Digital lending takes a foothold in the loaning business as expansion quadruples in the first nine months of the 2022/23 financial year, in contrast to a year back.
In a second knowledge series titled: ‘Data-Driven MSME Digital Lending for an Inclusive Economy’ that involved financial powerhouses, National Bank of Ethiopia (NBE), International Financial Corporation, FSD-Ethiopia, Kifiya Financial Technology, and the Mastercard Foundation, a series of sessions were held to address the lesson learnt and steps forward to solve the challenges in financing space of micro, small, and medium enterprises (MSMEs) in Ethiopia.
During the knowledge series that was held at Hyatt Regency Hotel on Wednesday May 3, Solomon Desta, Vice Governor of NBE, said that access to credit has highly been concentrated to very few borrowers, “Less than one percent borrowers have taken 45 percent private sector credits.”
He said that Addis Ababa alone took 80 percent of the banking sector loans and more than 99 percent of bank credits and more than 95 percent of credit account.
In Ethiopia there are over 70 million saving accounts, while the credit account is less than one percent compared in the banking sector. However, the number has shown significant increments owing to some of micro-finance institutions transitioning as banks in the past months.
Solomon told media that NBE is facilitating a regulatory sandbox that shall include new schemes for the implantation, “We are now preparing the framework.”
According to the Vice Governor, the central bank is working round the clock to change the credit scheme trajectory of MSMEs in the country.
“The NBE is working to change this situation and increase access to finance particularly to MSMEs. Digital lending and financial inclusion are a top priority for the government and NBE in the space of digital finance,” he said at the session, adding that, “NBE also recognizes the importance of further improving policy and regulatory environment for digital scheme and access to credit for MSMEs for shares to expand and provide innovative credit services. In this regard a regulatory framework that supports financial institutions to provide digital lending in partnership with mobile money service providers has been implemented.”
Solomon indicated that in the first nine months of the financial year, a total credit of more than 3.6 billion birr has been provided digitally through a couple of banks in partnership with mobile money service provider, telebirr.
The figures have been noted to shoot four-folds when compared to the same period of last year.
Those involved aggressively on the digital lending are the state owned Commercial Bank of Ethiopia and Cooperative Bank of Oromia, which launched a scheme called ‘Michu’, a credit score-based digital lending platform for MSMEs, are the main players in collaboration with the mobile money scheme of the state owned Telecom Company, Ethio Telecom’s telebirr.
The knowledge series aims to bridge the knowledge gap in uncollateralized digital lending and credit scoring and shows how uncollateralized digital lending addresses the access to finance challenges faced by MSMEs in Ethiopia.
MSMEs are the strongest economic development, innovation, and employment drivers. However, access to finance is frequently identified as a critical barrier to their growth.
“I am a firm believer that collaborative learning and knowledge sharing among the financial and digital ecosystem is lacking in Ethiopia. In today’s world, knowledge is no longer confined to a select few. It is to be available to anyone who seeks it. This democratization of knowledge is meant to level the playing field for stakeholders as well as enhance the entire sector in order to provide the best viable solutions to consumers,” Munir Mohammed Duri, Founder and CEO of Kifiya Financial Technologies explains, adding, “In this knowledge series, we have collaborated with many stakeholders to bring together records of learning from different perspectives in the private, and public sectors as well as across various markets in Africa. Focused on utilization of data-driven digital lending, these learnings will inform provisions of data-driven digital credit to the under-banked.”
An IFC study, with insights from several other market studies, suggested that the working capital finance gap for MSMEs in Ethiopia was estimated to be USD 4.9 billion in 2019, with SMEs accounting for 91 percent of the figure. This much larger finance gap for small to medium enterprises is due to a need for capital investment, machinery requirements, a general backlog of foreign currency, and much larger working capital requirements, all of which contribute to the exponential increase in the finance gap.
Digital lending schemes boom in Ethiopia, quadruple in magnitude
Safaricom appoints former Ethiopian Ambassador as its Chief of External Affairs
Safaricom Ethiopia appoints Henok Teferra, Ethiopia’s former ambassador to France as its Chief External Affairs and Regulatory Officer replacing Matthew Harrison Hervey who left Safaricom in December 2022.
Henok who has been serving as Ethiopia’s Ambassador Extraordinary and Plenipotentiary of the Federal Democratic Republic of Ethiopia to France, Spain, Portugal, Holy See and Monaco for the last four years since 2018-2022, will now take over from where his predecessor left off.
Matthew Harrison Hervey who has been serving Safaricom Ethiopia as Chief External Affairs and Regulatory Officer starting from mid-2021 has left the company on December 2022 after the company held its national launch in Addis Ababa on October 2022.
By way of academia, Henok Teferra obtained a Master’s degree in International Public and Private Law from the University of Nice in 1997 and a post-graduate degree in International Economic Law from the University of Panthéon-Sorbonne Paris in 1998. From 2000 to 2001, he worked as a developer-engineer at SYLIS S.A. in Paris, France. Between 2003 and 2010, he was appointed Third, then Second and finally First Secretary at the Ministry of Foreign Affairs of Ethiopia.
From 2010 to 2013, he was Director of Communications and International Affairs at Ethiopian Airlines. From 2013 to 2015, he was appointed Vice President of Corporate Strategy, Communications and Alliances at Ethiopian Airlines, a member of the Board of Directors of ASKY Airlines, and a member of the Star Alliance Management Board.
Henok was reappointed Vice President for Strategic Planning and Alliances at Ethiopian Airlines in 2017. He contributed to the airline’s rapid 25% growth by overseeing the entry into service of one new aircraft per month and the construction of new facilities. He also implemented strategic partnerships and fostered commercial cooperation with other airlines. He has received several awards and recognitions, including the Choiseul 100 Africa and the ASKY Airlines: Airline of the Year Award for Regional Operations.
According to sources, Henok will be the second Local senior management at Safaricom Ethiopia following Andarge Kabtimer, Chief Sales and Distribution Officer.
Since starting its operations with customer pilots in August 2022, and following its national launch ceremony in October 2022, Safaricom Ethiopia has grown its subscriber base to 2.8 million customers across Ethiopia.
‘Don’t detain journalists for doing their job,” lament Ethiopia’s media houses in press freedom celebrations
Human rights commission calls on government to stop arbitrary arrests of journalists and to respect citizens’ rights in addition to lifting the internet restriction imposed on social media as it is violation of the human rights principle.
The call on the fight for free press came at a time when the Ethiopian Media Council in collaboration with its partners celebrated the world press freedom day on May 3, 2023 in an event held at Inter luxury hotel with the presence of journalists.
Speaking at the celebration, head of the Commission Daniel Bekele /PHD/ called the government to respect the national media law, stating, “The New Media Law has provided exceptional circumstances in which detaining journalists before they are found guilty as not allowable,” adding that, “Despite enacting the New Media Law which forbids depriving journalists of their liberty at the pre-trial and trial stages, there is an increase in such practices.”
According to the latest press freedom index by the Reporters Without Borders, the press freedom situation in Ethiopia has further deteriorated as the country ranked 130 out of 180 countries with a global press freedom score of 47.7 in 2023. In 2022 Ethiopia was ranked 114 out of 180 with a global press freedom score of 50.53.
Amnesty International has said that “media freedom has come under significant attack” in Ethiopia in 2022, with authorities arresting at least 29 journalists and media workers across the country.
“Attacks, harassment, intimidation and criminalization of journalists have been escalating in East and Southern Africa for exposing allegations of corruption and human rights violations,” stated Amnesty International’s Director for East and Southern Africa, Tigere Chagutah in recent press briefings.
In a statement released on Wednesday, May third together with the Media Institute of Southern Africa to mark the World Press Freedom Day, the rights group said that the Tigrayan authorities also charged five journalists with “collaboration with the enemy” the same year.
Authorities across East and Southern Africa escalated their attacks against journalists and press freedom across the region to suppress reporting of corruption and human rights violations throughout 2022 the statement added.
The statement further said authorities in the region must stop targeting journalists and media organizations for doing their job, and create conducive environment which allows the press to work without repercussions, intimidation and imprisonment.
Daniel also stated that long term internet restriction imposed on certain social media is violation of human rights, “most of the population uses Facebook, telegram and YouTube to express their opinion and to get information, restriction violate freedom of opinion and expression and receive and impart information and ideas through any media and regardless of frontiers.”
As the council head explained, the media houses are in talks with the government in hopes that the restriction will be lifted up soon.
On April 27, 47 human rights organizations sent a letter calling on Ethiopian Prime Minister Abiy Ahmed to ensure unfettered internet and digital communications access.
The letter expressed alarm at the weponization of internet shutdowns in the country, highlighting several recent disruptions, including on April 3 when authorities blocked access to mobile internet during violent protests in the Amhara region and in February when the government blocked access to social media platforms. The letter argues that shutting down the internet is an affront to fundamental human rights and undermines the freedom and safety of journalists.
Green Tech Africa trains Ethiopia’s auto technicians of tomorrow
Green Tech Africa, a pioneer in the electronic vehicle (EV) supply space embarks in producing professionals on new type of vehicles in Ethiopia to elevate the gap seen in the market.
The company that introduced the supply of EV about a year ago with six different models has provided training to 25 young technicians in collaboration with a vocational college of the SOS Children’s Village NGO.
According to the green firm, the major objective of the training was to provide an inclusive training for young auto technicians to fill the gap that is seen in the sector.
Kidem Tesfaye, CEO of Green Tech Africa, said that the EV technology is not only for Ethiopia but it is new for the world. Due to that, there is a gap in skilled labour which is required in supporting and maintaining the cars after sales.
As a result the company paired up with the SOS Children’s Village to produce mechanics specialized on EV.
As Kidem explains, the initiative has triangular goals in mind, including; producing skilled labour on the sector, creating jobs and expanding entrepreneurship for young Ethiopians.
“By profession, the newly trained individuals graduated from different universities in motor and related engineering fields but currently in the country majority of the training is theoretical as opposed to hands on due in availability of the machines,” he elaborated adding, “We provided a high end job training for three months at the facility in SOS vocational college.”
He said that Green Tech Africa is in the final stage to commence a car assembly locally due to that some of the current certified students and upcoming trainers shall be absorbed in the assembly line and after sales service at the company or invest by themselves to support the demand in the market.
According to the plan, the company and the NGO that has a good reputation in Ethiopia will produce more than 300 professionals in the sector every year.
“Currently we have about 30 students in the second batch that will graduate within two months,” Kidem pointed out.
“The training focused in detail on maintenance of electronic device, battery cell, mechanical devise and components that will create confidence and trust for consumers,” he added.
As an entrepreneurship scheme, the company has designed EV clinics that will be open in different corners of the city and country, “Interested professionals, shall have the liberty to support customers at the EV clinic platforms.”
According to Fitsum Deressa, General Manager of GreenTech Ethiopia, which is the Ethiopian wing of Green Tech of Africa, said that the vehicles supplied to the market have a big market acceptance, while there is a gap in terms of technicians due to that the company decided to train capable professionals for free to fill the gap.
He said that at the current stage his company is strong on providing after sales service with skilled labour, while the market on EV is swiftly growing that needs ample professionals, ”Thus we are working to provide experts on the sector that are trained by qualified professionals, which come from local and international partners.”
He said that currently besides his company, different suppliers are hugely importing EVs, “So the trained professionals shall support the sector in general not only the cars that are imported via Green Tech.”
Hailu Abebe, Professor at Addis Ababa Science and Technology University, who is regarded as one of the pioneer on providing training on EV and lead instructor on the initiative embarked by Green Tech Africa and SOS, said that even though there is minor training on EV in some higher education in Ethiopia, it is limited on theoretical areas.
“The current technicians are mainly trained on traditional fuel vehicles but EVs have new technologies to which there is a gap on our technicians’ side. Thus, they have to have additional training to fill their limitations,” Hailu said.
Regarding the new scheme he said that about 80 percent of the new training initiative is focused on practical programs that shall be differ from the program designed in higher educations and shall give in detail knowledge to create confidence in professionals and customers.
Fitsum said that Green Tech Ethiopia is on the final stage to commence the assembly of EV and solar energy products.
He said that disassembled EVs that will be assembled locally have arrived in Djibouti port. So far in the past less than a year the company has supplied about 500 EVs and the feedback from consumers has been resoundingly positive.
As Kidem informs Capital, the assembly plant that was erected at Sendafa, 40km north east of Addis Ababa is set to commence operation in three months time.
