Semi-constructed skyscrapers dotting the horizon, shoppers, commuters and students flooding the sidewalks and a sea of trucks, cars and buses - all fighting for their own space along Bole road, Addis’ main thoroughfare. The signs of a decade of 10% annual economic growth for Ethiopia were evident in the cab ride to the hotel. The energetic vibe of Addis also reminded me that despite rapid advancements, it was still a country with one of the highest poverty rates in the world, large rural populations without energy access, significant bio-diversity and environmental risks and a nascent private sector to deal with it all.
To engage the private sector was the reason I was in Ethiopia. I was preparing for the business plan development of an Ethiopian Climate Innovation Center (CIC) similar to the Kenyan CIC launching later this year. The $15 million program will invest in and support early-stage companies wanting to become more involved in the booming local and international cleantech markets while becoming profitable and competitive.
However the suite of services developed for each CIC look different in each market and is therefore designed via a rigorous gaps, opportunities and needs analysis with local stakeholders. While in Ethiopia, I met with a few of the 100-plus stakeholders that will take part in the design phase of the Center. Public and private sectors, development partners, NGOs and academia were eager to share their expertise and experience of what was needed for a CIC in Ethiopia. These are my thoughts following those discussions:
1. Building entrepreneurial capacity: I read an ad for an autoshow in Addis with the tag-line ‘Scan globally, renovate locally’. Dereje, entrepreneur and owner of Lydetco Solar is doing just that by incorporating local materials into a US designed solar cooker to reduce costs. It’s true that many good technologies are out there but unlike the auto sector, cleantech in Ethiopia lacks the conduits - like an enterprising mechanic or an enthusiastic car lover – to accelerate local adaption and deployment. There is a need for more people like Dereje to make ‘cleantech’ a movement.
2. Filling the funding gap: I couldn’t turn a corner without someone telling me that access to finance was a big, if not the biggest gap for companies looking to expand. The financial services sector is heavily regulated with banks typically requiring over 100% of collateral. While micro-credit is available, there is a cap on the amount, leaving any enterprise in the ‘small to medium’ range without many options.
3. Designing a ‘re-entry’ strategy: The diaspora is now returning to Ethiopia, often with cash and experience to impart. Daniel Gizaw is an entrepreneur who recently established an Ethiopian subsidiary of his Michigan-based company. dVentus Technologies resembles a silicon valley tech park, housing an electronics lab, workshop and a multi-axis CNC (computer numerical control) machine which brings the lab’s designs to life. It is people like Daniel who see incredible opportunity in taking advantage of Ethiopia’s supply of affordable, educated talent and the region’s expanding market and influence.
4. Thinking outside the city: Ethiopia is divided into nine different regions and two chartered cities spanning an ecologically, topographically and climatically diverse country. Likewise, Ethiopia’s regional governments also play an important role in decision-making at the local level. A regional approach for a CIC will need to be designed to adequately address capacity constraints, engage local talent, access markets and interact with relevant policy-makers.
5. Promoting pro-market policy: The Ethiopian government has prioritized a number of value-add industries such as leather, textiles and horticulture. However companies not in these sectors can face a number of bureaucratic hurdles. For example, one interviewed entrepreneur imports crystal oscillators for testing electrical signals. However these are considered chandelier components and hence taxed more. Designing a CIC that is the voice of entrepreneurs and can engage the government on pro-market policy is critical in assisting an emergent cleantech private sector in Ethiopia.
Even with the challenges that Ethiopia faces in building new domestic industries, there is immense potential for the country’s green growth. The CIC will be designed to offer a holistic package of financing, capacity building, international and regional networking, and policy advice to meet the above challenges. This will contribute to a flourishing local environment for climate technology innovation. The business plan for the Ethiopia CIC will be completed by COP17 in Durban with the Center’s launch scheduled in the first half of 2012.