Deadline: September 23, 2025
The United Nations Capital Development Fund (UNCDF) has launched an Expression of Interest (EOI) to provide technical assistance and investment grants to financial institutions to accelerate financing for micro, small, and medium-sized enterprises (MSMEs) in conflict-affected areas of Northern Ethiopia.
The focus areas include provision of loanable funds, Business Development Support (BDS), innovative financial product and outreach, limited access to finance for MSMEs, especially those owned by youth and women, lack of collateral and credit history, high cost of borrowing (interest rates, fees and other transaction costs), limited innovation in financial products, technical assistance and investment grants to develop and deploy innovative financial products and expand distribution networks tailored to the needs and challenges faced by the target segment, support on distribution network expansion designed to build the capacity of financial institutions to collaborate with fintech companies and other ecosystem actors, deploying innovative loan products targeted at MSMEs in conflict-affected and remote areas, leveraging alternative data sources to assess the creditworthiness of MSMEs that lack traditional collateral or formal credit histories, data-driven, cash-flow based, and alternative approach to increase access to finance, reduce lending risks, and support more inclusive and sustainable financial services ecosystems, and mandatory technical assistance for developing or modifying MSME loan products and expanding distribution networks with a focus on conflict-affected areas.
This initiative is supported by the European Union Delegation in Ethiopia and is designed to restore the local economy and enhance the resilience of MSMEs affected by conflict in the northern regions of Afar, Amhara, and Tigray. Selected financial institutions will benefit from targeted technical assistance and performance-based investment grants to pilot innovative loan products, expand outreach, and provide financing tailored to the needs of MSMEs.
The program underscores the severe challenges MSMEs face in accessing finance, with only a small fraction of bank lending portfolios allocated to the sector. By promoting innovative financial solutions, leveraging technology, and building institutional capacity, the initiative aims to address structural barriers such as excessive collateral requirements and limited financial literacy while supporting women and youth entrepreneurs.
Financial institutions applying must be legally registered in Ethiopia, fully licensed by the National Bank of Ethiopia, and have at least three years of operational experience. They will be expected to pilot and roll out innovative loan products in Afar, Amhara, and Tigray, supported by investment grants and technical assistance to ensure affordable and scalable financing options.
The total budget for investment grants amounts to USD 1.2 million, to be allocated to selected institutions based on due diligence. Grants will be disbursed on a performance basis tied to milestones such as the development of new loan products, expansion of outreach channels, and disbursement of loans to eligible MSMEs.
Through this initiative, UNCDF aims to foster financial inclusion, strengthen local economies, and contribute to sustainable economic recovery and resilience in Ethiopia’s conflict-affected regions.
For more information, visit UNDP.
