UNCDF in Ethiopia

UNCDF in Ethiopia

The Challenge

Ethiopia ranks below the sub-Saharan African average in the 2013 Human Development Index, number 173 out of 187 countries. Over 39 percent of Ethiopians live below the poverty line, and development indicators drop significantly in the country’s least developed regions.

How We Are Helping?

UNCDF is implementing three programmes in in support of financial inclusion in Ethiopia: A joint programme with ILO to support the development of microinsurance services in association with microfinance savings and credit services, and two UNCDF global inclusive finance programmes, namely the Least Developed Countries Fund for savings-led market leaders for inclusive finance (MicroLead), which aims to increase access to financial services for low-income populations in LDCs; and YouthStart, which aims to increase access to financial services for young people.
In the area of inclusive finance, UNCDF will also support the development of the sector by a comprehensive country diagnostic and policy programming tool called Making Access Possible (MAP). MAP is a global initiative which has been tested and proven successful a number of countries in Asia and Africa. The comprehensive sector strategy which will be one of the outcomes of the process should be orienting all development partners’ support to the sector, and as such will be the central pillar in UNCDF’s programming in the country.
In the area of local development finance, UNCDF is one of the lead partners in the UN Joint Programme Enhancing Public Service Delivery for Accelerating Outcomes in Ethiopia’s four Developing Regional States (UNJP-EPSD). UNCDF’s support focuses on improving sustainable livelihoods in 22 pilot woredas (districts), mainly through capital investments and capacity development in key value chains. The emergence of a number of Income Generating Groups around many of these investments has already created a significant demand for microfinance services in the same localities. The potential for scaling up the positive impacts on livelihood conditions, women’s in particular, in these 4 regional states is therefore considerable.

In Detail


UN Joint Programme Enhancing Public Service Delivery for Accelerating Outcomes in Ethiopia’s four Developing Regional States

Goal To strengthen local governance, improve basic social services and promote environmentally sustainable livelihoods and develop a national gender strategy.

The UNCDF support in the 22 woredas (districts) has had significant impact. Limited financial resources see most woredas’ budgets allocated to recurrent expenditures with very little for capital investments. 10-15% is normally the maximum amount available for such investments. The grants provided through UNCDF, channeled to the woredas via Ministry of Finance and Economic Development and the regional Bureaus of Finance and Economic Development, though relatively small, constitute a significant increase to the woredas’ capital investment expenditure.

  • Gender sensitive value chain analyses, supported by 5 value chain facilitators and 1 national coordinator, identify products for investments.
  • These are now being introduced as proposals into the woredas’ own planning and budgeting, monitoring and evaluation systems.
  • Many investments involve the establishment of Income Generation Groups to manage them.
  • Others provide a local public good that benefits local producers, enhancing their livelihoods; e.g. rain water harvesting, provision of training and inputs (seeds, etc.); organization of collective action groups for marketing.
  • Women are targeted in the formation of these groups, usually 10-20 persons.
  • Benefits are direct to the groups and producers targeted and indirect to the surrounding communities; e.g. a grain mill reducing travel time for women travelling to a mill; a warehouse operating as a focal point for grain trade increasing the market options for grain sales, increase move from subsistence to cash crop production.

Sustainability is secured in two ways: institutionally through the programme working on and through government systems with local government and community ownership linking supply and demand side aspects of local government. Second, economically through the revenues generated by the capital investments being retained as funds for the IGGs’ and the individual producers to maintain existing investments and, in the longer term, to make new investments.

Period 2011-2015
Partners UNCDF, UNDP, UNICEF, WFP, FAO, WHO, UN Women, Government of Ethiopia, DFID, Government of Austria.
Total project cost and UNCDF contribution USD 20,200,000/ UNCDF component USD 1,971,627
USD 1,200,000


Goal To increase sustainable access to client-centric financial services, particularly savings services, for low-income populations.

MicroLead supports the expansion of savings led Financial Service Providers, including Greenfield institutions. It also supports capacity building by technical service providers to FSPs poised for significant growth in low-income savings mobilization, rural outreach, and outreach to women.
In Ethiopia, MicroLead awarded a grant of $1.7 million to BASICS, a technical service provider, to support two microfinance institutions (Buusaa Gonofaa and Wasasa) and the MFI sector by providing training sessions through the Association of Ethiopian Microfinance Institutions (AEMFI). The proposed technical assistance aims at strengthening microfinance operations of Buusaa Gonofaa, Wasasa and impacting the microfinance sector in effectively increasing its outreach to rural and poor clients, over a period of five years (ending June 2015).

Period 2008-2015
Partners UNCDF, Bill & Melinda Gates Foundation
Total project cost and UNCDF contribution USD 28,000,000
USD 1,694,000


Goal To increase youth access to financial and non-financial services.

In Ethiopia, UNCDF has proven its dedication to expanding economic opportunities for youth by:

1. Supporting the ACSI and PEACE to offer multiple financial services to help youth save their money, access loans and start their own business. As of September 2013, the two Ethiopian partners had provided demand driven and responsible financial services to close to 133,916 youth, collected US$3.7 million in savings, granted US$4.4 Million in loans to 27,933 youth entrepreneurs and trained almost 140,000 youth in financial literacy and entrepreneurship.

2. Organizing national consultations around the need for: i) a regulatory environment that enables youth (aged 15-17) to open and independently manage a savings account; ii) developing and enforcing legislation protecting youth that is consistent with the Smart Campaign and the Child and Youth Finance International Banking principles; and iii) facilitating the development of innovative, cost-effective delivery channels to increase low-cost access to youth by passing the necessary legislation for financial institutions to bank through agents, mobile phones, schools etc.

Period 2010-2014
Partners UNCDF, The Mastercard Foundation.
Total project cost and UNCDF contribution USD 12,000,000
USD 200,000

share this