Mastercard Foundation, First Consult Launch $48.9 Million MSME Recovery, Resilience Program in Ethiopia

In a major push to bolster the Micro, Small, and Medium Enterprises (MSMEs) sector in Ethiopia, the Mastercard Foundation and First Consult have announced the launch of a novel initiative dubbed the Micro, Small, and Medium Enterprise Recovery and Resilience (MESMER) Program.

Ad

Ad

Implemented under the guidance of the Ministry of Labor & Skills, the program aims to support a total of 72,200 informal, start-up, and formal enterprises. Additionally, the program envisions the creation of 410,800 jobs within these enterprises.

The MESMER program, with its budget of $48.9 million, will also disburse funds via partner financial institutions, grants, and soft loans countrywide, focusing primarily on conflict-affected areas, women, and young people.

Ad

Ad

According to First Consult, one of the leading consultancy firms in Ethiopia, MSEMS is the second-largest employment-generating sector in Ethiopia. A 2021 study conducted by First Consult, states that approximately 1.5 million MSMEs in the country grapple with a financing gap of $6.1 billion, which, if filled, could result in the creation of a remarkable 7.5 million jobs.

The MESMER program, which was launched today April 24, 2023, aims to enhance the resilience and growth prospects of MSMEs through three main strategies.

Firstly, it will facilitate credit access for MSMEs by collaborating with financial institutions for liquidity funding. Secondly, it will provide technical assistance to these financial service providers. Finally, it will offer demand-driven business development services along with psychosocial support services to ensure sustained resilience and growth of enterprises.

A significant component of the MESMER program involves bridging the gap between MSMEs and financial institutions. This initiative will establish better information symmetry, credit history, robust Know Your Customers (KYC) procedures, and improved credit eligibility, all essential elements for the creation of a favorable borrowing environment for MSMEs.

The MESMER program builds upon the success of the Mastercard Foundation’s COVID-19 Recovery and Resilience Program (CRRP) launched in 2020. The CRRP offered grants and soft loans to strengthen the resilience of MSMEs, with $7.3 million for grants and $17 million for soft loans. This unlocked a matching fund from two partner commercial banks, leading to a total fund of $34 million.

In April 2023, the Mastercard Foundation approved a grant exceeding $630 million for the second phase of the Young Africa Works Ethiopia Program. This program aims to enable 10 million young people to access dignified and fulfilling work by 2030. For the strategy’s first phase, the Foundation committed $300 million.