UNCDF Champions Blended Finance to Bridge Capital Gap for Ethiopian Micro and Small Enterprises

Addis Ababa, September 4, 2025 (ENA) --- The United Nations Capital Development Fund (UNCDF) is strategically employing innovative blended finance mechanisms to address the significant capital gap faced by Micro and Small Enterprises (MSEs) in Ethiopia.

UNCDF representatives led by Mike McCaffrey, Regional Digital Manager for East and Southern Africa, conferred with Ethiopia’s State Minister of Finance, Semerita Sewasew.

During the discussion, McCaffrey outlined UNCDF’s approach to off-balance sheet blended facilities, designed to attract larger private sector entities and Development Finance Institutions (DFIs).

In Ethiopia, UNCDF is helping to de-risk blended finance facilities, making it easier for Development Finance Institutions (DFIs) and private investors to provide funding to micro and small businesses.

This approach supports job creation, expands access to finance for small traders and farmers, and strengthens the country’s inclusive economic growth.

Furthermore, Mike McCaffrey emphasized the critical role of digital technologies, such as mobile money and digital ID systems, to significantly reduce transaction costs and expand financial access.

For her part the State Minister emphasized the critical role of leveraging digital technologies, significantly reduce transaction costs and expand financial access to micro traders and smallholder farmers, thereby fostering widespread job creation.

UNCDF aims to bridge the gap between traditional development organizations providing grants and technical assistance, and Development Finance Institutions that often lack the risk appetite for full engagement in economies like Ethiopia or with smaller financial service providers, McCaffrey noted.   

Semereta expressed the Ministry of Finance’s commitment to strong alignment and collaborative efforts with UNCDF to mobilize additional resources across various industries, including finance, agriculture, health, and education.