Supporting Women-Led Businesses in Ethiopia to Build Resilience During Uncertain Times

Navigating Inflation: Insights from Women Entrepreneurs in Ethiopia

Ethiopian Women Entrepreneurs Navigate Inflationary Pressures with Innovation

In the bustling city of Hawassa, Ethiopia, Jalene’s small coffee shop and roastery serves as a hub for locals and visitors alike. However, behind the scenes, Jalene is facing the harsh reality of navigating a high inflationary environment that is impacting businesses across the country.

With Ethiopia’s annual inflation rate soaring above 30%, entrepreneurs like Jalene are forced to make tough decisions to keep their businesses afloat. Fortunately, Jalene is part of a unique initiative called the Women Entrepreneurship Development Project (WEDP) and the Africa Gender Innovation Lab (GIL), which is providing her with valuable insights and support during these challenging times.

Through the Innovations in Financing Women Entrepreneurs (IFWE) initiative, Jalene and 17 other women entrepreneurs are being closely monitored and studied over a year and a half. This research has revealed three common strategies that women business owners are employing to address inflationary pressures:

1. Investing in inventory and assets instead of cash savings: Women entrepreneurs like Lalitu are choosing to invest in physical assets that increase in value over time, rather than keeping cash savings that lose value due to inflation. Innovative tools like a digital app piloted by IFWE are helping entrepreneurs make informed decisions about where to allocate their funds.

2. Replacing informal sources of credit with formal loans: Inflation has disrupted informal credit markets, prompting women to seek formal loans from banks. IFWE and WEDP are working to make formal credit more accessible to women by developing innovative lending approaches that reduce reliance on collateral.

3. Using household savings to cover business needs: With limited access to credit, women are tapping into household savings to keep their businesses running. Initiatives like couples-based business training are helping women and their spouses better coordinate their resources to support the business.

Overall, nearly 24,000 women entrepreneurs in Ethiopia have benefited from the WEDP network, receiving business loans and technical training. The collaboration between IFWE, WEDP, and the women entrepreneurs is paving the way for innovative solutions to empower and increase the resilience of female-led businesses in the face of inflationary challenges.

As Jalene and her fellow entrepreneurs continue to adapt and innovate, they are proving that with the right support and resources, women can thrive in even the most turbulent economic environments.

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