Somali Microfinance Institution (SMFI) jointly with the under formation interest free banking (IFB), filed this week its application to the National Bank of Ethiopia (NBE) to evolve itself to become a bank under the brand name Shebele Bank.
SMFI which was established in January 2011 announced that it has agreed with the under formation IFB that is handled by the Somali community to narrow the gap to access to finance under Sharia law in the region. The moves come as the firms want to move forward to establish a single financial firm.
Khadar Ahmed, General Manager of SMFI, told Capital that they are going to file the application to NBE to allow them to upgrade into a bank as per the directives that was issued recently and under the minimum paid-up capital requirement directive that NBE reviewed couple of weeks ago.
In his recent interview with Capital Mustefe Mohammed, Vice President of Somali region, told Capital the regional administration is working with investors to invest in the region that has massive potential. Since then there were activities to establish banks under the initiative of investors in the region.
“There was a process to form a financial firm called Shebele Bank, while when NBE allowed MFI to grow to banks we had discussed with the founder of Shebele and agreed to work together and establish a single financial firm under the IFB scheme,” Khadar said.
He explained that, in the initial meeting that was held in the capital of Somali region, Jigjiga, NBE had participated in the event. “Since we have developed the required documentation, the corresponding documents will be filed for application and consideration to the NBE,” Khadar remarked.
As per the agreement, the new bank that is the result of SMFI and Shebele will be called by the name of Shebele.
SMFI has already met the requirement of minimum paid up capital of half a billion birr to establish a bank, Khadar says, adding, “Our capital of SMFI is 508 million birr and at the same time we are selling share for the public to amass more.”
SMFI under Sharia compliant has provided financial service in Somali region and other places like Dire Dawa and Addis Ababa city administrations. It has registered extraordinary achievement on mobile banking that is power by Bel Cash.
“We are confident that our hello cash mobile money service is the leading in the country since we have 750,000 users from urban to rural transactions since 2015,” Khadar explained.
As per the deal Bel Cash will transfer the technology and service for the financial firm in the near future.
In a directive issued August last year, NBE has allowed microfinance institutions to upgrade into full-fledged banks. So far Amhara Credit and Saving Institution have upgraded to become a bank under the name of Tsedey Bank.
Under the revised directive of NBE for banks minimum capital requirement that was issued in the second week of April, the newly coming Shebele Bank would fulfill its minimum paid up capital to 5 billion birr in seven years time.
SMFI has reached over one million of the public and of that 80 percent are active clients. The total amount of loan it provided is over 2.2 billion birr.
Under its mobile money service over 200 million birr per day is transacted on its platform. 19,000 point of sales and 42 branches have been managed by its services.
As of April 30, 2021, the total amount of outstanding loan is over 1.8 billion birr.
In a related development Oromia Credit and Saving Share Company will hold its first meeting on Monday May 24, to upgrade the Credit and Saving company to a full-fledged banking service.