) from 9 local lenders, 11 social lenders Descriptive statistics, Qualitative analysis

Dawit Mohammed Hussen: “Access of Financial Service: Supply Side Barriers in the Banking Industry of Ethiopia”. European Journal of Business and Management, Vol.7, No.4, 2015.

Debebe: “Value Chain Financing: The Case of Selale area Dairy Value Chain” (Masters Project study). School of Graduate Studies of Unity University, 2010 Reviews the financial access to the broad population in Ethiopia and analyses the main barriers of providing financial service particularly the banking products to the broad adult population. Ethiopia n/a Individu al level n/a n/a Secondary n/a n/a Literature review n/a n/a

Address constraints, challenges and good practices of delivering financial services to rural producers and agribusinesses and thus suggest innovative ways of value chain financing. Ethiopia Selale n/a agri Mixed Primary and secondary n/a Non-probability sampling Interview 133 individuals: 5 Dairy Cooperatives in Selale area, 5 focus groups (10 farmers in each focus), 57 households, 16 Supermarkets, 7 kiosks, 22 cafés, 4 processors, 2 private collectors, 1 union, 2 MFIs, 3 commercial banks, 3 NGOs and 6 government offices Descriptive statistics

Dokle and Farrell: “Mobilizing Agricultural Finance Toward a Common Language Between Lenders and Agri-SMEs in Sub-Saharan Africa”, Center for Financial Inclusion (CFI), SCOPEinsight, Alliance for a Green Revolution in Africa (AGRA), 2021. Improving the information flow between lenders and agri- SMEs can help address this finance gap. Currently, lenders do not have clear and standard lending requirements and, in turn, agriSMEs are not always clear on what factors can make them creditworthy. Financial Inclusion (CFI) and SCOPEinsight, in partnership with the Alliance for a Green Revolution in Africa (AGRA), worked to create a standardized set of bankability metrics. SSA (Kenya, Rwanda, Uganda, Ethiopia, Ghana, Ivory Coast, Tanzania) n/a SME agri Mixed Secondary 2019 n/a Interviews, datasets Secondary data: 100 agri-SMEs (data from 7 CSAF (Council on Smallholder Agricultural Finance’s) members), 2,336 agri-SMEs (data from SCOPEinsight) Primary data: 72 industry actors (Funder, Formal Financial Institution, Value Chain Organization, Professional Service Provider) Qualitative analysis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Elias Eriksson: ”Demand of External Finance by Manufacturing SMEs in Addis Ababa, Ethiopia”. Gothenburg School of Business, Economics and Law, 2015.

Entrepreneurship Development Centre (EDC) Ethiopia: “Survey Report Covid19 Impacts on MSMEs in Ethiopia”, 2020. Examines how SMEs finance themselves and what drives their demand for external finance. Ethiopia n/a SME non-agri Mixed Primary and secondary 20122013 Non-probability sampling Secondary: Panel dataset of Ethiopian Primary: qualitative interviews Secondary: manufacturing firms Primary: 20 SME manager (textile, agroprocessing, metal, mineral products, plastics, chemicals) Descriptive and inferential statistic

Assesses the impact of Covid-19 on MSMEs in Ethiopia. Ethiopia Oromia, SNNPR, Tigray, Addis Ababa MSME agri & non-agri Quantivative Primary 2020 Non-probability sampling Survey 362 micro and small enterprise (service (33%), manufacturing (30%), urban agriculture (11%), construction (8%), trade (19%)) Descriptive statistics

Esayas Mulatu Morka,Jane Wamatu: “Ethiopian Microfinance Assessment Report: A case for entrepreneurship skills development for youth in sheep fattening”. Working Paper, ICARDA, 2020. Assess the status and performance of the MFIs. Ethiopia Tigray, Amhara, BenishangulGumaz, Gambela, Addis Ababa, SNNP, Oromia, Harari, Dire D, Somali SME & smallhol der farmers agri & non-agri Mixed Primary and secondary n/a Non-probability sampling Key informant interviews 34 MFI chief executive officers, managers, experts, and development practitioner Descriptive statistics, Qualitative analysis

Fanta: “Banking reform and SME financing in Ethiopia: Evidence from the manufacturing sector”. African Journal of Business Management Vol. 6(19), pp. 6057-6069, 2012.

Farm Mechanization and Conservation Agriculture for Sustainable Intensification (FACASI): “Financial products for farmers and service providers report: Ethiopia”, CIMMYT, 2015. This study investigates the effect of banking reform on SMEs access to bank credit during post-liberalization period 1994 to 2007. Bank concentration, competition, efficiency, and liquidity have been assessed. Ethiopia Addis Ababa SME non-agri Quantivative Primary and secondary n/a Probability sampling Primary data: Interviews Secondary data: datasets Primary data: 102 manufacturing SMEs Secondary data: key financial figures from 2 state owned banks, 6 private commercial banks Descriptive statistics

Find innovative models for MFIs to finance farmers and agricultural SMEs with the goal of finding ways to deal with credit risks, given the lack of financial information, track record, or acceptable collateral. Ethiopia n/a MSME agri Mixed Primary and secondary n/a Non-probability sampling Key informant interviews Senior staff of the Association of Ethiopian Microfinance institute, microfinance practitioners, leaders of multipurpose and financial cooperatives, other relevant institutions. Narrative analysis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Fredu Nega Tegebu, Edris Hussein Seid: “Small and medium enterprises access to finance in Ethiopia: Synthesis of demand and supply”, 2016. Demand and supply issues relating to SMEs access to finance in Ethiopia. Ethiopia Addis Ababa, Dire Dawa, Hawassa, Adama, Kombolcha, Dessie, Mekelle SME agri & non-agri Quantivative Primary n/a Supply side: Nonprobability sampling Demand side: probability sampling (stratified sampling) Questionnaire 8 banks, 3 MFIs 519 SMEs (manufacturing, construction, trade, service, urban agriculture) Descriptive and inferential statistic

Gebreeyesus et al: “Main Features of Micro and Small Manufacturing Enterprises in Ethiopia”, Ethiopian Development Research Institute, 2018. State of the micro and small manufacturing enterprises in urban Ethiopia. Different aspects of the MSE development including on characteristics of enterprises and entrepreneurs; job creation, sales, marketing, investment, financing, competition and innovation activities or performances of MSES. Ethiopia Addis Ababa, Adama, Jimma, Dire Dawa, Jigjiga, Mekelle, Bahir Dar, Gondar, Dessie, Hawassa SME non-agri Quantiative Primary 2017 Probability sampling Survey 8,174 micro and small manufacturing enterprises in 10 largest cities. Descriptive statistics

Gelaye: “Factors That Affect Financial Performance of Micro and Small Business Enterprises in Dambi Dollo Town, Oromia, Ethiopia”. Research Journal of Finance and Accounting, Vol.11, No.1, 2020.

Gurmessa, Ndinda: “Smallholders’ Access to and Demand for Credit and Influencing Factors: Policy and Research Implications for Ethiopia”. Journal of Business & Economic Policy Vol. 4, No. 3, 2017. Determine the factors that affect financial performance of micro and small business enterprises in Dembi dollo town administration. Ethiopia Dembi dollo town SME & Micro agri & non-agri Mixed Primary and secondary Stratified random sampling Questionnaires 358 micro and small business enterprises Sectors: manufacturing, construction, service, urban agriculture, merchandising Inferential statistics (multiple regression)

Access and demand for credit and its determinants among farmers’ cooperatives. Ethiopia Oromia, Southern Nations Nationalities and People's Region (SNNPR) Farmer coopera tives agri Mixed Primary 2013 Non-probability sampling Questionnaires, focus group discussions and key informant interviews Quanitative: 100 coffee farmer cooperatives Qualitative: other key actors in coffee sector Descriptive statistics, Qualitative analysis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Hadis & Ali: “Micro and Small Enterprises in Ethiopia; Linkages and Implications: Evidence from Kombolcha Town”, International Journal of Political Science and Development, Vol. 6(1), pp. 16-26, 2018. Examine the status of formal institutional linkages (access to the market, financial support, infrastructures and educational institutions) and its implications on MSEs performance in Ethiopia, particularly in Kombolcha town. Ethiopia Kombolcha town MSE agri & non-agri mixed Primary and secondary 20102016 n/a Interviews (semistructured questionnaire), datasets Primary data: 206 enterprise owners and MSEs officers (manufacturing, service sector, urban agriculture) Secondary: data from the central statistical agency, federal SMEs development agency, city administrative enterprise development offices. Descriptive statistics

Husen & Wodajo & Tasenţe: “The Role of Microfinance in Funding Small & Medium Enterprises: Harekello Town of Goro Dolla District in Focus, Ethiopia”. Technicum Social Sciences Journal, Vol. 17, 355-385. 2021.

Jagiso et al: “Honey Value Chain Analysis and Producers Financing in Damot Gale District”, Southern Ethiopia, Food Science and Quality Management, Vol.78, 2018.

Kersten et al: “Small Firms, large Impact? A systematic review of the SME Finance Literature” World Development Vol. 97, pp. 330–348, 2017.

Kipnis: “Financing Womenowned SMEs- A case study in Ethiopia” USAID, 2013. Role of the Microfinance on funding of SMEs in Gorodola Harakallo town. exploring the role of microfinance institutions and the extent to which the small business have benefited from the credits scheme of microfinance institution. Ethiopia Gorodola Harakallo town SME non-agri Mixed Primary and secondary n/a Non-probability sampling (cluster sampling) Questionnaires, interviews 50 business owners located in center of Gorodola Woreda (metal work, shopping, wood working and tailor) Descriptive statistics

Identifying different major actors and their respective functions who are engaged in honey value chain. It also identified the sources of finances for bee keepers, and their opportunities and challenges. Ethiopia Damot Gale District MSME agri Mixed Primary n/a Probability sampling (two stage sampling: 1. bee keeping Kebeles , 2. households) Survey 120 households (producers, collectors, wholesalers, retailers, cooperatives, processors and consumers) Descriptive statistics

Review evaluations of finance programs for SMEs.

Motivation, impact, and lessons learned of utilizing a DCA risk-sharing agreement, coupled with technical assistance, that specifically targets women-owned SMEs. Ethiopia n/a SME n/a Mixed Primary and secondary 2013 Non-probability sampling Interviews Interviews with banks credit officers Descriptive statistics

Worldwide n/a SME n/a Qualitative Secondary n/a Multivariate metaanalysis n/a SME Qualiative analysis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Kistana, Aregawi & Abraha: “Assessment of ‘Why Private Commercial Banks in Ethiopia Neglected the Agriculture?’ Evidence from 10 Selected Private Banks”. Journal of Economics and Sustainable Development, Vol.5, No.13, 2014.

Kumari, Dibar: “The Role of Financial Institutions in the Growth of Small and Medium Enterprises in Dilla Town, Ethiopia”. Pen Acclaims, Volume 1, April 2018.

Manaye, Tigro: “Challenges for Small and Micro Enterprises in Accessing Finance (Case of Wolaita Soddo Town)”. Global Journal of Management and Business Research: C Finance, Volume 17, Issue 7, 2017

Mano & Iddrisu & Yoshino: “How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive” World Development Vol. 40, No. 3, pp. 458–468, 2012.

Mektel & Mohammed: “Determinants of farmers’ adoption decision of improved crop varieties in Ethiopia: Systematic review”. African Journal of Agricultural Research, Vol. 17(7), pp. 953960, 2021 The study used ten selected private banks to investigate the reasons why private banks in Ethiopia neglected agriculture. Ethiopia n/a n/a agri Mixed Primary and secondary 2009 2012 Non-probability sampling Questionnaires, semi-structured interview Loan officers and Credit managers of 10 private commercial banks Inferential statistics

Analyze the role of financial institutions/ banks and micro finance institutions on the growth of SMEs in Ethiopia; examine the performance of financial institutions with regard to the growth of SMEs. Identify the major constraints of growth of SMEs. Ethiopia Dilla Town SME agri & non-agri Quantivative Primary and secondary n/a Non-probability sampling Questionnaires 50 SMEs (registered with the trade and industry burea) (all sectors) Descriptive statistics

Identify the challenges that small businesses in Wolaita soddo town face in accessing finance. Ethiopia Wolaita Sodo Town MSME agri & non-agri Quantivative Primary and secondary 2017 Probability sampling (stratified random sampling technique) Questionnaires 282 MSMEs operator/owner (thereof 22 in Urban Agriculture) Inferentionl statistics

Examines whether the entrepreneurs are willing to learn about management and to what extent the training improves the performance of their businesses. Ghana Kumasi MSME non-agri Quantivative Primary 2005, 2008 Probability sampling Questionnaires 139 entrepreneurs (metalwork) treatment group: 47 entrepreneurs control group: 66 entrepreneurs Inferential statistics

To summarize and synthesize the most common factors from 21 studies that determine the farmers’ adoption decision of improved crop varieties in a regular pattern in Ethiopia. Ethiopia n/a Farmer agri Qualitative Secondary n/a n/a Literature review of 21 studies Farmer Qualitative anaylsis

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Mwonge & Naho: “Determinants of credit demand by smallholder farmers in Morogoro, Tanzania”, African Journal of Agricultural, Vol. 17(8), pp. 1068-1080, 2021.

Negasa et al: “Analysis Of Coffee Value Chain Finance In Bodji Dirmeji District Of West Wollega, Ethiopia”. Ethiopian Journal of Environmental Studies & Management 12(1): 32 – 42, 2019.

OECD: “Making Blended Finance Work for Agri-SMEs: Lessons learned from selected case studies”, 2021. To assess the determinants of credit demand by smallholder farmers. Tanzania Morogoro Municipality Farmer agri Quantivative Primary n/a Probability sampling (twostage random sampling: 1.wards, 2. household) Survey 300 smallholder farmers Inferential statistics

Since access to institutional finance is very limited, the majority of the coffee farmers are forced to search financial services through informal channels. Analyzing coffee value chain finance in Bodji Dirmeji District, Ethiopia with specific objectives of mapping out the coffee value chain finance and Sources of Credit for Coffee Value Chain. Ethiopia Bodji Dirmeji District (3 kebeles) Househ old level agri Quantivative Primary and secondary n/a Probability sampling (two stage sampling method) Questionnaires 168 coffee farmers (producers, local collectors/assemblers suppliers, processors, service providers, exporters, wholesalers and retailers) Descriptive statistics

Many agri-food SMEs do not have sufficient access to finance to fulfil their potential. This highlights the role of blended finance and provides insights into how development co-operation actors can utilise blended finance. Ghana, Kenya, Tanzania, Bhutan, Brazil, Paraguay, India, Mexico, Philippines n/a SME agri Qualitative Secondary n/a Non-probability sampling 9 case studies agri-SMEs Qualitative analysis

Oshora et al: “Determinants of Financial Inclusion in Small and Medium Enterprises: Evidence from Ethiopia”. Journal of Risk and Financial Management, 2021.

Salman Alibhai et al: “Disruptive Finance: Using Psychometrics to Overcome Collateral Constraints in Ethiopia”. In: World Bank: “Designing a Credit Facility for Women Entrepreneurs. Lessons from the Ethiopia Women Entrepreneurship Development Project (WEDP)”, 2020. Investigate the determinant factors that affect the financial inclusion of smallmedium enterprises in Ethiopia. Ethiopia Addis Ababa SME n/a Mixed Primary and secondary 2020 Probability sampling (twostage stratified sampling) Questionnaire, ex-planatory research design 319 SMEs (all sectors), banks, MFIs Inferentionl statistics (multiple linear regression model)

Women-owned businesses have less access to credit than their male counterparts. This unequal access is largely driven by inequalities in ownership of fixed assets such as houses and land, which can serve as collateral to secure loans. Suggestion of a universal credit score that was calculated using psychometric and behavioral data. Ethiopia n/a MSME n/a Quantitative Primary 2015 Non-probability sampling Pilot the psychometric testing 2,496 clients of MFI Amhara Credit and Savings Institution (ACSI) descriptive

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Seife Ayele: “Policy incentives and agribusiness investment in Ethiopia: benefit or deadweight?” APRA Brief, Issue No. 20, 2019.

Tarfasa et al: “Determinants of growth of micro and small enterprises (MSEs): Empirical evidence from Ethiopia” Swiss Programme for Research on Global Issues for Development, 2016. Assesses the effectiveness of policies promoting business investment in agriculture. Ethiopia n/a n/a agri Qualitative Primary and secondary n/a Non-probability sampling Case studies, indepth interviews 5 case studies of agribusinesses 10 key informant interviews with business leaders Qualitative analysis

Identify the determinants of growth and of investment in innovation in MSEs using a survey of 300 firm level data from Addis Ababa. Ethiopia Addis Ababa MSE agri & non-agri Quantitative Primary 2015 Probability sampling (twostage selection, just first stage randomly selected) 1. stage: Subcities: Yeka, Akaki 2. stage: Woredas structured questionnaire 300 MSEs (manufacturing, construction, service, trade, urban agriculture) Inferential statistics

Tefera & Gebremichae & Abera: „Growth Determinants of Micro and Small Enterprises Evidence from Northern Ethiopia“ Journal of Economics and Sustainable Development, Vol.4, No.9, 2013.

Tekeste Berhanu Lakew & Hossein Azadi, 2020. "Financial Inclusion in Ethiopia: Is It on the Right Track?" International Journal of Financial Studies, MDPI, Open Access Journal, vol. 8(2), pages 1-13, 2020. Till: “A green revolution in sub‐Saharan Africa? The transformation of Ethiopia's agricultural sector”. Journal of International Development, 2020

World Bank: “Better Loans or Better Borrowers? Impact of Meso-Credit on FemaleOwned Enterprises in To investigate the growth determinants of MSEs in Tigray regional state.

Measure the success or failure of Ethiopia’s financial inclusion.

Explores the presence of a nationallevel green revolution in Ethiopia and the role of agricultural public spending within it. Ethiopia All rural areas Farmer agri Quantivative Secondary 19952018 Probability sampling Datasets: interviews, records, measures ca. 90,000 Farmer Descriptive statistics

Investigates the impact of credit to female entrepreneurs, by examining larger loans, provided to growthoriented women entrepreneurs, falling Ethiopia 6 cities MSME agri, non-agri Quantivative Secondary 2014 followup survey: Probability sampling (Propensity score matching) Women Entrepreneurship Development Project (WEDP) 2,369 female entrepreneurs follow-up survey: 2,139 firms Inferentionl statistics

Ethiopia

Ethiopia Mekelle City MSE agri & non-agri Quantivative Primary 2012 Probability sampling Semi-structured questionnaire, personal interviews 178 MSEs (Service, Manufacturing, Trade, Construction, Tourism, Urban Agriculture) Inferential statistics

n/a Individu al level n/a Qualitative Secondary n/a n/a Literature review n/a n/a

Study Study's objective Country Region MSME Sector Qualitative/ quantitative approach Primary or secondar y data Years Sampling design Data collection methods Target group & sample size Data analysis methods

Ethiopia”. World Bank Policy Research Working Paper 8511, 2020. In: World Bank: “Designing a Credit Facility for Women Entrepreneurs. Lessons from the Ethiopia Women Entrepreneurship Development Project (WEDP)”, 2020. World Bank: “SME Finance in Ethiopia: Addressing The Missing Middle Challenge”, 2015. in the “missing middle” or “mesofinance” segment of the financial market because their credit needs are too large for microfinance, but not large enough for commercial banks.

Addressing the questions whether MSEs are the main net job creators in Ethiopia and whether they are able to access adequate financial services. Crossregional n/a SME & Micro agri & non-agri Quantivative Demand side: secondary data Supply side: Primary data Deman d side: 20002012

Supply side: n/a Demand side: Probability sampling

Supply side: Non-probability sampling Demand side: 1. The Ethiopia Survey of Large and Medium Scale Manufacturing Industries (LMMIS): an unbalanced panel composed 2. The World Bank’s Enterprise Survey Supply side: structured faceto-face interviews Demand side: SMEs 1. 6,000 firms (with at least 10 employees) 2. 794 firms (services sector, microenterprises)

Supply side: 13 financial institutions (7 banks, 6 microfinance institutions) Descriptive statistics

2016/20 17 registration database sample of firms (all sectors)