A bill that proposes the formation of the National Start-up Council, which will be tasked with overseeing resource mobilisation for entrepreneurs and start-ups, is making headway in the drafting process.

The Start-up Business proclamation, which is being drafted by the Ministry of Innovation & Technology in collaboration with the Jobs Creation Commission for the past year, was sent to the Office of the Attorney General three weeks ago for legal review.

The Council, which will have between seven and nine members, will supervise the National  Innovation Fund and support the ecosystem for the development of innovation and the creation of jobs. The Minister of Innovation & Technology will chair the Council, while the head of the Jobs Creation Commission will serve as the secretary. Members of the Council will be nominated by the Minister and appointed by the Prime Minister.

The bill is requisite for removing the impediments to entrepreneurship by easing the procedures of establishing, running, expanding and closing down a business, according to Khalid Ahmed (PhD), advisor to the Office of Digital Transformation Programme at the Ministry.

The National Innovation Fund, which will be supervised by the Council and administered by the Ministry, will mobilise resources for the start-ups from the government, as well as loans, grants and investment from private equity groups and angel investors. The mobilised funds will be used to incentivise start-ups by covering the cost of fees for the registration of intellectual property and guarantees given to the start-ups to get funding from financial institutions.

"Providing early-stage risk capital to start-ups can unlock tech entrepreneurship," said Kahlid. "The government can spark this model, and others can follow suit, since the country lags behind peer countries in the creation of space for innovation."

Ethiopia is home to close to 80 start-ups, which is far behind Kenya and Rwanda. Ethiopia stood at 110 out of 137 in the ranking of the Global Entrepreneurship Index in 2018.

"This affects the perception of investors who are looking for places to put their money," he said.

Over the past two years, start-ups raised 11 million dollars from 63 private equity companies and venture capital investors registered in the country.

A Technical Advisory Board under the Council will be formed to screen potential start-ups for funds and will forward its recommendations to the Council. The Board will have members pulled from the public and private sector upon the appointment of the Minister of Innovation & Technology. A Startup & Innovation Unit that oversees the evolution of the start-up and innovation ecosystem will also be formed.

The bill is applicable for micro, small or medium enterprises that have been operational for a period of no more than five years. These start-ups are eligible to secure a Start-Up Label or Innovative Business Lable if they have a product or service that is either innovative or disrupts the existing market structure. To secure the label, the person who developed the system or the product should own at least a quarter of the company.

To acquire the Start-up Label, the bill has set out three stages: pre-registration, registration for competence and commercial registration. The innovative business has to have a defined maximum number of employees and a minimum annual turnover rate as defined by the directive.

For the pre-registration process, the company has to fulfill the conditions set out by the bill and request pre-registration at the Ministry, which will issue a pre-registration certificate that is valid for two years. Holders of this license will be relieved from turnover, value-added and income taxes. The details of this relief will be governed by a directive to be issued by the Ministry of Revenues.

After these start-ups develop a product or service, respective government agencies have to issue a certificate of competence for the start-up that goes through the pre-registration process within a month from initiation. These start-ups should go through commercial registration to acquire a license from the Ministry of Trade & Industry two years after the pre-registration process.