Ethiopia’s Youth Investment Bank Eyes Launch This Year, Targets Funding 100+ Startups

Ethiopia’s Youth Entrepreneurship Investment Bank (YEIB)- a new bank under formation- is expected to begin operations this year, targeting more than 100 innovative startups and micro, small, and medium enterprises (MSMEs), according to the Ministry of Labour and Skills (MoLS).

Zerihun Alemayehu, Job Creation Expansion Lead Executive Officer at MoLS, confirmed to The Reporter that preparations are underway to meet the regulatory requirements of the National Bank of Ethiopia (NBE) to establish the new bank. Once operational, the bank will allow young entrepreneurs with viable business plans to secure loans and growth capital.

The initiative operates under the African Development Bank (AfDB)-supported Agri-MSMEs Development for Jobs (AMD4J) project, which is being implemented by MoLS.

 Ashik Bediru, Project Manager for AMD4J, stated that AfDB funding will be released as soon as the bank completes its licensing and certification processes. According to the latest AfDB implementation progress report, the YEIB component underwent structural adjustments following a decision to transfer its implementing entity from the Development Bank of Ethiopia (DBE) to Ethiopian Investment Holdings (EIH). A restructuring appraisal has been completed, draft grant amendments have been prepared, and foundational policy documents for the new management board and its subcommittees have been approved.

To prepare for its launch, YEIB is finalizing documentation under Ethiopia’s capital market legislation, establishing staff recruitment criteria, and fulfilling licensing prerequisites. The bank was originally launched in October 2025 through a memorandum of understanding between MoLS and EIH. The broader AMD4J initiative is backed by a USD42.86 million grant approved by the African Development Fund in May 2024, alongside complementary contributions from the DBE and the Ethiopian government, aiming to expand access to finance and business development services for youth- and women-led enterprises.

YEIB plans to support technology-driven, innovative business ideas across all sectors without prioritizing specific sub-sectors. MoLS, alongside the Entrepreneurship Development Institute (EDI), will identify candidates and provide training on business grounding and operationalization. Headquartered initially in Addis Ababa, the bank plans to expand into regional states as viable investment opportunities arise. Beyond funding, prospective beneficiaries will undergo investment readiness assessments, training, and technical assistance before receiving capital. Furthermore, the bank is designed to grow beyond a purely state-run entity by gradually selling shares and expanding its equity base to bolster domestic investment.

The AfDB’s framework for YEIB combines long-term equity and quasi-equity capital with a Public Credit Guarantee Scheme, which aims to encourage conventional financial institutions to lend to youth-led businesses that lack standard collateral. Progress on the wider AMD4J project is moving forward, with beneficiary registration, stakeholder mapping, and ecosystem assessments already underway. Seventeen financial institutions—comprising eight banks and nine microfinance institutions—have been selected to participate, and 249 Agri-MSMEs representing 533 members have been cleared for financial access. Over its lifetime, the broader AMD4J program aims to support 8,000 MSMEs across the country.